Category Archives: Business Taxes

Avoid Criminal Consequences & Find Harmony

When the IRS sees a business owner with a history of failure to remain compliant, in addition to seeking repayment of back taxes, they can set out on a path to preclude that owner from opening or operating additional businesses.  This path leads to an injunction being sought by the Department of Justice (‘DOJ’) to preclude further business activities that may result in additional taxes going unpaid.  In doing this, the IRS looks to lessen the damage that may come from schemes promoting tax fraud.  Unfortunately, many who have simply run into tough times and have fallen behind on their taxes can become the target of one of these injunctions.

When an injunction is put into place and subsequently violated, the failure to comply is pursued with criminal prosecutions for contempt of the injunction order as well as civil remedies which can involve the forced closure of a business.

“Lead the people with administrative injunctions and put them in their place with penal law, and they will avoid punishments but will be without a sense of shame. Lead them with excellence and put them in their place through roles and ritual practices, and in addition to developing a sense of shame, will order themselves harmoniously.” –Confucius

Shame is a word that no one wants to be associated with.  When we feel shame, we reminisce on our failures that lead to the shame.  Often times, shame follows the failure.  Confucius tells us that by developing a sense of our own shame, we can allow the shame to precede the failure and subsequent punishment that may come from that failure and instill practices that prevent the failure from coming about.Young female entrepreneur working in a home office

The IRS is out to prevent future failures by way of injunctions.  We are here to prevent future failures by helping our clients develop the processes necessary to remain compliant and show the IRS that an injunction is not necessary.  We encourage the use of a payroll company for all future filings to ensure that nothing falls behind.  We partner with the largest payroll providers in the country to streamline implementation and allow you to stay focused on your day to day business operations.  Additionally, we work the the IRS to make sure that all deposits paid timely are communicated to revenue officers handling the case, so they do not find the need to recommend an injunction to the DOJ.

If your business has fallen behind and you are not sure how to address the liability, contact us today.  Once our representation is in place, we will work diligently to prevent the need for an injunction to be sought and get your business back into compliance with the taxing authorities.

A Perfect Storm

The 2000 film, “The Perfect Storm”, details the harrowing events of the fishing vessel, Andrea Gail. In the film, the ship and crew were lost at sea as a result of numerous weather elements coming together to form a force of nature that was unstoppable. A similar storm may be forming with respect to the enforcement and collection of unpaid payroll taxes.

A year ago, the Treasury Inspector General For Tax Administration (“TIGTA”) published a report in which they indicated a greater need for a focused strategy in effectively addressing egregious employment tax crimes. In the report, TIGTA recommended that criminal prosecution be sought by the Department of Justice more frequently to create a greater general deterrent.

Additionally, on March 2nd 2018, Deputy U.S. Attorney General Rod Rosenstein stated that the Trump administration would vigorously pursue offenders that fail to pay payroll taxes. The criminal offense associated with failing to pay payroll taxes is set out by 26 U.S.C.§ 7202. It states that “Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.”Boat in Pond

These reports and comments are typically heard as rhetoric intended to encourage compliance, however a recent case from Wisconsin brings potential for concern. While prosecution rarely happens for minor offenses of 26 U.S.C.§ 7202, a Wisconsin business owner, Gary Auerswald, was recently targeted for prosecution by the US Attorney from the Western District of Wisconsin.  What makes the case unique is that the amount in question was only $24,482.43 and only for the 4th quarter of 2014. While there may be more to the story that is unknown, this may also be the start of the crackdown Rosenstein spoke of.

One thing is for certain; there has never been a more important time to get in front of back taxes, especially unpaid and unfiled payroll taxes. If you think your business may have delinquencies, do not hesitate to contact us and see how we can help you get out in front of any delinquencies and not be another target for the US Attorney to prosecute.

Tax Tip: What to do post resolution

Whew! You made it through to the other side! Congratulations on navigating the difficult maze of regulations, processes and emotions to successfully finalize a resolution to your tax problems. Time to relax, forget about the past and move on to a better future, right?

Well, not exactly. During 20/20’s two decades of working with clients, we’ve seen the pitfalls that can await taxpayers on the other side of the resolution process. We strongly advocate that our clients create a “post-resolution plan” to help them steer clear of future problems. Without a thoughtful approach to your new reality, the chances of needing additional help down the road increases.

The first step is to make certain you understand all aspects of your resolution, any payment plan that may be in place, the expected duration of the plan and – perhaps most important – how you will pay it. Don’t wait until your first payment is due to fully comprehend everything you agreed to in the resolution. Delaying this step is what typically leads to a first mistake: missing a payment (something you don’t want to do).

To avoid missing any payment deadlines, consider scheduling a direct deposit. If you choose to use traditional U.S. mail for your payments, remember that each payment must be received by the actual due date. Unlike filing a tax return, payments are not considered to be on time by their postmark. If you opt for snail mail, make certain to leave enough time for the post office to punctually deliver the payment.

A lot of managing your resolution just comes down to staying on top of it and identifying problems before they occur. At 20/20, we have been very successful at setting up manageable resolutions for clients for 20 years. We’ve found that very often, the root cause of problems can be traced back to a taxpayer’s individual habits, business practices or organizational skills.

While some businesses struggle to stay current due to genuine financial hardship, we often see business owners and officers neglect to establish effective business practices. One of the most effective ways to ensure compliance is to engage the services of a payroll firm. At 20/20, we partner with payroll and sales tax solutions in order to assist our clients in developing good and effective business practices. It’s important to make an honest assessment of your business and lifestyle to see if these solutions are right for you and your company.

Ask yourself the tough questions: Is your business undercapitalized? Are you overspending? Are there lifestyle changes you should consider to help keep you on better financial track? All of these are important considerations to study to keep you moving forward and avoid future tax problems.

Light at the end of the TunnelFinally, now that you have what probably feels like a new lease on life, don’t take it for granted. Keep vigilant on your resolution and be proactive if and when you have any problems surrounding the payment terms. Remember that communication is key to staving off future issues with the IRS or other tax authorities. Don’t hesitate to speak up when problems arise.

If you’re still concerned about the ability to successfully manage your resolution and steer clear of future problems, 20/20 offers a monitoring program called POA+. POA+ is a monthly, pay-as-you-go service that allows 20/20 to maintain an active role in your tax resolution plan. Our team will be able to receive and monitor notices from the taxing authorities to promptly address issues that arise as well as remain available to answer questions.

However you proceed, enjoy the relief that comes from knowing you are managing your tax obligations and taking the best care of your business. And be certain to stay on top of your resolution requirements! If things ever get out of hand again, remember that 20/20 is here to help.

[INFOGRAPHIC] NEW YEARS RESOLUTION: PLAN NOW FOR 2018

According to IRS data, nearly one third of Americans wait until the last minute to file their taxes. With numbers that high, it’s no surprise that our clients are often a part of that percentage. The delay is primarily due to insufficient preparation – and the dread that comes from facing all the paperwork scattered throughout your office. But it doesn’t have to be this way.

Here are the most important things you should resolve to do NOW to ensure you are setting yourself up for a successful year.

Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

2017 Year in Review: Top Tax News

No matter your perspective on the recent passage of tax reform, there’s no question it is the biggest tax story of the year – and perhaps of the decade. The estimated $1.5 trillion bill is being touted as the savior of the middle class and simultaneously denounced as just another exercise in trickle-down economics. Time will tell how the expansive bill shakes up the economy, but with provisions impacting everything from health care to the standard deduction, the reform is sure to impact just about every American in some way.

Business man holding TAX on blurred abstract background

The rest of 2017’s tax stories are not quite as dramatic, but important nonetheless. Here’s a rundown of the top tax news of the year:

  • Employment taxes: The IRS stepped up efforts to combat delinquent employment taxes in the wake of a scathing report in May from the Treasury Inspector General for Tax Administration. The IRS watchdogs reported that the number and size of payroll tax violations is going up, and IRS penalties alone have not been enough to stop the trend. Although the willful failure to remit employment taxes is a felony, there have historically been fewer than 100 criminal convictions per year.
  • Use of private debt collectors: In June it was announced that the IRS began using private debt collectors to try and recoup overdue money owed the government. The IRS program engages four private-sector collection agencies to pursue the toughest debt. Generally these are cases where money has been owed for multiple years and the case is not currently being worked by federal employees.
  • Tax reform impact on delinquent taxes: A change in pass-through taxation, which impacts taxpayers who have some or all of their business income taxed on their individual return, could aid S corporations, LLCs, partnerships and sole proprieterships. As a result, these entities might have fewer challenges meeting their tax obligations. However, tax reform is not expected to have a major impact on tax resolution needs. As always, “life happens” so some people will owe – and some of those people will inevitably need tax resolution services.

The biggest story of the year may be that nothing really changes. The need to have a solid tax plan in place for individuals and businesses is still essential. Be certain to plan ahead for tax obligations, monitor your business throughout the year to guard against revenue ebbs and flows – and make certain you always have a plan to pay.

Happy New Year to you and yours, and best wishes for a profitable 2018!

Top Five Concerns of People Facing IRS Action

You’ve received a letter from the IRS telling you there’s a problem with your taxes. You’re not entirely clear on what the letter means. Yet you are sweating a little. You’re nervous about what happens and what steps you should take next. You’re anxious and are tempted to ignore it all.

Here’s your first step: DO NOT IGNORE THE IRS NOTICE. For your next step, read the following concerns that 20/20 most often hears from clients calling our office for the first time. With our 19 years of experience helping people overcome tax difficulties, we’ve heard just about every concern. Here are the top five concerns common to our clients. Taking Notes

1. Aggressive enforcement and liens

People who speak with 20/20 agents overwhelmingly express fear that the IRS wants payment immediately and by any way possible. Taxpayers want protection from aggressive enforcement actions like bank levies, accounts receivables levies, wage garnishments and asset seizure. While every person’s case is unique, we have a variety of tools we can use to intercede and ensure that these extreme IRS actions are avoided. In nearly every case, we are able to use these tools to give clients the time and space they need to establish compliance and form a strategy to meeting their tax obligations.

2. Difficulty dealing with or communicating with the IRS

It’s not surprising that the second most-frequent concern we hear is that resolving this issue will require inordinate amounts of time, effort and frustration. Who hasn’t sat on hold trying to reach an account service representative? Taxpayers envision a customer service nightmare multiplied tenfold by government inefficiency. Because we work with the IRS all the time, we’re familiar with the agency’s communications processes and we know how to reach the right person to get the right information. We take over communication and do it for the taxpayer, freeing them up to run their business – and their life.

3. Revenue officer showing up at place of business and employees or others finding out about liability

While the IRS is stepping up enforcement and collection efforts of unpaid or delinquent taxes (particularly employment taxes), the agency does work to respect and protect a taxpayer’s privacy. However, in a busy office where documentation and information is shared widely, it’s entirely possible that some news about tax issues may filter out to others. But any employee or other individual will feel less anxious when they know a qualified, experienced tax resolution company like 20/20 is working on the case. The alternative is to have employees or others worry that nothing is being done to manage the liability.

4. Debt to IRS growing out of control (penalties and interest accrual)

There are very few ways to avoid having to pay interest when a tax obligation is delinquent. However, 20/20 can make certain that all obligations, interest and even any penalties will be the least amount allowable under the law. The bottom line: Doing something to resolve the situation is always better than doing nothing.

5. Getting a good and manageable resolution.

Finally, 20/20 clients are worried about achieving a fair, manageable resolution that won’t break the bank and will alleviate their worries. Fortunately, we’ve been helping clients achieve this goal for almost 20 years so we can say with confidence that we can help most taxpayers. We’ll use our experience to obtain the best resolution available under your specific circumstances.

While reactions to potential IRS action vary, it’s fairly typical for clients to feel some or all of the above concerns. Some people seem unfazed and are not frightened of the IRS at all. Typically, this reaction comes from taxpayers who have dealt with the IRS previously. The strongest fear many people experience is that others (employees, spouses, friends, etc.) will discover the problem. There’s a certain stigma about owing money to IRS – and they worry what others will think.

But the truth is many people experience these types of problems and it doesn’t indicate any lack of character. Taxes are a complicated issue – and running a business is always challenging. What’s important is recognizing when you need help in order to keep any problems from becoming overly burdensome. That’s precisely why we exist.

Employment Tax Noncompliance Reaching Historic Numbers

As political leaders in Washington consider dramatic cuts to federally funded programs and agencies, billions in employment taxes, interest, and penalties has gone unpaid due in some part to decreasing efforts from the IRS to pursue and collect from the growing number of delinquent employers.

That’s the assessment of experts at 20/20 Tax Resolution, a tax resolution firm that specializes in helping business owners manage and resolve tax obligations when they’ve fallen behind. According to IRS data, nearly $46 billion in unpaid employment taxes and penalties were left unaccounted for in fiscal year 2015. Yet, five consecutive years of IRS budget cuts have reduced the agency’s ability to manage enforcement caseloads.

“Employers are often under tremendous financial pressure to meet tax obligations,” said David Miles, vice president at 20/20 Tax Resolution. “When they fall behind, either through financial necessity or willfully, it’s important that the IRS possess the resources to work with employers to rectify any shortfalls.” IRS Building Sign

According to the federal budget proposed by the Trump Administration in early March, the IRS budget would be reduced to $9.65 billion, a 14.1 percent cut for the fiscal year that begins in October and would mark the agency’s sixth consecutive year of budget cuts. The proposed 2017 cut goes against the stated desires of Treasury Secretary Steven Mnuchin, who believes the IRS needs more money and staff to fulfill its mission and increase revenue. For taxpayers seeking to meet their tax obligations, the proposed IRS budget cuts would result in fewer personnel available to resolve issues, slower response times and ultimately more frustration.

“It has been shown that every dollar of IRS funding returns four dollars in revenue – and as much as $10 if invested in enforcement activities,” said Miles. “Yet additional cuts to IRS funding will further erode the agency’s capabilities to realize this revenue generation.”

“A properly funded IRS provides necessary resources to garner faster, more efficient and more accurate resolutions to employer tax issues,” Miles said. “To reiterate, when fewer resources are available, the result is a reduction in decision makers, longer wait times and slower resolutions, making employers focus longer on their tax troubles and potentially even dissuading some employers from complying voluntarily.”

“Egregious” employer tax noncompliance (defined as 20 or more consecutive quarters of non-payment) has tripled over a 17-year period, according to IRS records. When collection against an employer is unsuccessful, the IRS pursues the individuals responsible for the company by assessing the Trust Fund Recovery Penalty (TFRP). In FY 2015, the IRS assessed the TFRP against approximately 27,000 responsible persons – 38 percent fewer than just five years before as a result of diminished revenue officer resources.

“It becomes a challenge for employers to seek resolution when the resources required to remedy tax issues are not available or are exceedingly difficult to manage,” Miles said. “For the sake of taxpayers and the nation as a whole, a fully supported IRS offers the best way to help employers meet their obligations.”

IRS Collections Going Private this Month. Be Wary of Tax Scams.

After months of conversation, and criticism, taxpayers across the country will finally start hearing from private debt collectors starting this month. If you are unfamiliar with this initiative, please take a moment to read through our blog post “IRS Turning to Private Debt Collectors.” This piece provides a great overview of what the program entails.

Interestingly, the conversation about the IRS’ third go-around with private debt collection has really shifted from its past failures to how the IRS will separate itself from the many IRS scammers passing themselves off as a private collection firm.  To do its part to combat IRS scammers the IRS has, in the past, leaned heavily on the fact that it does not make outbound phone calls to collect taxes. That will change under private debt collection.

It has been announced that private debt collectors are only going to be assigned cases that are inactive. This means that these entities are going to be calling taxpayers that have not heard from the IRS in quite some time making the potential risk of confusion about who is calling much higher. The IRS recognizes the issue and has given advice to taxpayers to help distinguish the legitimate private debt collectors from others.

According to a recent IRS announcement, IRS Commissioner John Koskinen explains, “Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times.” He continues with, “The people included in the private collection program typically already know they have a tax issue. If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.” The concern is that the Commissioner’s explanation may not resonate with many taxpayers.  As a result, if scammers attempt to leverage private debt collection into a new tactic, taxpayers may not know who is who.

As expected, the IRS is urging all taxpayers that owe back taxes to work through a resolution sooner rather than later.  And for those taxpayers unsure of where they stand with IRS the Commissioner suggests that they take the necessary steps to determine what taxes, if any, remain unpaid.

If you find yourself unsure about what you owe, contact us today.

*Want to read more? Click here to check out the latest IRS announcement.

Unpaid Taxes Will Impact Your Future Travel Plans

It was hard to miss the dramatic changes to tax collection introduced at the end of 2015 in the Fixing America’s Surface Transportation Act (FAST Act). At the time, journalists and tax professionals alike wrote about and discussed FAST’s re-implementation of the IRS’ use of private debt collection agencies and the IRS and Department of State teaming up to revoke or suspend passports over unresolved tax debt. While private debt collection agencies dominated the narrative come the end of 2016, recent talk of how the new passport rules in FAST will play out have taken center stage.

The IRS issued guidance in early 2017 providing insight on how the program will be run. According to Section 32101 of the FAST Act, the Secretary of Treasury upon receipt of a certified list of seriously delinquent taxpayers will provide such list to the Secretary of State for action with denial, revocation or limitation of the passports for those on the list. The law describes “seriously delinquent taxpayers” as those having an assessed liability of more than $50,000 for which a Notice of Federal Tax Lien has been filed (and appeal rights exhausted or lapsed) or a levy has been issued.

There are, however, exceptions. The law reads that liabilities that have been resolved by an installment agreement or Offer in Compromise, have exercised Collection Due Process Rights (CDP) in response to a levy, or cases in which collection has been suspended due to an innocent spouse claim will not qualify for certification from IRS. The good news is that if you find yourself on the list, you can get off of it. The law provides for reversal of such certification, generally within 30 days, of the liability being satisfied or in the event that the taxpayer meets one of the aforementioned exceptions.

Despite the IRS’ guidance there undoubtedly remains a degree of uncertainty with the continued development of the program and its inner workings. For example, will the initial IRS certification include every taxpayer that could qualify or is the IRS going to exercise some internal judgment on a smaller class of more “serious” delinquencies? How often will the IRS be providing a list its seriously delinquent taxpayers to the State Department? Will the IRS include taxpayers that have been placed into Currently Not Collectible status? How will the State Department develop its protocols and how strict will those be? Can the IRS abide by its requirement to decertify a taxpayer within a certain timeline and how quickly will State subsequently respond to the decertification by releasing a taxpayer’s passport? All valid questions and concerns that will eventually need to be addressed.

And there remains yet another concern for a taxpayer making it on to the IRS’ certification, domestic travel. According to a 2005 law, REAL ID Act only certain types of state ID will be recognized by federal agencies in the future. Think TSA. For taxpayers that have identification issued by states whose driver’s license do not yet meet the federal requirements of the 2005 ID law travel from state to state could also be impacted. To see where your state stands with complying with REAL ID Act, click here.

With such uncertainties on the horizon, the best way to combat these potential scenarios and unanswered questions surrounding the new passport law is to enter into an agreement to resolve your unpaid taxes as soon as possible. If you find yourself in a situation where you don’t know where to turn or have specific questions regarding your unique circumstances, please contact us now.

Keep These Resolutions for a Happy New (Tax) Year

New Year’s resolutions focused on financial goals can be the most rewarding to achieve but are often the most difficult to maintain, according to tax resolution experts at 20/20 Tax Resolution.

“Making financial changes can feel daunting,” said Brian Biffle, president of 20/20 Tax Resolution. “However, they can be the most critical resolutions to establish and keep, particularly if you own your own business.”

A lack of financial planning (leading to challenges meeting tax obligations) is the overwhelming reason business owners seek tax resolution services, Biffle said. Therefore, developing goal-oriented financial practices is the most effective way to avoid facing action from taxing authorities.

Here are 20/20’s top 2017 New Year’s tax resolutions:

  • Make those changes you talked about in April: Remember when you noticed you weren’t maintaining business receipts properly? Review your 2015 tax return to recall what changes you wished you made last year.
  • Resolve to keep better records: It seems like a no-brainer, but maintaining organized, accurate records throughout the year is the quickest way to reduce future tax headaches.
  • Make projections: Many business owners fail to project taxes they’ll owe throughout the year, creating financial uncertainty around tax deadlines. Projecting for these costs helps eliminate surprises.
  • Start a tax-specific bank account: A specific tax-focused bank account to set aside for that expense and serve as a constant reminder to save for tax obligations.
  • Review business and personal expenses: It’s usually easier than one thinks to identify items that can be eliminated, saving hundreds of dollars.

“Most important, get on it,” Biffle said. “If you are currently experiencing a tax debt problem, be proactive and stop running from the issue. It’s really not as frightening as it seems and there are experienced professionals that can help.”