Bringing in the Pros
Problems with the IRS can be difficult or draining, and sometimes devastating. If you have common tax problems, you may be able to handle them on your own. However, more complex scenarios may require the services of a tax resolution firm.
How do you know when it's time to call in the pros? Here are some sticky situations that you shouldn't try to get out of alone.
If you haven't filed your taxes on time, the steps you should take will depend on your personal situation. Late filers who don't owe money or are eligible for refunds can simply file at any time. If you've missed a year or you know you're going to be late, and you owe money, you can file for a six-month extension.
However, if you have multiple years of unfiled and unpaid taxes, your best bet is to hire a tax resolution firm. The later your taxes are, the more you'll owe the IRS in late penalties and interest, on top of the unpaid taxes. A tax resolution firm can help you set up an installment agreement, and may even be able to arrange an Offer in Compromise, which lets you pay a fraction of what you owe to clear your tax debt.
Steep installment agreements
You can arrange for an installment agreement with the IRS on your own. But if you find that you're unable to afford the payments, you should enlist the help of a tax resolution firm. You may be eligible for an Offer in Compromise, financial hardship, or partial payment agreement that will allow you to meet your tax obligations.
Being audited by the IRS is a stressful and often frightening procedure. Going it alone can be a risky proposition, especially if you don't fully understand tax laws and how they apply to you. A tax resolution firm can help you get through an audit and minimize potential damages to your finances—and your life.
If your assets have been seized through a tax levy, or you've received a notice from the IRS announcing the intention to seize assets, it's time to work with a tax resolution firm before the levy affects your bank or retirement accounts, cars, real estate, and other property. Tax professionals are experienced with stopping levies by working out payment arrangements or an Offer in Compromise with the IRS.
If you are in need of Assistance and would like to talk to someone from an A+ BBB Rated Tax Resolution firm, call Levy and Associates, Inc. at 888-411-5389 (LEVY) or fill out the form to the fight and someone from our staff will get back with you shortly.
Remember, "You want a LEVY on your side, not one against you!"
What to look for in a Tax Resolution Firm
If you're having serious tax problems, chances are you'll do anything to get them fixed. This often means turning to a professional tax resolution firm. Unfortunately, there are many companies that prey on the desperation of those who are struggling with big tax issues—places that are all too eager to take your money, but not quite so willing, and sometimes even unable, to help you.
How can you tell if a tax resolution firm is on the level? Read on for some warning signs to look for, and steps you can take to make sure you select a specialist who meets your needs.
- Be wary of eagerness to collect payment from you. If a firm demands payment up-front in full, or asks for your credit or debit card information on first contact, you should probably steer clear. Most reputable tax resolution firms will work on a good-faith retainer.
- Verify the firm's track record and credentials. Find out what their tax relief success rate is, and how many Offers in Compromise they've successfully settled. Check with the Better Business Bureau and make sure the firm has a good rating.
- Ask for names. If a representative of the firm is reluctant to give you the name of the owner, chances are they don't want you to know who's behind the company. This is a big red flag.
- Walk away from “guaranteed” results. No tax problem case is the same, and there are no surefire ways to reduce liability or qualify for an Offer in Compromise. An honest tax resolution firm will ask plenty of up-front questions, and will obtain documentation and background information before discussing possible solutions.
- Don't let anxiety dictate your decisions. Facing serious tax problems can be an unsettling—or even downright frightening—experience. However, it's important to remain as level and objective as possible when choosing a tax resolution firm. Dishonest companies rely on outlandish promises and high-pressure sales tactics to push you into making on-the-spot decisions, driven by fear.
When you know what to expect from a reputable tax resolution firm, you won't have to rely on your emotions to dictate your decisions. Ask the right questions, do a little research, and you'll be equipped to find a tax resolution specialist who will work diligently to ease your tax woes.
If you are in need of Tax Help, Levy and Associates has an A+ Rating with the BBB and has been around for years. Our experience is second to none. For a free consultation, please call us at 888-411-5389 (LEVY) or fill out the form to the right and someone from our staff will contact you shortly.
10 tips for getting through a Tax Audit
When it comes to taxes, there's nothing worse than the idea of being audited. While some are at higher risk than others, anyone can be targeted for a review by the IRS. The average taxpayer has a 1 in 200 chance of being singled out for an audit.
So what can you do if you receive that dreaded notice? In nearly every case, it's best to consult with a tax professional. Here are some more tips to help you prepare:
- Don't ignore an audit notice. If you receive one, you're usually given 30 days to respond—and if the IRS doesn't receive a response, they can simply adjust your tax liability and send you a bill.
- Read the notice carefully. An audit notice details the items that the IRS intends to examine. This is information you'll need when you report to the audit.
- Get organized. It's generally in your best interests to make the auditor's job easier by having your records in order. Group the items listed on the audit notice for fast access, and arrange things logically by date.
- Obtain copies of any missing records. Keep in mind that it's your responsibility to prove your deductions, not the auditor's. If you have taken deductions that you can't prove, your returns will be adjusted accordingly.
- Bring only the records that are being examined. An auditor may decide to ask about items that weren't originally covered in the audit notice. If you don't have that material with you, in most cases the auditor won't press the issue further.
- Don't be difficult. Contrary to popular belief, IRS auditors are actually people. If you treat the auditor politely and resist the urge to unload your frustrations, the audit process will be far smoother. Auditors are generally willing to cooperate and provide guidance—if they’re treated courteously during the process.
- Provide copies, not originals. The IRS is not responsible for lost or misplaced documents, and if you give your original documents to the auditor, you'll no longer have records of your deductions.
- Stay focused on the audit. IRS agents are professionals, and may draw out questionable statements in what seems like friendly conversation—especially regarding your assets or recent financial activities. It's best to answer all questions in a straightforward manner, if possible with a simple “yes” or “no.”
- Don't be afraid to say no (politely). If an auditor asks about items or records that you firmly believe have no foundation for examination, feel free to turn down the request, especially if the item wasn't covered on the original audit notice.
- Know your rights. Familiarize yourself with the tax laws that apply to you, as well as the actual audit process. This also helps you to appear knowledgeable, earning you respect from the auditor.
Again, it's best to enlist the services of a tax professional if you're being audited—but you should still be prepared ahead of time. Knowing what to expect from a tax audit increases the chances that you'll emerge from the process relatively unscathed.
If you are being audited or have questions regarding an audit, call 888-411-5389 (LEVY) or fill out the form to the right an someone from our A+ BBB Rated staff will contact you shortly.
If your IRS case has been assigned to a local revenue officer, responding timely to requests is critical. The revenue officer will require certain documents by specific dates. Should you fail to respond, the IRS will eventually issue a "Summons." In the event that you still don't comply, you will receive what's commonly referred to as a "second chance letter" issued by the IRS attorneys.
Yesterday, a taxpayer that had a business in Royal Oak, Michigan -which is now closed, retained Levy & Associates to resolve the pending payroll tax matters. The revenue officer had issued a Summons for the form 433 B last November. The taxpayer failed to respond.
The Levy team immediately contacted -today, the revenue officer and left a detailed voice mail that the Levy team is now representing this taxpayer.
IRS matters will not disappear. They must be addressed timely and thoroughly.
Call the Levy office today for a free telephone consultation: 888 411 LEVY.
Remember: Don't fear a LEVY, Hire a LEVY.
What to do when the IRS invades your paychecks
If you owe money on your income taxes and fail to pay, the IRS may garnish your wages. A garnishment is an arrangement with your employer where a certain percentage, up to 25% of your income, is deducted from your paycheck before you receive it and sent directly to the IRS. In addition to your salary, the garnishment may also be applied to any bonuses, commissions, retirement, or pension earnings you receive.
When does the IRS apply a wage garnish?
Typically, a wage garnishment is the step following a tax lien. Once it's been determined that money is owed, the IRS sends a notice demanding payment. If the notice is ignored or payment is refused, the debtor is sent a 30-day notice that a garnishment, also called a tax levy will be instituted.
The majority of employers cooperate with applying a wage garnishment, since employers are held responsible for unpaid garnishes, rather than the wage earner.
What can I do if my wages are garnished?
The good news is that the IRS doesn't like to use garnishment as a method of collecting back taxes. It's an expensive process for them—but it's also the most effective way to draw attention to the money that's owed. After all, most people won't overlook missing a quarter of their paychecks.
There are several ways you can avoid or end a wage garnishment from the IRS:
- Pay the amount owed. While this is the most obvious method, most people who have their wages garnished can't afford to do this (which is often the reason the garnishment came about in the first place).
- File for an offer in compromise, which is an agreement with the IRS to pay a fraction of the amount owed, similar to the arrangements some collection companies will offer to credit card debt holders. This can be done when you receive a 30-day notice of an impending wage garnishment. However, the IRS is typically reluctant to grant an offer in compromise, and it's best to work with a tax professional on this.
- Arrange a payment plan. This is the method the IRS prefers, and if you don't have a history of defaulting on payment plan agreements, it's relatively simple to set up. Once you've entered a payment agreement, the IRS will release the wage garnishment.
- Prove financial hardship. If a wage garnishment severely impacts your ability to pay necessary bills, you may be able to get a temporary halt on collection through garnishment until your income level rises.
If your wages are being garnished, or you've received notice of garnishment, the best move is contact a tax professional to discuss your options and help you make arrangements with the IRS. Though wage garnishment is a difficult situation, it's also a temporary one that can be navigated—and corrected—with the right guidance.
For assistance with any tax problems, including a wage garnishment, call 888-411-LEVY (5389) and speak to someone from our A+ BBB Rated Staff. You can also fill out the form to the right and someone from our staff will contact you shortly.
Remember, "You want a LEVY on your side, not one against you."
How Penalties are Calculated for Late Income Tax Payments.
What Happens After April 15?
If you have to pay income tax, it's important to file and make your payments on time. The IRS assesses penalties against late tax payments, and the cost gets steeper the longer you wait. Even filing for an extension doesn't prevent late penalties, though it can reduce the amount you'll have to pay.
Filing for an extension
When you file Form 4868, you receive a six-month extension that slides your tax filing deadline from April 15 to October 15. However, the extension is not for making payments—only for filing your tax forms. In order to avoid late penalties on taxes you owe, you must pay at least 90% of the amount due on or before April 15.
Also, if you pay 90% by April 15 and file Form 4868, interest will still be accrued on the remaining amount owed, at “the federal short-term rate plus 3 percent.”
Regular penalties for unpaid income tax
If you don't pay your income taxes on time, in addition to the accruing interest rate, the IRS assesses a penalty of 0.5% of the total amount you owe, each month, which continues until you reach the maximum 25% penalty—or until you've paid the entire amount owed.
These penalties are in addition to the aforementioned interest, which accrues daily.
If you can't afford to pay the entire amount of income tax you owe, the IRS will allow you to apply for an installment agreement, which allows you to make monthly payments on your taxes. There is a variable fee for setting up an installment agreement, depending on factors like income level and payment method.
The penalty assessed on installment agreement payments is lower: 0.25% of the amount owed. Again, interest charges of 3% over the federal short-term rate accrue daily.
File early, pay promptly
The sooner you file and pay your income tax, the less it will cost you. It's best to pay the amount you owe right away, but if that’s not possible, you can file for an extension or an installment agreement and end up paying less than you would if you simply sent the payment in late.
How to keep the IRS from challenging your tax returns
Just the idea of an income tax audit is enough to send most people into a panic. Fortunately, there are a number of things you can do to lessen your chances of being audited and breathe easier during tax season.
- Stay honest. This is obvious, but important, advice—not cheating on your taxes is the best way to keep from being audited, and also the best way to make it through an audit if you get targeted anyway.
- Keep a paper trail. Retain documentation for everything you deduct, including travel logs, meal receipts, and other business-related expenses. Ensure that you have accessible copies of your tax returns going back at least seven years.
- Don't claim excessive charitable contributions without supporting documentation (this is one of the “triggers” for the IRS to initiate an audit).
- Follow the directions carefully on all tax forms. Check and double-check your tax returns. Factual or mathematical mistakes can serve as red flags for the IRS.
- Don't skip any declarations, including 1099s for self-employment income. Today's computerized IRS cross-checks tax return items with employers and other sources, and can easily detect things that have been left out.
- If possible, avoid claiming your home as a business expense. This can also serve as an audit trigger.
- Resist the temptation to pass off a hobby as a losing business. The IRS provides clear guidelines for distinguishing between hobbies and businesses—make sure you're following them.
- Don't panic. If you receive a letter from the IRS after filing your taxes, it's probably because you forgot to sign something or neglected to include a necessary form. If it is an audit, and you've filed honestly, you'll have less to worry about.
The good news is that the IRS is performing fewer audits than before. You have approximately a one in 200 chance of being audited, as compared to one in 60 in 1996, and one in 112 in 1999. Take the time to file your taxes as completely and accurately as possible, keep copies of your records, and your odds will improve even more.
For Assistance with an Audit, please call us at 888-411-LEVY (5389) or fill out the form to the right and someone from our A+ BBB Rated Staff will contact you shortly.
Today we received a testimonial from one of our Tax Clients and we were so happy we wanted to show it off as soon as we could. Thanks Tony for the kind words:
"Choosing the right support in the financial area of my business is critical. When I sought out accounting and tax services, I looked for a company that had vast experience in a broad array of accounting and tax issues, including dealing with the IRS. I wanted a company that would be responsive and accessible since, as a businessman, sometimes I need an answer “at that moment”. Levy Tax Professionals has been nothing short of amazing. They certainly have been an integral part of my company’s success. By providing timely and useful information, they have allowed me to make better business decisions and increase my profitability. The responsiveness and experience of Marc Schiller has allowed me to focus on running my business without having to deal with outside distractions. I consider Levy Tax Professional to be an integral business partner for my company."
To receive the type of customer service that Tony has written about, please call us at 888-411-LEVY (5389) or fill out the form to the right and someone from our A+ BBB Rated staff will contact you shortly.