Category Archives: Tax Tips

[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!

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.

Summertime Tax Tip: Amending a 1040 Return

As the IRS states, the tax code is a complex set of laws affecting virtually every American individual and business. Last year the IRS processed over 244 million tax returns and other documents. The volume is a tribute to the voluntary tax system as well as the IRS workforce.

Undoubtedly, however, the complexity and volume of our tax system means that errors are almost unavoidable. As representation experts we do our best to find and correct those errors made by the IRS. But, that’s just one side of the equation. Every year countless taxpayers ask us what to do if they discover an error on a return that was already filed. The short answer is to not panic and correct the mistake.

2020 Summer Tax Tip_FINAL_PNG

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

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

 

[Infographic] 5 Common Business Owner Payroll Myths: Debunked

When it comes to running a business, ensuring that payroll obligations are met, both to employees and all applicable taxing authorities, doesn’t come without challenges. While there are a wide variety of resources available to help businesses of all sizes manage their payroll obligations, perhaps no other challenge can be as “taxing” (particularly for small- to medium-sized companies) as ensuring that these obligations are met.

If you own a company, take some time to familiarize yourself with some of the most common myths many business owners believe when addressing their payroll tax concerns.

 

Five Common Payroll Myths Debunked

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

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

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.

Holiday Hiring: Don’t Forget About Tax Regulations

Retailers and seasonal companies currently on a hurried hiring spree for the holiday season would be wise to slow down enough to ensure they are complying with all required tax regulations, according to experts in the tax resolution business.

“Because seasonal hiring often occurs in a hurry, it’s important that businesses adhere to their usual hiring policies and processes so they don’t overlook critical tax documentation and considerations,” said Brian Biffle, president of 20/20 Tax Resolution in Broomfield, Colo. “First and foremost, it’s important to remember that part-time and seasonal employees are subject to the same tax withholding rules that apply to any other employees.”  

To ensure against unexpected tax issues, it’s important that businesses have the resources and the record-keeping systems in place to manage an influx of temporary employees during the busy season, according to Biffle. Maintaining accurate records is not only critical with respect to payroll issues, but also down the road should problems arise. In addition, there are a number of other considerations that must be addressed, Biffle said. For example:

  • Correctly identifying employment status (1099 or W2)
  • Incorporating additional administrative costs (payroll management, for example) into hiring plans
  • Ensuring any potential health care coverage costs (if required for seasonal employees working 30 hours or more per week) are factored into hiring decisions – a rare requirement based on a variety of criteria but worth verifying when making hiring decisions
  • Anticipating the unexpected and planning accordingly

“The retail business especially can be unpredictable, particularly if a ‘hot’ item captures consumer attention creating additional hiring needs. So it’s smart for employers to examine all variables that may impact the bottom line – including hiring costs,” Biffle said. “It can be very easy to neglect costs like these during the rush of the season when business is plentiful, but doing so can put a business in a serious financial bind.”

Conversely, Biffle said that seasonal workers should pay attention to any tax implications created by accepting a holiday job. Workers should ensure they factor in tax withholding to cover any tax liability (whether done through the employer or as a self-employed individual), including federal income tax, state income taxes, Social Security and Medicare (FICA) taxes, as well as any local taxes that may be required.

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.”

Experts: Plan Now To Improve Tax Outcomes Next Year

According to Internal Revenue Service data, nearly one third of all Americans wait until the last minute to file their federal income taxes. And that delay can come at a hefty price, say tax consultants at 20/20 Tax Resolution. Therefore, taking the time right now to plan for next year’s tax deadline is the surest way to ensure you and your business feel less pain and don’t run into trouble down the road.

“Business filers can take an average of 24 hours to prepare their annual tax returns,” said Brian Biffle, president of 20/20 Tax Resolution in Broomfield, Colo. “But for complex returns, that figure is typically much higher and poor planning comes with huge opportunity costs, including the risk of missing deductions, making errors and increasing stress due to the hurried rush to finish by the deadline.”

Instead of incurring these costs and risking another stressful tax season, Biffle and his consultants advise clients to take action immediately.

“Our clients come to us when their situation seems so dire they have no option but to seek professional assistance,” said Biffle, whose agents provide tax resolution services to clients facing action by the IRS or state taxing authorities. “But with a little proactive planning throughout the year, businesses and individuals can vastly decrease the pain of tax preparation and even save themselves the possibility of needing 20/20’s services in the future.”

Here are 20/20’s top tax planning tips for 2016:

  • Start maintaining better records: It seems like a no brainer, but maintaining organized, accurate records throughout the year is the quickest way to reduce tax headaches come next April. Rather than throwing receipts in a box and waiting till next year to review them, start documenting them now. You’d be surprised at how many businesses fall short in this area.
  • Get organized: If your accounting system is a hodgepodge of spreadsheets and documents in a folder called “Taxes” on your hard drive, now is the time to research and identify a manageable system for 2016. There are a lot of products available for nearly every need (no matter the size of your business) and using one of these will save immeasurable time and money next spring.
  • Get educated: You probably asked your accountant about a half dozen questions in the last week about your taxes (and they were the same six questions you asked last year). Take the time now to educate yourself on all things tax related, and give yourself an occasional refresher throughout the year. This education will make you a much more savvy taxpayer.
  • Plan for estimated taxes: If you were unprepared for your tax bill this year – just as you were last year and the year before that – start planning now for your quarterly and annual estimated taxes. Accurate planning takes the bite out of tax season. In addition, it helps you make smarter business decisions throughout the year.

“Obviously, we specialize in helping people resolve their tax issues when problems arise,” said Biffle. “But following these tips can help businesses start off on the right foot, and keep them from running into the problems that bring so many distressed taxpayers to our door.”

[Infographic] 5 Tax Mistakes You Don’t Want to Make

Confronting an actual or potential tax liability with the IRS can be worrisome and overwhelming — it’s important to know what mistakes to avoid. There are may nuances to understanding how to work though a situation effectively. But, there are also some very simple rules that will be beneficial to both you and your business in the long run.

As a business owner, this infographic outlines five tax pitfalls that you DON’T want to make when dealing with a liability.

Five Tax Mistakes You Don't Want to Make

There are solutions available to taxpayers who owe taxes. The key to making the experience as manageable as possible is knowing a few easy tips about what to avoid.

You can always learn more about the ways in which we can help you and your situation, or feel free to contact us with any questions.

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

Payroll: What You Don’t Know Can Hurt You

I regularly speak to the collection system or process that underlies IRS and state collections. A common theme that is promoted in our collection representation education courses is to try and control as much of the collection process as possible. There is nothing more powerful to one’s role in the collection process than knowledge and communication.

These key components of dealing with the IRS are true for individuals and businesses alike. And yet, when we talk about knowledge and communication we are so often referencing areas of improvement for business owners. Small to medium-sized business (SMB) owners are typically inundated with responsibilities. Not only are the company’s employees looking to owners for their livelihood, but many are still directly involved in the company’s production, its product.

Take these burdens and couple them with an IRS system that sends an extraordinary volume of mail to report on even the slightest detail (a change in reconciling small dollars on a return) and certain problem patterns develop. There are two very common scenarios that lead to the owner getting behind and thus losing control of the collection process very early on:

  1. Not opening IRS mail
  2. Empowering someone other than themselves to control the payroll process

The IRS is infamous for its mountains of mail. Taxpayers know it, tax professionals know it and the IRS knows it.  For the IRS, it’s a crucial and relatively cost effective way to fulfill certain statutory obligations such as the need to keep taxpayers notified. And while it works there can also be a point of diminishing returns. It is not at all uncommon for the volume of mail to lead to the feeling that the letters never have any substantive material. This fosters an almost apathetic approach to the next letter that leads to missing key pieces of information such as notification of ability or an appeal.

That same feeling of apathy can develop in relationships within a business. Sometimes it’s not a lack of interest that creates the problem but rather putting too much unchecked trust in someone responsible for something as important for payroll. In any business, the owner carries the ultimate responsibility for ensuring that payroll tax obligations are met and met timely.  Although someone can be hired for a specific skill like accounting, a business owner cannot delegate responsibility for employment taxes. There is no way to move that burden. A business owner will always be in a position to know where their company stands with its payroll tax obligations if this is clearly understood. 

I recommend to my clients nothing short of weekly meetings, even if they are quick, to review the critical functions of their company. With many small businesses, there are going to be some issues. Knowing about the problems so they can be addressed is vital to getting back on top. Let us be of assistance when it comes to answering any of your questions by

Let us be of assistance when it comes to answering any of your questions by contacting us now, we are always here to help. You can also learn more about payroll tax issues, here.