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".

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 !

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!

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".