A Tax Consultant for All Seasons

No, I don’t mean the Olympics. As I indicated in a blog a few days ago, the company I work for - Effectur was in the running for the Best Place to Work in the Triad.  There are 35,000 companies in the Triad area and they were divided into 3 groups, Small, Mid-Size, Large. Effectur was running in the Mid-Size Group. We came in second. While needless to say, I was disappointed in not winning First, I am still proud of what we accomplished.

It is still quite an accomplishment to even come in second place amoung so many businesses. It attests to the commitment of our management team to provide not only excellent customer service, but excellent employee service. To give you an idea, one the items that they brought up in the presentation, was that the President of our company sent an employee to a Ritz Carlton hotel so she could see how the Ritz treated people. He wanted her to experience their level of service so she could come back and provide that level of service to her fellow employees.How many companies are willing to do that!!

We may have taken second place, but we are tops on my list of the best places to work! I am proud to be an employee of a company that strives to treat both its customers and it’s employees with integrity, professionalism, and compassion.

If you or someone you know speaks Spanish and needs tax assistance, the IRS has a Spanish version of their website .IRS.gov/Espanol.  They also have several phone lines that offer assistance in Spanish.  Listed below are some of the items available on the Spanish version of the website and the different numbers where information in Spanish is available.

If they have a tax problem and need help, Effectur has someone who speaks Spanish and can help find a resolution that is right for them.

The IRS Spanish Web site offers tax forms, publications, and information. Interactive applications such as the following are available for individuals:

• The EITC Assistant (Asistente EITC) helps determine your eligibility for EITC.
• Where’s My Refund? (¿Dónde Está Mi Reembolso?) can help you determine the status of your federal tax refund.
• Where’s My Stimulus Payment? (¿Dónde está mi Pago del Estímulo Económico?) can let you know if your stimulus payment was sent or will be sent within the next week.

Toll-Free Telephone Assistance is available in Spanish on pre-recorded hotlines and from bilingual IRS representatives:

• The TeleTax line (800-829-4477) has recorded messages in Spanish that are available around the clock, covering more than 100 tax topics.
• The Refund Hotline (800-829-1954) provides information about a refund status in Spanish when caller provides the filing status and the exact refund amount expected.
• The IRS toll-free customer service line (800-829-1040) has Spanish-speaking representatives ready to help taxpayers.

For complete list of contact numbers check IRS.gov.

Many documents available in Spanish: Among the most frequently requested publications available in Spanish are Publication 1(SP),  Derechos del Contribuyente (Your Rights as a Taxpayer), and Publication 579(SP), Cómo Preparar su Declaración de Impuesto Federal (How to Prepare the Federal Tax Return,).  For a list of forms and publications in Spanish search the phrase “Formularios y Publicaciones” on IRS.gov.

Keeping Small Businesses in Mind: The Small Business link, Recursos Para Pequeñas Empresas, will lead business owners to information such as “SSA/IRS Reporter,” a newsletter that can be downloaded in English or Spanish. The summer 2008 edition has tips for new businesses, electronic filers, getting paperwork done right the first time, e-filing for small tax exempt organizations, extension filers, and much more.

Other important information for Spanish-speaking business owners can be found in Publication 966(SP), Opciones Electrónicas para pagar todos sus Impuestos Federales (Electronic Choices to Pay All Your Federal Taxes), and Publication 1518(SP) Calendario de Impuestos del IRS para la pequeña empresa y trabajadores por cueta propia (Tax Calendar for Small Businesses), a working tool filled with tax tips and deadline reminders.  Form 944(SP), which simplifies reporting requirements for business owners, is now available in Spanish, and when faced with challenges, it is good to know that information on disaster losses is also available in Spanish on IRS Publication 1600(SP).

If you or someone you know speaks Spanish, then think of the IRS when you need tax assistance.  We can help! ¡Podemos ayudar!

Remember that for the genuine IRS Web site be sure to use .gov.  Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• El IRS en Español
• Formularios y Publicaciones
• Recursos Para Pequeñas Empresas

Yes,  you certainly can, but you may not want to.  If you only owe the IRS a small amount, it would make sense to call the IRS yourself and set up a payment plan. However, if you owe the IRS a sizable amount, you may need representation. Does that mean you need to hirer a lawyer? No, but you may need an Enrolled Agent.  An enrolled agent can talk to the IRS on your behalf.  Why would you pay someone to help?

Did you know if you call the IRA yourself, they will ask you to commit to a larger amount that you might be comfortable with? They may ask for a lot of financial information, which depending on the amount you owe, you may not be required to give them.  Unless you are very sure you know all your rights and otpions, you may need an Enrolled Agent to represent you.  A CPA can also represent you before the IRS.

There are several option that you may qualify for, but the IRS representative you are speaking with, may not make you aware of these option. Their job is to have you repay what you owe as quickly as possible.  At Effectur, we  have many clients who were in a payment plan that they got themselves, but the amount is more than they can pay. We help negotiate a lower rate in many cases. What you have to pay depends on what you owe and what your net income is (income less expenses (the ones the IRS allows).

If you need peace of mind in dealing with the IRS, Effectur is here to help.

Today rather than talk about taxes, I want to talk about where I work. My employer (Effectur) is in the running for Best Place To Work in the Triad. (the Triad being our local tri-city area)  I share this information with pride.

If you have ever Googled any of the other tax resolution companies on the internet, you will see a lot of negative comments. You will quickly surmise that none of these are in the running as Best Place to Work.  Our management team has created an environment that is both employee and customer service oriented.

I am proud to work for a company that strives to stand out above the crowd.  A company that has as it’s mission statement “Providing Our Clients With Peace of Mind”.  I hope I will be able to blog next week to tell you we won first place. But even if we don’t, we were nominated and have been recognized for our company’s efforts to provide a fantastic place to work.  They are well aware that a great work environment inspires employees to do their best for their clients.

If you need assistance with a tax resolution problem, check out our web link above.  Google Effectur. Google other tax resolution companies too. Check with the BBB. Pick the one with the least complaints and the most satisfied clients. I know who that will be.

If you find yourself unable to pay your tax bill and you have received a notice that tells you to pay it all now, you do have options. Listed below is an excerpt  from an IRS Summertime tax tip that tells you what you need to know to settle your  tax debt.  If you find all this information daunting, your best option may be to contact a company that specializes in tax resolution.

There are many of them out there and some will promise you a specific resolution. If you are shopping tax resolutions firms you need to be aware that NO ONE can promise you a specific resolution. What type of resolution plan will work for you depends on many factors, but most importantly, what the IRS determines.

Do your homework before you make a decision. Google the firms name and look at the number of negative reviews versus the positive. Effectur is a firm that gives you straight answers and utilizes its team of tax professional to help you find the best resolution for your situation.

Here is the IRS info, should you decide to handle your tax situation yourself:

The IRS encourages you to pay the full amount of your tax liability on time. If you get a bill for late taxes you are expected to promptly pay the tax owed including any additional penalties and interest. It is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS. You can also pay the bill with your credit card. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.

You can pay the balance owed by credit card, electronic funds transfer, check, money order, cashier’s check, or cash. To pay by credit card contact either Official Payments Corporation at 800-2PAYTAX (also www.officialpayments.com) or Link2Gov at 888-PAY-1040 (also www.pay1040.com). To pay using electronic funds transfer you can take advantage of the Electronic Federal Tax Payment System (EFTPS) by calling 800-555-4477 or 800-945-8400 (also www.eftps.gov).

An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS for the collection of the amount due in monthly installment payments. To be eligible for an installment agreement you must first file all returns that are required and be current with estimated tax payments. If you are an employer you must be current with your federal tax deposits.

If you owe $25,000 or less in combined tax, penalties, and interest, you can request an installment agreement using the web-based application, Online Payment Agreement (OPA), found on the Internet at IRS.gov. Or, you can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 days whether your request is approved, denied, or if additional information is needed.

You may still qualify for an installment agreement if you owe more than $25,000, but a Form 433F, Collection Information Statement, may need to be completed.

If an agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levels, a reduced fee of $43 will be charged.

For more information about installment agreements and other payment options visit the IRS Web site at IRS.gov. IRS Publications 594, The IRS Collection Process and 966, Electronic Choices to Pay All Your Federal Taxes also provide additional information regarding your payment options. These publications and Form 9465 can be obtained on the IRS.gov Web site or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Form 433-F, Collection Information Statement
• IRS Publication 594, What You Should Know About The IRS Collection Process
• IRS Publication 966, Electronic Choices to Pay All Your Federal Taxes

If you received a notice from the IRS and it was labeled a CP2000, it means your tax return was missing income that was reported to the IRS. In this blog and other blogs this week, I will address the different forms that the IRS may have indicated you left off your return. The CP2000 shows you what forms were left off your tax return and what you need to do to correct it. It also tells you how long you have to respond. If you miss this deadline, they will assess the tax and it will be a long involved process to prove you do not owe that tax.

Your best course of action is to follow the directions on the form or consult an Enrolled Agent to help you understand your options. If you chose to respond yourself and the form that you did not report is a 1099-B you will need to provide the IRS with the following:

• The date you purchased the stock(this determines whether you gain or loss is long-term or short-term) long term gains have a lower tax rate than short-term gains. Stocks held over a year qualify for the long term gain rate.

• Your stock basis–this is what you paid for the stock plus the commission you paid to purchase and sell the stock–in other words, what it actually cost you .

The difference in your cost basis and what you sold the stock for is your capital gain or loss. This should be reported on a Schedule D on your tax return. Do not file and amended return to correct this error unless specifically instructed to by the IRS. Usually, you can just provide them with the additional information.

You may however, be charged a penalty for the error on your return. You will be charged penalties and interest as well, if you owe additional tax. You can visit the IRS website for more information.

Most taxpayers who end up in trouble with the IRS do not realize they do have certain rights as prescribed  by law. Included below is information published by the  IRS that explains what those rights are and has links to several resources concerning those rights.

Whether you file a Form 1040EZ or a complicated corporate return, you will benefit from knowing your rights as a taxpayer and being familiar with the IRS’ obligations to protect them. The goal of the Taxpayer Rights Corner is to be your one-stop shop for taxpayer rights information during every step of your interaction with the IRS.

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Know Your RightsYou have rights as a taxpayer when dealing with the IRS.

• Publication 1, Your Rights as a Taxpayer
• Protecting Taxpayer Rights, Fact Sheet
• The Taxpayer Bill of Rights 2, as passed by Congress
• Taxpayer Bill of Rights II, IRS Training Publication
• Low Income Taxpayer Clinics , Access to Representation

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Your Civil Rights Are ProtectedUnder no circumstances will the Internal Revenue Service tolerate discrimination by its employees, grantees, contractors, and/or subcontractors. NO ONE shall be excluded from participating in, be denied the benefits of, or be subject to discrimination because of: race, color, sex, national origin, disability, reprisal, or age in programs or activities funded by the Department of Treasury - Internal Revenue Service.

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Taxpayer Advocate ServiceThe Taxpayer Advocate Service (TAS) is an IRS program that provides an independent system to assure that tax problems, which have not been resolved through normal channels, are promptly and fairly handled.

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NoticesWhat should you do if you receive a notice from the IRS?

• Understanding your notice
• Topic - IRS notices

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Your Rights to RepresentationLearn more about granting power of attorney.

You are entitled to similar protection of confidentiality with respect to tax advice given by a federally authorized tax practitioner as with an attorney.

Every taxpayer is entitled to have access to representation. The Low Income Tax Clinic grant program is designed to help accredited academic institutions and non-profit organizations provide low to no-cost tax assistance (such as representing the taxpayer during an audit or tax collection effort) and/or tax outreach to taxpayers for whom English is a second language. Click here for IRS Grant Program Information.

• Frequently Asked Questions

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ExaminationWe accept most taxpayer’s returns as filed. If we inquire about your return or select it for examination, it does not suggest that you are dishonest. The inquiry or examination may or may not result in more tax. To learn about your rights during the examination process, and for information about how audits are conducted;

• Examination of Returns, Appeal Rights, and Claims for Refunds - Publication 556
• Market Segment and Specialization Program (MSSP)

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Appeal RightsIt is your right to appeal any action taken by the IRS to change your account.

• Topic - Your Appeal Rights
• Appeals Division

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Collection ProcessLearn about the process IRS may follow to collect overdue taxes, including a summary of your rights and other important information about the collection process.

• Pub 594, The IRS Collection Process
• Topic: Tax Collection
• Frequently Asked Questions
• Collection Financial Standards
• Form 9465 - Installment Agreement Request

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Innocent SpouseThe Reform Act of 1998, broadened the relief from joint liability available to spouses who file joint returns.

• Innocent spouse relief

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Refund OffsetIf you are due a refund but have not paid certain amounts you owe, all or part of your refund may be used to pay all or part of the past-due amount. This includes past-due federal income tax, other federal debts (such as student loans), state income tax, and child and spousal support payments.

• Treasury Offset Program
• Frequently Asked Questions

I worked as a bookkeeper for many years myself and never knew that I was placing myself in a situation where  I  could be liable for unpaid  payroll taxes. If you are a bookkeeper  and you  have signature privileges on the checking account or you are authorized to make decisions as to what bills should be paid or not paid, you can be held liable. The IRS holds anyone either owner or employee who has it within their power to determine whether or not payroll taxes are paid liable.   Even corporation status does not protect you from liability.

What I am referring to is what is termed the Trust Fund Recovery Penalty. This is the penalty the IRS imposes on individuals who should have paid these payroll taxes. The payroll taxes at issue here are those held in trust by the employer.  These taxes are the Federal Withholding and Social Security/Medicare taxes-employee portion that are withheld from an employee;s pay check. These are held in trust and are required to be paid to the US Treasury in timely Federal Tax Deposits.

When a business pays other bills instead of paying their required payroll taxes, you are basically stealing from the US Treasury. Needless to say this is not tolerated and the IRS will pursue any and everyone who could be responsible for the lack of payment.

So, word to the wise, if you are a bookkeeper in this position, be sure your employer is paying these taxes.  If you have doubts that they are being paid, or do not want to be held liable, be sure your name is not on the signature card at the bank and you can prove that you are not the final decision as to what bills are paid.

If you find yourself in this situation and need representation before the IRS, contact an Enrolled Agent.  An Enrolled Agent can contact the IRS on your behalf and advise you on your options. Effectur is a company that employs Enrolled Agents and former IRS employees to help those who find themselves in trouble with the IRS.

The Online Payment Agreement or OPA is an online function of the IRS where you can set up an Installment Agreement. If you have filed all your tax returns and owe under 25,000, you can use this system to set up an Installment Agreement. If you have received a notice of taxes due, your notice will have the information you need to complete the application.  If you do not have a notice, the IRS website will explain what information you need to set it up.  Here are your 3 payment options listed on IRS website:

1. Pay in Full
   You may agree to pay in full – you will save penalties and interest.
2. Short Term Extension
   If you cannot pay in full at this time, you may be eligible for a short term extension of time to pay of up to 120 days.
   • There is no fee for an extension to pay.
   • If we grant online approval of your request for a short term extension, you will receive written confirmation within 10 days,
3. Monthly Payment Plan
   If you cannot pay in full within 120 days, you may be eligible to make monthly
   installment payments.
   • You must have filed all of your tax returns that are due.
   • Effective January 1, 2007 a $105 user fee will be added to the amount you owe and $52 for plans where the payments are deducted directly from your bank account. Or for eligible individuals with income at or below certain levels who apply and qualify, the reduced user fee of $43 will generally be added to the amount you owe including agreements where payments are deducted directly from your bank account.
   • If we grant online approval of your request for monthly installments, you will receive written confirmation within 10 days.

If you are unable to set up your Installment Agreement through the OPA, you can either contact the IRS or an Enrolled Agent who can represent you before the IRS.

Every day I see clients who have been audited due to an error on their return or because something in the return raised a red flag. The biggest mistake  many of them make is to ignore the audit report and allow the IRS to finalize the audit without responding. Your best course of action is to get help from an Enrolled Agent or  other tax professional, unless the issue is a simple one you can handle yourself.

Many audits I see are done on the Schedule C. Self employed individuals often do not know what items are deductible and when to deduct them on the return. Items like mortgage interest are listed on the Schedule A, C and form 8829-Business Use of Home Deduction. Obviously, you cannot take the  same deduction in all three places. Mortgage interest for a primary residence normally goes on a Schedule A. If you are using a portion of your home for your business, you can report that portion on the Form 8829 and the remainder goes on the Schedule A. The only mortgage interest that would go on the Schedule C itself is if you own a building for your business. The mortgage interest for that building does go on your Schedule C.

Other common problems include

• Listing contract labor when you did not issue 1099s for those whose pay was over $600.
• Listing expenses for clothing for your job–not allowed unless it is a uniform you would not wear outside the office(like for a fast food chain, mechanic or delivery uniform)
• Listing health insurance–this goes on page 1 of you 1040 if you are self employed–not on the Schedule C.
• Listing both the mileage allowance and gas and maintenance expenses. You can only take either the mileage allowance or the gas/maintenance/insurance actual costs. The mileage is usually the easiest and only require mileage records for miles used for business purposes. The actual expenses deduction requires you keep all receipts for auto expenses and pro-rate them based on the number of business miles. If you have a separate vehicle for business you will not need to pro-rate.

As you can see, knowing what to put and not to put on your Schedule C will help decrease the likelihood that your Schedule C will be audited. Contact a tax professional or visit the IRS website for help.