Thursday, February 28, 2008

Audit Focus: Business's

The IRS concentrates on three areas of delinquent tax payers, those that have Schedule C (self-employed), Employer Business Expenses and erroneous dependents listed on returns. Business returns consist of 1120,1120-S and 1065 forms. The S -Corp audits are up .38%, and the partnership audits are up more .36%. Most audits are conducted on larger corporations, greater than $250 million in income (35.6%). Did you know that 8.7 million business returns were filed in 2006? and of this 0.6% were audited !

The numbers for the 2007 tax year will only increase. However the tax due on these audits are far less than individual audits. If I owned a business, I would be sure to pay my estimated tax payments or tax deposits ( when you have employees working for you) to prevent an audit of this nature. This in essence is stealing from the IRS and your employers.

Audit Facts: Individuals

We often forget about the vast number of delinquent taxpayers wh undergo an audit examination. In this weeks post, I would to focus on audit facts for individuals along with some statistics that support the need to have audits.
Did you know that on a form 1040 (personal federal income tax) you will find that the IRS has 132 million individual tax returns filed each year? Of this number, almost 1.3 million consist of audits ; this being about 1% of the 1.3. Though 1.67 % are for those making more than 100k a year, and .89% for those making less than $100 K a year. Out of this number 77% of these audit were correspondence audits, and of the 77% , 23% were face to face audits. I don't think that those owing back taxes realize that audits result in an average of 58% increase in tax due. Being under audit examination sends a reg flag to the IRS to monitor your every return to ensure that nothing was filed incorecctly or that you are hiding what the IRS liked to call "dissipated assets".

Tuesday, February 19, 2008

Refund...What will you do with yours?

As you may have already heard, President passed a bill that will grant all employed individuals (single and married) to recieve an additional amount from the government in 2008. Those that are married will receive a check for $1200; those single will receive a check for $600. The president passed this due the fact that the economy is going through such a recession. I personally feel that we have been in a recession for quite some time but the government will not admit to that. Eventhough the will not admit this, I can understand why they are taking this approach. If you were to publiclly say this, the nation would go into a panic, causing the people of our nation to conserve their resources even more.
I think the president is trying to stimulate the economy by issuing this suppliment to the working public. My question to you is what will you do with this money? Those that are in tax debt probably would'nt think about giving away "free money" back to the government. If you owe the government, they may apply this refund back to your tax liability.Henceforth, owing the government is not beneficial in away. There are licensed tax consultants that can help you get into a resoluotion or better yet file your returns wiht the hopes of lowering your liability. I encourage to contact a professional such as Effectur Inc to help resolve your tax delinquency today. And remember, that in order to receive your refund check (by spring/summer), you need to file your 2007 income tax return !

Sunday, February 17, 2008

Abatement Part 2; The Common Threads

The Internal Revenue Service takes in consideration several common threads (so to speak) before abating interest and penalties for taxpayers that are known for being procrastinators ! I want to go over a couple of those common threads that the IRS likes to examine:
As stated before, around 13% of the abated interest and penalties, most of this Percentage has to be paid first. Secondly, there needs to be a reasonable cause, a good faith estimate that is documented to prove the IRS made an error. Another commone thread thta the IRS looks at before abating interest, is whether or not the taxpayer is perpetually non-complaice or is this an isolated incident. A last common thread to examine is did the taxpayer self-comply or be forced to comply? Ultimately the IRS wants to make sure that the taxpayer makes a more valid attempt to be in compliance !

Penalty and Interest Abatement

It is very common that taxpayers assume that penalties can be abated at any given time. But in reality there is only a 5-10% chance of receiving penalty abatement. Of this percentage, a taxpayers needs to have their balances paid in full.Most taxpayers don't realize why the IRS enforces penalties.Penalties are imposed to foster complaince. Most of te penalties are civil penalties set in place to deter non-compliance clients.
Interest is another way to accrue a significant amount of money for delinquent taxpayers that owe back taxes.Unlike penalty abatement, penaltiy interest is more difficult to get abated. The only way the IRS will abate interest is by an erronious error made by only the IRS. If this were to happen, the taxpayer would need to have this error in writing for legality reasons. Statistics show that 41% of penalty abated monies;13 out of 100 are abated. This is not a large amount. Keep in mind that the IRS should not be considered as a financial institution that issues free loans. The amount you owe will be paid in full and then some !If you have questions about penalty abatement and a more in depth meaning, contact a professional tax consultant today!

Saturday, February 16, 2008

Penalties, Interest & Your Taxes

It one thing to not file and or pay your taxes, but its another to not think there will be ramification for doing so. Think of the IRS is being like a bank, where when you borrow money there will be penalties and interest you have to pay on top of that ! The IRS veiws it as you stealing money from the governement. Therefore you will need to pay those balances in addition to compounded interest to compensate for the "loan so to speak" that you were issued. The longer time goes by, the more these penalties and interest accrue! There are several types of penalties in conjunction with compounded interest; they are as followed:

*Penalties for not filing your tax return
*Penalties for not paying your taxes
*Penalties for filing your returns late

All in which impact the bottom line of what you as a delinquent tax payer will owe. It is imperative to become acutely aware of the serious implications this will have upon you as a taxpayer. There are present companies that can help you diminsh some of this tax debt;trained tax consultants at Effectur just waiting to help you today !

IRS Parody Of The Inches:Any Given Sunday !

Here at Effectur, we work hard everyday asa team to see that our clients are taken care of. We feel that it is a diservice not inform the clients the importance of being compliant with their taxes. Recently, some of our employees wrote a script (a parody from the movie Any Given Sunday) and submitted it on U-Tube. This parody talks about what its like for a Revenue Officer to work in conjunction with the collections department towards a common goal: Working towards levying accounts, seizing assests, for those delinquent taxes filers and payers !
Revenue Officers work together inch by inch to see that perpetual tax payers learn the importance of stealing from the government and in some case other employees.It is a crime to have dissipated assets hidden from the IRS.Revenue Officers and Revenue Agents work to seize every opportunity in attempting to collect all the taxes owed "one inch at a time".

Tuesday, February 12, 2008

Offer In Compromise and its Disadvantages

Where there are advantages, there are always disadvantages in this life. When it comes to Offer In Compromise's and you tax debt you will find the following:

Some of the disadvantages of an OIC are as followed:

*Your Offer In Compromise will be on public record for a year
*You will have to pay on all taxes for the next five years or your OIC will default !!!!!!
*OIC extends the Experation Date by the time of the IRS Review plus 30 days
*If you can negotiate an Offer In Compromise, the IRS can take up to 2 years to complete an OIC investigation.
*Also keep in mind, that if you have a refund, the IRS can take that refund upon the acceptance of an OIC.
*Another disadvantage of an OIC, is the reinstating of all penalties and interest of the OIC defaults.


Offer In Compromise

The truth about Offer In Compromise !

I have been working at Effectur Inc for a few months now.After taken a few instructional classes, I have learned that the Offer In Compromise (OIC) resolution (that so many deliquent tax payer's) is qiute diffucult to achieve ! Did you know that out of all accepted OIC's, 40 % will go into an Currently Not Collectible (CNC) status? Secondly, on accepsted OIC's, over 80% of these taxpayer's stay compliant and stay in the tax system. When filing an OIC, it is imperative that you stay complaint on all your returns or ES tax payments !

Below are some of the advantages of an OIC:
*Liability is gone forever, meaning you recieve a fresh new start as long as you comply
*Future levies are eliminated
*A tax lien is removed , and all of its effects are released. However if you file Bankruptcy, the IRS will leave a lien in place.

All this being said, you will be able to finally legitimize your financial aspects of your life.

Saturday, February 9, 2008

Liens, Levies and Tax Evasion

Did you knw that a lien is increased by 10%;if you owe back taxes, you have a lien. Even if the CSED (Expiration Date) balance expires, the IRS can reduce a lien to a judgement and reinstate the the CSED. Most people are terrified of getting caught for tax evasion. When a lien is placed upon your property, and you transfer that assett into someone else's name or trust;be prepared for to serve time for tax evasion. The IRS thinks unfavorably upon hiding debt and will have an IRS Revenue Agent to seize your asset. I have been in the tax consultant industry for a very short time. However, I am finding more and more examples where of the enormous amounts of taxpayer's with IRS tax problems. There is tax amnesty out there to help you feel confidennt of a your tax debt relief !

Collection Process; Part 2

Did you know that the last notice sent before a levy is placed upon your account an action is an L1058? The IRS is serious about an action of this severity. It is very difficult to get levies and liens lifted from a delinquent taxpayers account. Levies are never released until tax is paid in full. Taxpayer's are under the impression that it is easy to get this type of release, but it's not. This is not an expediant process once the IRS places this type of action. Henceforth, whatever the balance is at the time they implement the bank levy, this will be the amount deducted from your account. Fortunately, large banks don't allow a complete depletion of your account at the time of the levy. Say for instanc, a taxpayer owes $10000.00 and one day he deposits this same amount of money, large banks will not deduct this exact amount. They are aware of how bank levies work and know thatmore than likely, your account will be hit again in 22 days or so. However, small banks (mom and pop banks,if you will) are not as likely to be so keenly aware of this. They will just comoply with the IRS and their complete instruction.
In essence a taxpayer will wound up making "minimum wage" at the time of the wage garnishment targets your place of business.

Collection Process

Those who owe back taxes with the IRS are not considered compliant and can be considered as having a serious irs tax problem.If a payment plan such as an Installent Agreement (full or partial pay) is not met, then a levy or tax lien can be placed on the account.There are several notices sent, in the following order i.e. CP 501,503,504,L1058. In defense of the IRS, taxpayers have a considerable amount of time where they can attempt to find a resolution for their delinquent tax problems. Therefore taxpayer's should not be surprised when wage or bank levies are enforced ! The IRS has to take action at some point, or taxpayer's will abuse the governments genorosity. If a lien is placed upon your account and a Revenue Agent examin's your account, where he finds dissipatee assest; you have to report this to the IRS immediately. Hiding assessts is not favorable upon the IRS.
If you have experieced this enforced action, or you are just in question on how to get immediate action from a group of trained tax consultants...act now !

Wednesday, February 6, 2008

Being Compliant With The IRS

What is being compliant with the IRS mean?

The IRS requires you to have all of your returns filed (Buisness/Individual) as a prerequisite to a resolution. Secondly, paying your taxes is considered being compliant with the IRS. Tax Consultants at Effectur Inc. can help get you compliant on all of your income and payroll taxes as well as your returns that need filing. It is imperative as a business to stay current on all your tax payments i.e. estimated tax payments (sole-prop) and or Federal Tax Deposits.
The Internal Revenue Service have two departments that enforce collection on those who are perpetual late filers and owe back taxes. Those departments are Revenue Agents and Revenue Officers. Revenue Agants, handle/review filed and unfiled returns, file Substitute For Returns, make assessments and conduct Audits. Whereas the Revenue Officer and ACS (collection dept.) collect on assessed balances asn ensure past,present and future compliance on all you invidual income and payroll taxes and return filings.

If you owe taxes and need IRS tax relief, Effectur can help with the above concerns.

Sunday, February 3, 2008

Liens, The second part

A lien is not released until tax is paid in fill or an Offer In Compromise is accepted or tax abated. Furthermore a lien can expire 10 years from the date of the assessment (CSED-Expiration Dates). However it can be extended by many transactions such as Bankruptcy and Offer In Compromise. After the CSED expires, the IRS can't collect and the lien is self-released.
Any taxpayer owing more than $5 k dollars will have a lien placed upon their property. This will act as an encumbrance on all property rights, owned and acquired after the date of assessment.
If you have a lien placed on your property, or if you have IRS debt, Effectur has trained specialists (tax consultants) that can assists you on a variety of tax needs.


Have you ever been confused about a levy vs. a lien ? A lien is primarily when a taxpayer owes back taxes and they have secured property (house,car) that the government could seize the profits if one happens to sell that property to another individual. The government has to be paid after the financial lenders before the original owner can make a profit. A lien is a public notice where you can only get lifted at your area courthouse when all debts are paid in full to the IRS.
Most taxpayers don't realize that when a public lien is filed and you try to sell your property, the prospective buyer will need to have the lien subordinated or the lien will attach itself to the new homeowner. If the IRS has placed a public lien (which is what a lien consist of) upon your property, don't wait to talk to someone about working towards getting that lien removed.
However, the IRS will not file a lien under the following circumstances:

-If one becomes deceased
-Owes less than $5000
-Currently in a Streamline Installment Agreement; not if the total or accessed is over $25K
-If in anyway cause the Taxpayer not to be able to pay liability (i.e. lien effects his ability to earn or borrow).

Effectur is a company where there are well trained tax-consultants that can help with liens and tax deliquent issues.

Saturday, February 2, 2008

Second Part-Offer In Compromise

I wantd to continue my discussion about Offer In Compromise. When you owe taxes There are four factors that determine Reasonable Collection Potential.

-Future Income : Monthly Dispobably Income
-Asseets: Your Net Equity in assets
-Assests Collectible from 3rd parties : Transferee liability,assests held by others
-Income /Assests out of reach of the Government: i.e foreigh assests and income

Other factors include:
-Buisness owner, value of business
-Future earning ablity
-Asset appreciation
-Many other factors

When you have delinquent taxes, you must first be compliant on all of your returns. First you need to settle your filing requirements before you can receive IRS Help on the back taxes you owe.
-You cannot immediately full pay or full pay through an installment agreement
-You must be compliant on all filing requirements and certtain payment requirements,including estimated tax payments and federal tax deposit requirements.