Category Archives: 20/20 Tax Resolution

Presidential Candidate Tax Returns: Should Voters Care?

Reviewing tax returns can reveal a lot of information about a political candidate. But many tax experts caution the average voter may not be knowledgeable enough to know what all that information means – and they argue that any conclusions based upon a tax return can often be traced back to a voter’s pre-existing political position.

“As a company, 20/20 reviews a lot of tax returns. It’s our job to dispassionately review a  tax record and determine what steps need to be taken to resolve any tax issues,” said Brian Biffle, president of 20/20 Tax Resolution. “Voters review tax returns with a more subjective approach. So, before they pass judgment based on a candidate’s financial history, a ‘tax return primer’ might be in order to understand what they are reviewing.”

According to 20/20, here’s what voters can learn from a candidate’s tax return:

  • Sources of a candidate’s taxable income
  • Clues to business failures in losses or the overall fiscal health of business endeavors
  • Information on charitable deductions (not simply how much but where it’s distributed)

“For some voters this information can, in essence, become a test of character,” Biffle said. “They’re interested in where a candidate’s income originates and what types of charities the candidate supports.”

Other information revealed often causes voters to compare a candidate’s tax history to their own, said Biffle, and make judgments about how “in touch” a candidate is with voters, as well as the candidate’s ability to serve in the Oval Office. For example:

  • The effective tax rate paid by a candidate
  • Information on investments and loans
  • Real estate taxes (abatements, for example)
  • Real estate holdings
  • Information about the existence of offshore accounts, household employees and other holdings

“Voters sometimes view this information almost as a question of transparency,” Biffle said, particularly since candidates are not required by law to release their tax returns. “But in reality, none of these things provide a complete analysis of a person’s ability to lead. It’s only become an important factor to voters in recent elections.”

Although candidates are required to file Public Financial Disclosure Reports since the passage of 1978’s Ethics in Government Act, these reports don’t provide the detailed examination many voters have come to expect, Biffle said.

“We have clients from every walk of life, income level and background,” Biffle said. “At no time does a tax return provide an exact portrait of a person’s character. It simply offers a glimpse into their finances.”

20/20 to Provide Expertise at 2016 NAEA Conference

David Miles, EA, vice president of 20/20 Tax Resolution, will present two National Tax Practice Institute® (NTPI™) courses at this year’s annual conference of the National Association of Enrolled Agents in Las Vegas Aug. 1-3.

The highest credential awarded by the Internal Revenue Service, an enrolled agent (EA) is a federally authorized tax practitioner empowered by the U.S. Department of the Treasury to represent taxpayers before the IRS. Miles will be leading two courses, including:

  • Introduction to Collections – Monday, Aug. 1 This introductory course to IRS Collections explores the fundamentals of the IRS collection system, as well as the skill set needed by those practitioners just beginning to represent clients before Collections.
  • Case Evolution with a Flowchart Approach – Wednesday, Aug. 3 This session covers the process for handling a collection case from start to resolution through the aid of a specific workflow.

“At 20/20, we’re very proud that every one of our tax professionals serving clients nationwide are credentialed enrolled agents or attorneys – and many of our agents hold both of these titles,” said Brian Biffle, president of 20/20 Tax Resolution. “Constant change is the nature of the tax business, and David’s expertise will help NAEA attendees refine and enhance the skills they take back to their clients.”

NTPI is a three-level program developed to sharpen the skills of enrolled agents at all stages of their careers. With each level of this program, participants expand their knowledge and skills, and gain the confidence needed to guide their clients successfully through the challenging maze tax regulations and agency structure.

Taxes 2016: Collection Cases, Unpaid Balances Increase

More people owe more money in unpaid taxes than at any other time in U.S. history, according to recently published figures from the Internal Revenue Service. According to the numbers for fiscal year 2015, unpaid tax balances increased by $7 billion and the number of active collection cases grew to 13.5 million.

All this data, coupled with the recent IRS announcement that the agency is planning to hire up to 700 enforcement agents to pursue collection efforts, points to an increasing need for tax resolution services, said David Miles, vice president of 20/20 Tax Resolution in Broomfield, Colo.

“With a growing emphasis on collection and the addition of 700 new enforcement hires, businesses and individuals facing unpaid tax burdens would be wise to take action first before the IRS takes it for them,” Miles said.

According to news reports, IRS hiring will first be focused on the department that monitors small businesses and self-employed individuals. This only increases the urgency for these audiences to address any lingering tax concerns, according to Miles.

“Most of our clients are an adaptable cross-section of American business,” he said. “They have a general sense of business, but the nuances of tax policy are not usually top of mind. Particularly with this new IRS development, our advice is always to err on the side ofover preparation.” 

Primarily, that means planning ahead for tax burdens, closely monitoring financial concerns throughout the year and keeping ahead of any potential IRS action.

“Undercapitalization seems to be the universal issue with companies facing tax problems.” Miles said. “Whether due to poor planning or unforeseen circumstances, undercapitalization often leads to a company’s collection problems. However, many companies compound the problem by ignoring the issue or just hoping it will go away. Being proactive before the IRS takes action is the best way to resolve tax challenges.”

More IRS Enforcement on the Horizon

It’s not a secret that the Internal Revenue Service has been understaffed for quite some time. However, the IRS has announced that for the first time in five years there will be significant enforcement hires (between 600 and 700 new employees). Although the IRS is still suffering from years of successive budget cuts totaling almost $1 billion the IRS has, over the course of the last year, received funds that allow it to address its most dire staffing needs.

In announcing the new hires, IRS Commissioner, John Koskinen, provided an overview of how these decisions are made. According to Koskinen, earlier this year Congress provided $290 million specifically earmarked for taxpayer service, identity theft and cybersecurity. The more recent availability of funds necessary to fund the enforcement staffing was recognized through certain work efficiencies and the rate of attrition in enforcement.  

A cursory review of fiscal years 2014 and 2015 staffing illustrates that collection personnel such as Revenue Agents and Revenue Offices, have been two of hardest hit functions of the IRS. In fact, from 2014 to 2015 each role lost 10% of its workforce at a time when many other functions had almost no losses and some even added positions. Interestingly, Commissioner Koskinen, in his announcement, highlighted the fact that each enforcement position typically returns almost $10 for every dollar spent – and many times, much more. 

The enforcement hiring will be introduced in two waves, one in the next few weeks and the second wave later this year. The initial hiring will focus on entry-level positions in SB/SE (small business/self-employed) while the hires in the latter part of the year will assist with more high-profile enforcement areas.

It’s difficult to know the practical impacts on taxpayers, collection inventory and practitioners prior to implementation, yet it’s safe to say that there probably hasn’t been this much reason to be proactive in respect to resolving a collection case in six years. I think it’s reasonable to speculate that the hiring initiative together with the IRS’ Early Action Initiative and the private debt collection authorized by the FAST Act are going to shake things up. 

For the full Koskinen article, click here. 

 

 

 

 

Heed These Warning Signs When Seeking Tax Resolution

Nearly two-thirds of America’s small businesses say that the complexity and cost of federal tax preparation poses a significant problem for their business, according to the National Small Business Association. Consequently, small business owners can sometimes miss important nuances of the tax code, putting them at odds with the IRS and in need of tax resolution services.

“Businesses facing difficult tax problems can be very vulnerable,” said Brian Biffle, president of 20/20 Tax Resolution. “Owners feel they need to react quickly but they are often worried about facing IRS penalties and can be unsure of tax policy regulations. The rush to solve the problem, combined with a lack of knowledge, can make identifying a qualified tax resolution provider a challenging process.”

However, there are many reputable professionals providing tax resolution services, Biffle said. The key is to identify one that is knowledgeable, diligent and will actually help solve tax problems.

“Many tax resolution companies work very hard to provide honest and effective counsel to their clients,” said Biffle, whose company has successfully managed tax issues for more than 26,000 clients nationwide as of April 2016. “But there are distinct warning signs business owners should recognize when searching for a provider.”

  1. Overpromising – No tax consultant can guarantee results, whether those results include reducing tax liabilities or promising acceptance into the IRS Offer In Compromise program. If a company makes immediate guarantees with no information to back up its claims, it may be a sign to seek a different provider.
  2. Lack of transparency – Every tax resolution provider should be comfortable delivering background information on their company in an upfront and easily understood manner. The provider should be able to discuss company ownership, years in service and past client successes. When they aren’t able to do so (or are unwilling to do so), a business owner should move on.
  3. Demands for in-full payment upfront – As in any relationship with a professional services provider, trust is a key indicator of partnership. If a tax resolution provider wants to charge a fee just to speak with a consultant, you can end up paying an unlicensed salesperson to simply tell you what the company can do for you. Find a company that provides initial consultations completely free of charge.
  4. Lack of credentialed consultants – A competent tax resolution provider will not utilize unlicensed commission-based sales people to provide a diagnosis of your tax issue. Remember that only a CPA, an attorney or an Enrolled Agent can represent you before the IRS. If your tax resolution provider is not offering you assistance through a seasoned, credentialed consultant, it’s a good sign the provider will not be working in the best interests of the business.
  5. Unclear next steps – The provider should be able to discuss who will be managing the work, how often they’ll be in contact and what a business owner can expect with respect to ongoing reporting of progress. If these specifics are unclear, it’s a sign to walk away.

“These are the key indicators that should raise consumer concern,” Biffle said. “Of course, business owners should always use their best judgment, but as in so many aspects of business, if it feels too good to be true, it probably is.”

Success Story: 20/20 Assists SMB Owner in New Jersey

Back in April of 2013, a small business (SMB) owner from Hackettstown, New Jersey, approached 20/20 Tax Resolution for help in resolving a $60,000 liability with the IRS. We worked over the next several months to obtain the appropriate documentation and analyze the taxpayer’s current financial condition. Because of the precarious situation the business was in when they came on board, we also filed several appeals on behalf of the business so as to keep them safe from enforcement actions (levies on bank accounts, seizure of assets, etc.), while we took the time to analyze their situation.

In July of 2013, we submitted a proposal for an Installment Agreement in the amount of $300 per month to resolve the liability through what’s called a Partial Payment Installment Agreement. Although we knew that this agreement would need to be reviewed every two years, the taxpayer could not afford a larger monthly payment to meet the six-year rule so as to avoid the two-year review. After submission of our proposal, there was the normal back-and-forth of negotiations and collection of additional supporting documentation as well as awaiting the appeals process for the previously filed appeals.

During this time, we also had to deal with a Revenue Officer who was not playing by the rules and issuing erroneous levies. We were successful at getting these levies released based on the rules and regulations set forth in the Internal Revenue Manual (IRM), but all of these issues lead to a delay in obtaining a formal resolution.

By April of 2014, the business’ financial condition was only worsening. Things were even more dire than they were a year prior. This being the case, we decided to move forward with an Offer in Compromise on behalf of the business. The taxpayer was skeptical at first that we could work out an agreement of this type, but we discussed with him the new rules and regulations surrounding the Offer in Compromise based on the Fresh Start Program and showed him why his business qualified for the program. By October 2014, we completed the Offer in Compromise and sent it to the taxpayer for signature and to forward with the appropriate down payment and filing fee. Unfortunately, the taxpayer forgot to send in the Offer, delaying our efforts a bit longer. By February of 2015, the Offer was submitted and we were then tasked with awaiting an Offer Specialist to be assigned to the case. The Offer process is quite lengthy and can take up to two years before a formal determination is made on the case. After negotiations back and forth, we were finally successful at resolving this case through the Offer in Compromise program, compromising the liability for a total of $324 in February of 2016.

We were all very pleased with the final results and received this “thank you” from the taxpayer:

I wanted to write to you to say thank you for all the work that you did for me to help me resolve this tax issue. As you may remember, we had previously used another company, which charged us huge fees and did not advance the process of settling the debt. That company went bankrupt. I had mistakenly turned over all my documentation to that company. I lost all of it. That was an enormous error on my part. I trusted the wrong people. I also lost all my records, which made your job even more difficult. I, not only, lost my money to that company, I also found that the tax issues worsened. I was quite “gun-shy” when I hired your company. However, you were very patient with me throughout the process. I thank you so much for that. When you laid out my options, I could not have imagined that this would have been settled so fully and completely. It is like a breath of fresh air. So, I just wanted to thank you so much for your professionalism, diligence, and patience.”

As you can see, not all cases are cut and dry, and the IRS can be an extremely difficult entity to deal with. This being said, with proper representation, and maybe a little bit of patience, your case could be resolved just as completely as this one was. Get in touch with us today to learn more about how we can help with your particular situation.

Sometimes the Best Advice is Tough to Give

Recently, I came across an article on a major clothing company highlighting a payroll hiccup during which the employees went temporarily unpaid. From the sounds of it, this company has been facing money problems for quite some time, ultimately filing for bankruptcy protection in October 2015. The company chalked up the problem to a procedural error by a global banking and financial services company, specifically stating that its money woes had nothing to do with it.

Whether the company’s line is true is not the point. Let’s assume for a moment the worst, that the payroll problem was related to the finances. Then, let’s take a moment to applaud them for making the responsible decision to hold the net payroll, temporarily, until all of the payrolls related obligations could be met.

A company’s ability to fulfill its payroll tax obligations has a direct impact on the company, the owner, investors and the employees. It affects the company’s very existence. The responsibility to collect and remit payroll taxes is statutory, required by law. The law states that a company has the burden to collect and remit payroll taxes from its employees when the employees are paid. Therefore, if payroll is delayed so is the obligation to remit the tax-related aspects of the payroll.

It goes without saying, but running a company with employees carries a host of responsibilities. After all, a company’s employees rely on it to provide for their general well-being. But, to a business owner, the importance of trust taxes, specifically payroll, cannot be overstated. Therefore, when beginning a new representation case, it is critical to introduce an educational component to the work. It’s imperative for clients to understand how to make good decisions in the face of financial distress. We understand that it’s certainly not easy to have a conversation with employees about a payroll being held. After all, those people are likely counting on it because of obligations of their own.  Nonetheless, this can be the correct decision in some cases.

Holding a payroll is not the only answer and in some cases can be the wrong answer to a tough spot. But compared with the fallout from missing a payroll tax deposit, such as an IRS levy, it can actually prevent a bad situation from getting much worse. Dealing with IRS Collections is about ensuring that a company facing duress survives for everyone involved over the long term. The questions about what to do and when make it vital to have a qualified and competent professional to lean on.

If you are a business owner and find yourself facing a payroll problem, make it a priority to give us a call today. The longer you wait, the more complicated and difficult your situation can become. If you happen to be a tax professional with a client who could use our assistance, either contact us directly or fill out our client referral form, here.

“I’ve Got My Tax Liability Under Control”

Over the nearly 20 years that I have been in practice I can’t tell you how many times I spoke with taxpayers believing that they had their resolution under control by making voluntary payments.  These soon-to-be clients suffered from all too common misperception that these payments would in some way deflect attention from their case or cause it to be put to the bottom of the collection pile.

Unfortunately, they couldn’t be more wrong and it’s usually a levy or lien that brings about the realization.  Yes, of course, voluntary payments are important to paying unpaid taxes.  In fact, they are the first thing I recommend in nearly every case, especially employment tax cases.  But to think that voluntary payments alone will alter the course of one’s case can be a huge miscalculation.  State and IRS collections are done by system.  They’re not whimsical or based on good faith.  Until a tax liability is paid in full or a formal resolution, such as installment agreement, is agreed to the collection process moves forward exposing taxpayers to liens and levies.

Just recently, in fact, I encountered this very situation.  A taxpayer came to me at the end of last year irate about being levied by the IRS.  The company owes the IRS just over 100k in employment taxes but the owner of the company had been making voluntary payments of $2,000 per month.  He hadn’t spoken with the IRS but had noted less mail was coming since beginning the voluntary payments.  He was angry that the levy followed his very obvious effort at resolving the situation.  Unfortunately, this taxpayer had assumed that his payments had directly influenced the IRS’ lack of urgency with his case.

Immediately, I began my effort of educating the taxpayer about the collection process.  Most every state and definitely the IRS has a set protocol for collecting unpaid taxes.  The process begins with notification of a balance due, letters with an increasing demand for payment and ultimately assignment to a field personnel for collection.  Every collection case goes through this protocol until the liability is paid or a collection determination is made.  A collection determination means the state or IRS’ decision on how the liability will be resolved.  A tax practitioner’s goal is to mold and influence that collection determination within the rules to their clients’ best interests.

The point here is that making voluntary payments, while advisable, does not alter the collection process.  Short of full paying the liability proactive and consistent contact with the authorities is not just recommended but required in order to ensure that a client remains protected from enforcement action.

If you find yourself in this situation, it is now more important than ever to get in contact with us. We are always here to answer any questions that you might have about your particular situation. Make it a point to contact us today so that we can get your life back on track.

[Infographic] 7 Types of Installment Agreements

Installment Agreements (also known as Payment Plans) are the most accepted and common resolution strategy with the IRS. It takes experience, time and preparation to successfully negotiate an Installment Agreement and no negotiation goes exactly like the other.

We’ve created this simple guide to help illustrate the various types of Installment Agreements that may be available to you depending on your particular situation.  Take a few minutes to better familiarize yourself with their differences — and remember, we are always here to help.

7 Types of Installment Agreements

Learn more about ways we can help or feel free to contact us with any questions.

To download a high-resolution version of this infographic, please click here

20/20 Representative Teaches at NAEA’s 2015 NTPI Conference

20/20 Tax Resolution’s Vice President, David Miles, EA, taught two different classes at the National Association of Enrolled Agents (NAEA) NTPI 2015 National Conference in Las Vegas Nevada on August 3rd.  As an outstanding education provider, the NAEA developed the National Tax Practice Institute (NTPI) — a three-level program of study that covers all facets of representing clients before the IRS.

Miles describes NAEA’s NTPI conference as, “an extraordinary opportunity to come together with some of the most experienced and talented collection representatives in the country.  Being able to participate as an instructor alongside these gifted and talented individuals was an honor.”  In his Level 1 class, Miles works to establish a foundation for all that practice before the IRS Collections Division.  In his Level 2 Appeals class, there is a more acute focus on the nuances of the IRS’ Collection Appeal programs coupled with practical problem-solving lessons.  When asked about gauging the success of each specific course, he explains, “The real success of the conference are the attendees, which includes Attorneys, CPAs, Enrolled Agents, etc. Their energy and commitment to practice is truly inspiring.  My single focus as an instructor is to be good enough for them.”

With over 18 years of tax representation and consultation experience, Miles continues to be an active educator for other tax practitioners on both a local and national level.  20/20 Tax Resolution is proud to be at the forefront of the tax representation industry and recognizes the importance of building relationships and networks while attending this annual conference.  When reflecting on these recent events, Miles sums it up perfectly, “The best part of attending NAEA’s NTPI conference is seeing practitioners throughout the country sharing experiences and knowledge for the sole purpose of improving our service to our clients.  It’s a unique and vital camaraderie.”