All employers are required to withdraw certain taxes from their employees’ paychecks or wages. Employment taxes consist of two portion of taxes—trust and non-trust fund taxes.
The trust portion of the taxes consists of the money withheld from an employee’s wages, such as Social Security, Medicare and income taxes. The non-trust portion is the employer portion of the Social security and Medicare. When these funds are collected, they are expected to be sent to the IRS on a regular basis. To help ensure payroll taxes are sent to the government, the IRS can impose a penalty, known as Trust Fund Recovery Penalty, on any parties responsible for the payroll taxes. The rationale for the penalty is that if an individual at company level held taxes in trust for the government, they should be held accountable.
The responsible party of the company can get hit with 100% penalty for the withheld portion of the taxes, and that could multiply in a very short time. The future of the business can adversely be impacted as non-payment can lead to its closure and the seizure of business assets by the government until the outstanding tax debts are satisfied.
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In order to work out any kind of deal, the IRS requires that the taxpayer be in compliance; meaning that all tax returns have been filed and tax payments are current. Once a deal is accepted, tax compliance must be maintained, and any failure to do so can result in a default of any successful agreement or negotiations with the IRS. In essence, why should the government agree to any future negotiation when the taxpayer cannot even stay in compliance now? Prior to accepting a resolution case at ProTax Consulting Services, we review a compliance agreement with our new client to ensure there is mutual understanding of the expectations. If, after the scope of our review, it is determined that compliance is a concern, we will address it immediately. Compliance includes the following: tax returns are not filed, or estimated tax payments have not been made, or there isn’t enough withholding taken out for the current year. Compliance is something that’s usually addressed at the outset of our engagement because even after we solve a tax case, blowing the compliance will undo all the good we have done.
We provide you a customized tax solution plan at ProTax Consulting Services. Although there are many different approaches to handling a case since everyone’s financial layout is unique, the good news is our knowledge of the tax code has enabled us to argue with the IRS way beyond many IRS representatives. Once we take the time to evaluate your situation, we seek the best possible solution that works for your unique situation. Our firm has made hundreds of thousands of dollars of tax debt dwindle to less than a few hundred dollars. We do not guarantee that your debt will be completely eliminated, but when we represent you, the odds are definitely in your favor. Our firm has turned some of our client’s tax debts into a refund during audit resolution and.
If you have been audited, your wages have been garnished, or your passport has been revoked, we will make every effort to protect you, and No matter how bad your situation may seem, the odds are we’ve dealt with similar situation in our prior work. Our vast knowledge and experience in tax laws empower us to solve just about any tax resolution problem.
Millions of taxpayers have problems with their back taxes. Dealing with the IRS and/or state tax agencies can be a stressful experience and failure to resolve will no doubt exacerbate the issues. A trusted and reliable tax resolution firm like ProTax Consulting Services that understands how the tax system works can help you resolve your tax problems by finding a solution that works for you. Whether it’s a large tax bill for personal or business, or you are concerned about liens or tax levies, an IRS audit, or any other complex case that involves your business or corporations, Fear not! At ProTax Consulting Services, we can help you find Peace of Mind. The reality is taxpayer’s who owe back taxes do have options. They can take advantage of a number of tax relief programs, whether it’s several variations of Installment agreement, Offer in Compromise, etc.
Even though the IRS Policy states that “All taxpayers are entitled to courteous, responsive, and effective” service, many taxpayers perceived the IRS representatives as abusive and scary. Some of them feel financially threatened by the IRS representatives, and that they have no empathy and make no effort to understand what brings the taxpayer to this dilemma. As a result, many of you live in fear, or hide from those dreaded IRS notices, hoping that somehow the problems will just go away. Sadly, with all of its power and might, the IRS won’t go away. Like it or not, failure to pay or file your taxes can result in aggressive collection practices. Every IRS notice you receive brings you closer to the lion’s den of the IRS. The good news is, there are many options and ways to get your life back—and even better yet, there’s a way to protect your savings and your paycheck; a way for you to keep your car!
There’s a misconception that “If I don’t’ file, the IRS won’t know.” This misconception can lead to deeper problems with the IRS. What failing to file a return does is set off a host of terrible things, including penalties, notices and worse. What most people don’t know is that filing a return on time can help avoid a 25% penalty even if the money that is owed on the return is not sent at the same time. We see so many people who could have saved THOUSANDS OF DOLLARS on penalties if they just knew this one thing. So in the future, no matter what is going on in your life, file all tax returns on time, even if you don’t send in the money owed with the return.
Small business owners or self-employed individuals in particular, are a common threat to the IRS since there’s usually no automatic withholding system in place. Some business owners might not understand that they are expected to pay their taxes on a quarterly basis, or they simply they not be able to take care of payments. When money is short, many employers tend to pay the employees first, even if they have to skip paying themselves. If you were to call the IRS to explain the situation, the IRS wouldn’t care about your financial hardship. They wouldn’t care if employees are risking being out on the street. All they care about is your failure to send their share of payments.
At ProTax Consulting Services, an experienced Enrolled Agent will work with you to resolve your tax problems in a seamless way. As a Tax Resolutions Specialist Firm, we are able to provide our clients with knowledge and guidance while protecting them from audit red flags and other aggressive collection actions by the IRS. We work diligently with the IRS to ensure our clients are treated with fairness. As client advocates, we apply our vast knowledge and experience in tax laws to put the IRS on notice that our clients won’t be bullied.
As a Tax Resolution firm, we resolve tax controversies all year long, sharpening our tax skills every day. As members of some of the most renowned tax law organizations, we receive publication updates of the tax laws regularly. In every publication we read or seminar we attend, we make it our number one goal to gain more knowledge that will help maximize the most profits as legally for business owners while minimizing liabilities.
Some of you might wonder “why does the IRS audit?” The IRS code grants authority to the IRS to examine taxpayers’ returns, books, and records for the purpose of ensuring that the returns are correct.
There are several types of audit, and they can be done within an IRS office, in the field, or at a Compliance Center. The simplest audit is usually done at the Compliance Center. It starts with a letter or notice and often conducted by telephone or by letters. Field audits are more complicated types of audits, as they usually involve books and records examination. Revenue Agents usually perform field audits, and this type of audit involves a review of taxpayers’ tax returns for prior and subsequent years.
Good preparation is essential to a good examination result, as examining employees have discretion as to what kind of proof is required. The IRS examiners generally have limited time to complete an examination, and presenting information in an organized way helps establish credibility. The IRS letter will request information it wants to examine, such as bank deposits, proof of deductions etc. It is important to provide them only the documents requested and nothing more.
When a tax return is under examination, the taxpayer is presumed guilty until proven innocent. In other words, the taxpayer has the burden of proof. When a taxpayer fails to comply with a request made by an IRS agent, the taxpayer is subject to be penalized by additional taxes and penalties. Many taxpayers who receive IRS communications are often frightened and uncertain, and are therefore unable to effectively communicate the information on the notice. Understandably, the audit process can be a very stressful one, and with the IRS’s broad power, they certainly can take advantage if you have no legal muscle on your side. It’s never a good idea to fight an audit alone. As the proverb states, “He who is his own lawyer has a fool for a client.” Treat an IRS audit as seriously as you would a murder trial. If you wouldn’t go to court without a lawyer, then why would you go before the IRS without competent representation?
At ProTax Consulting Services, managing our client’s expectations is a critical part of our representation of someone who is under examination. By keeping the lines of communication open, it usually helps our client understand their risks and exposure in the audit. Parts of our internal audit assessment include: a review of the validity of the tax return in question, what expenses look out of line, and what types of document they request. By performing this internal audit for our client, our goal is to gain an insight of the client book, which would help us identify any areas of exposures. The internal findings usually help us better prepare to answer any questionable items that might be raised by the examiner.
The Appeals process of the IRS provides taxpayers with an independent, impartial review of their case after the IRS makes a determination on a collection or an audit. It is usually the taxpayer’s last opportunity to reach an agreement with the IRS before the case goes to court.
A taxpayer is protected by the Taxpayer’s Bill of Rights to challenge an IRS decision by pursuing an appeal. Simply because the IRS takes a position favorable to them does not make them right; hence, many tax disputes are resolved in favor of the taxpayer.
The Taxpayer Bills of Rights entitles taxpayers to a fair administration appeal of most IRS decisions. When the IRS is wrong in their conclusions, the Appeals process is usually the best course of action. At ProTax, it is our standard procedure to do a three-point case review, when an IRS determination is not in our client’s favor. Some of the questions we raise include:
In order to improve our chance of winning at Appeals, we will go the extra mile for our client. However, we have to make sure that at least one of the above questions is answered with a “yes”, and some of the ways to do so is by providing evidence to support our position.
However, since the Appeals is usually the last best option to raise objections to resolve a tax controversy, it is strongly recommended to hire a qualified tax resolution specialist.
An installment agreement is an agreement between the IRS and a taxpayer to allow the taxpayer to pay taxes owed in monthly payments. Usually the IRS will use its financial guidelines for determining how much a taxpayer can pay. Once an agreement is accepted, the taxpayer must comply to the terms. Otherwise, it will result in a default of the installment agreement. It is critical from the beginning to understand that an installment agreement is a major part of being compliant, and needs to be maintained.
There are various types of installment agreements, and they include: Automatic Installment Agreement, Streamlined Installment Agreement, Regular Installment Agreement, and Partial Pay Installment Agreements. Each has its own unique requirements.
When Can a Tax Debt Be Discharged?
There are various myths surrounding bankruptcy. One of the most common questions people often ask is, can my IRS debts be discharged if I file for bankruptcy? Sometimes, they may not ask and assume filing for bankruptcy will automatically wipe out their IRS debts. Unfortunately, the bankruptcy law has certain restrictions that allow only certain kinds of taxes to be discharged.
Although a tax debt is more likely to be discharged in Chapter 7 than Chapter 13 bankruptcy, sometimes taxpayers can find themselves in the worst situation after filing for bankruptcy if they did not obtain proper information. Some taxes are chargeable in bankruptcy if the following conditions are not met:
Debts that cannot be discharged in Chapter 7 bankruptcy:
Tax liens. When all of the above conditions are met, the IRS will discharge your personal income tax obligations. However, all assets that a lien is attached to are still subject to collection, since bankruptcy does not usually release IRS tax liens. This rule applies only to tax liens recorded against your property before you file for bankruptcy. The IRS may still be able to execute on its tax lien or any property acquitted at a later date. In effect, this means you’ll have to pay off the tax lien in order to sell the property. Every taxpayer’s situation is different, and before filing for bankruptcy, we strongly recommend a taxpayer schedules a FREE consultation to learn the pros and cons.