Frequently Asked Questions
Before any levy can occur, a taxpayer must be given notice of the action taken against them. The IRS will attempt to contact the taxpayer through written notices. These notices can be contested or appealed to prevent the levy from occurring. And if the levy does occur and causes an economic hardship or you enter into an installment agreement (payment plan), you can have it released before the funds are removed from your account. If those notices are ignored, the case can escalate through “collections” where the taxpayer may receive phone calls or in-person visits from the agent or officer assigned.
Rather than ignore these communications, it’s always better to communicate with the taxing authorities and work together to resolve the issue.
When you engage the services of our tax resolution services, you are hiring us to assess the entirety of your tax problem and speak on behalf of you or your business before the IRS. A good tax resolution representative will know exactly what is allowable on a financial disclosure and be able to analyze your financial information to determine exactly what resolution you qualify for.
Many taxpayers may only qualify for an installment agreement. While it sounds awful to pay old taxes in addition to paying current taxes, the reality is that with our representative we will be able to negotiate the lowest possible installment payments by arguing on your behalf that you simply cannot afford to pay more. The installment agreement amount can be the difference between keeping the doors of your business open or closed.
When the IRS or state first make contact, they will often inform the taxpayer what is owed and ask them to repay the liability. Recognizing that most taxpayers with outstanding tax debt don’t have the ability to repay their debt all at once, the IRS and states typically offer taxpayers a few resolution options. But in order to qualify for anything other than full payment of the tax debt, a taxpayer must be current and compliant.
To be “current and compliant” means a taxpayer has filed all past tax returns. Moving forward, the taxpayer must remain compliant on all filings in order to maintain an installment agreement. Scheduled payroll deposits, self-employment estimated payments, or any tax due must be paid on time or the installment agreement is likely to be terminated. Filing all missing returns and not accruing additional taxes are the most important components to resolving back taxes and can also be the most difficult step for any business to accomplish.
In order to file years of missing business tax returns, your business needs to have well-documented financial records showing its income and expenses. Many business owners in this predicament don’t keep accurate monthly or annual financial records documenting their income and expenses. Without this data, businesses can often feel helpless as they have no idea where to start the daunting task of preparing years of financial records.
Without this basic financial information, a tax preparer will be unable to complete an accurate return. And if the return is prepared using guesswork, the risk of audit, fines, and penalties goes way up.
If you’re trying to resolve unfiled tax returns, you’ll need some historical bookkeeping done in order to file back taxes. If you’re not up for doing this work yourself, we can help you file your unfiled back taxes. Our bookkeeping team will get your business’s financial records in order, allowing your business to file missing tax returns that accurately account for all expenses incurred. By not missing any expenses, our tax professional will have no trouble accounting for every penny spent, which will reduce your business’s tax liability.
Once all returns have been filed and the scope of the liability is known, the elephant in the room is ready to be dealt with. The next step in reaching a resolution is determining whether your business, (or in some cases, you personally) can repay what is owed. In order to make this determination, the IRS or state will ask the taxpayer to complete a financial disclosure that accurately represents assets, liabilities, income, and expenses.
The financial disclosure is the ultimate weapon in tax resolution. Unfortunately for many taxpayers, this is where the process becomes so difficult to comply with, they simply cannot move forward without help. This is where our tax professionals get to work to help you and others struggling to resolve their tax liability.
If even the lowest installment agreement won’t be affordable due to extreme hardship, we may be able to qualify you or your business for an “Offer in Compromise.” An Offer in Compromise (‘OIC’) is an agreement between the IRS and taxpayer to settle unpaid taxes for less than the full amount owed.
An OIC is usually submitted on the grounds that the taxpayer cannot afford to pay the taxes owed and it is in the best interest of both the government and taxpayer to forgive the debt. The IRS forgives these debts, not out of their own goodness, but to promote future compliance.
When the IRS agrees to forgive taxes, they do so with the condition that the taxpayer must remain current and compliant for the next five years. Any failure to remain in good standing will result in the full liability being reinstated.
In addition to providing a resolution to your taxes, it is very common for our tax resolution services to be able to eliminate some or all of the penalties you’ve been assessed. The IRS and most states will agree to forgive penalties where the taxpayer has reasonable cause for failing to file or pay their taxes. We will listen to your story and home in on specific details that the IRS/state would consider reasonable cause.
In addition to the reasonable cause criteria, one penalty can be forgiven by law as a first-time penalty abatement. The first-time abatement is granted in every case where the taxpayer has had a prior history of good compliance and incurred a penalty for the first time in three years.
An EA, or Enrolled Agent, is a tax practitioner who is licensed at the federal level by the Internal Revenue Service. In fact, Enrolled Agent status is the highest credential awarded by the IRS.
A CPA, or Certified Public Accountant, are licensed by their applicable state boards of accountancy.
Both Enrolled Agents and Certified Public Accountants enjoy virtually unlimited practice rights before the IRS. That means there are no restrictions to the types of tax issues we can handle and the type of taxpayers we can serve.
Additionally, each may represent tax clients before any type of IRS office. Lastly, EA’s and CPA’s are both required to meet specific ethical and continuing education requirements and must both pass rigorous exams.
Enrolled Agent’s specialize in tax issues period — such as preparation of taxes for individuals and business entities, tax resolution, and/or advising clients on tax matters. While Enrolled Agents do perform accounting tasks, and may perform certain kinds of audits (such as Tax Audits), they our limited in that they cannot express an “unqualified” type of opinion, such as a public company would need when filing their financial statements with the Securities & Exchange Commission. Having SEC compliant audited statements is not a requirement for most small non-public businesses. As such, performing these kinds of audits can only be done by CPA’s.
So, please understand that we don’t provide any Auditing or Attestation services.
Rest assured, our team of Enrolled Agent’s and professional bookkeepers are well-trained in the accounting services we do offer.