Why don't people act on their tax problem?

Taxpayers often wait until their bank account or wages are levied before they seek help with tax issues. None of these are pleasant. If you have read any of my posts a common theme has been that waiting reduces your options and makes it harder to resolve. I know many people are just plain scared to find out what is going to happen. They are afraid of the IRS and if they haven't heard anything in a while no news is good news. There are a few instances where the statue can expire and it can go away but waiting is likely to worsen the problem.. When you come to my office and meet with me I will listen to your story, contact the IRS on your behalf, gather the necessary documents, and tell you the likely path we are going to take to get something done about this. Many people tell me I feel better knowing what the issues are and what we need to do to get them fixed. The IRS sends plenty of notices before they take action don't ignore them!

Robby

Why do I owe Arkansas income tax when I didn't file?

The IRS and State of Arkansas share information. If you file a federal tax return with an Arkansas address then the State of Arkansas will look for an Arkansas tax return. If you haven't filed then they take the federal income information and prepare you an Arkansas income tax return. You won't be given credit for Arkansas taxes paid since the federal income information doesn't include this. Pretty harsh result especially if you have some Arkansas income tax paid in. I represent residents of Texarkana Arkansas who think since they are border city exempt they don't have to file an Arkansas Income Tax return. You must file an Arkansas Income Tax return to claim the border city exemption if not you will be getting a bill from the Arkansas Department of Finance and Administration. If you are a resident of Arkansas and find yourself in this situation you need to file an original return. Prompt action to correct this is a good idea because the State of Arkansas will file tax liens for small amounts at the county courthouse. This impacts your credit rating. They will proceed with collection efforts which in Arkansas can include being served by a member of the County Sheriff's department in an effort to collect the tax.


Robby

I haven't filed in years Why do I owe the IRS?

The IRS has taken the income information they received and filed a tax return for you. The filing status is likely married filing separate (highest tax rates available) or single. No dependents and no deductions will be on this tax filing. It is called an SFR. Substitute for Return. You will have a balance due. They don't file for you if you have a refund coming. If you ignore the balance due notice the IRS will begin to collect the tax and you will be subject to their collection actions. This can be solved by filing an original return for the year in question. If you don't have any records we can retrieve them from IRS with a valid power of attorney and get an original return filed. Getting the return processed by IRS can create some challenges so we monitor the status of the IRS collection efforts so we can file any collection appeals if needed or contact the IRS directly to intervene before collection actions are taken.

Can a wage levy be released?

Certainly it's not easy. First thing that really helps is if you have filed all your tax returns. If you aren't compliant your options diminish. If are current on your filings then time is of the essence. Depending on when the next payday is you may have time to take action before the levy is enforced. If not you can still take action after a levy has been enforced. You can enter into an installment agreement based upon your ability to pay or if you have no ability to pay then your account is placed in currently not collectible. You will have to provide the IRS with the necessary financial information on their forms for them to make this determination. Either of these cases IRS will release the levy. If you aren't current on your filings and enforcement of the levy is creating a hardship you can ask for a taxpayer assistance order to stop enforcement of the levy from the Taxpayer Advocate Service by filing form 911. The Advocate Service has lots of cases so you need excellent documentation to get them to take your case. There are some collection appeals that you can use to at least get a hearing but this may take some time and a consulation with a bankruptcy attorney may be needed as well. The best advice I can provide is don't ignore the IRS notices. The sooner we can intervene in a potential levy situation the better the chances of resolving it favorably.

Robby

IRS levied my paycheck

A wage levy is one of the strongest enforcement actions the Internal Revenue Service will take. They take money out of your paycheck to pay a tax debt. Well how much?  Wage levies are sent to levy sources typically your employer on form 668-W. When your employer furnishs you a copy of this wage levy complete the part listing your filing status and your exemptions and sign it. The IRS uses a table to determine how much of your take home pay is exempt from levy. In other words how much you get to keep. On a bi-weekly payroll (every two weeks 26 pay periods) single one dependent $384.62 is exempt from IRS levy and is your take home pay. On the other hand if you are married filing joint with a total of four dependents $1069.23 is exempt from IRS levy. A substantial difference so get the paperwork and fill it out if you have dependents. If $1,069.23 is exempt from levy and you make less than that every two weeks no money would be taken from your paycheck. Wage levies continue every pay period and if your wages aren't exempt from levy the IRS will hold money from your paycheck as long as you owe them
money for the tax period levied. Next post I will discuss some strategies on how to get your wage levy removed from your paycheck.  

I haven't filed my income taxes in years and have no records

This could be a little tricky. However, with your written authorization we can get the wage and income documents from IRS that detail your income earned. Some expenses may be on the IRS transcripts. Mortgage interest would be an example of this. If you have business expenses and no records these can be reasonably estimated and if the method of determining them is properly disclosed to the IRS you can get these returns processed. It may require us to appeal your case or otherwise have some discussions with IRS managers but it can be done. Helping taxpayers catch up their tax filings and get them back into the system is something I really enjoy and makes for happy customers who no longer have this on their mind. After this is accomplished just let us prepare and file your tax returns every year and this problem won't happen again.  

IRS tax notice CP-2000

This is a matching notice that compares your filed tax return to the income documents that the IRS receives. If they find differences they just send you a proposed adjustment often with penalties and always interest. These notices come one to two years after your tax returns are filed. Don't pay the balance due without a clear understanding of why you owe it. Many times the missing items are on your tax return but IRS can't find them. Often the IRS only gets one side of the transaction. The IRS gets the amount of securities sold but not what you paid for them. There may be income the IRS has but not the deductions that go with it. Gambling income and losses would be an example of this. We represent taxpayers to explain these differences and resolve these issues. You might be surprised to know that just because IRS proposes a balance due doesn't mean you owe it.

Representing taxpayers with tax problems what does that mean?

It means getting authorization from the taxpayer and talking to the IRS or State for them. You generally don't have any contact with the agents after I become your power of attorney. It means if you are being audited by the State or Federal government I go for you to meet with the agent. You don't have to go. If you owe the IRS or state government money and need resolution to that matter I deal with the revenue officer for you. It means I get a copy of all IRS notices that you receive so the status of your case can be monitored as we move towards a resolution. My customers tell me it provides piece of mind to know that I will be dealing with the revenue agents and officers and they don't have to deal with something that makes them uncomfortable.


Robby

How the Texarkana, Arkansas border city exemption works.

Since this Arkansas income tax provision is so misunderstood here is how it works. If your residence is inside the city limits of Texarkana, Ar you are exempt from Arkansas income tax regardless of where you work. If you live inside the city limts of Texarkana, Tx you must work inside the city limits of Texarkana, Ar to be exempt from Arkansas income tax. Everybody else who has Arkansas income is subject to the Arkansas income tax. You must file an Arkansas income tax return if you have Arkansas income to claim the border city exemption. The State of Arkansas is actively looking for taxpayers who either didn't file when required or claimed the border city exemption in error. Every year I represent numerous taxpayers who have these issues and I can help you resolve them.

Robby      

You aren't a bad person if you have tax problems.

I enjoy helping people get their tax issues resolved. The cause of these problems often are divorce, death of a loved one, sickness, bankruptcy, and drug, alcohol, or gambling addicitions. We listen to your issues and have compassion to understand the burden tax problems can cause you. One of my customers told me that he couldn't hardly rest at night until this was taken care of. Fixing tax issues is challenging, interesting, and rewarding work. After your tax issues are resolved  we can prepare your tax returns and make sure you stay straight with the government year after year.

Robby  

Can IRS penalties be abated?

The answer is yes if you qualify. IRS penalties can be be abated if reasonable cause exists for the filing or tax deposit issue that created the penalty. Reasonable cause is defined in the Internal Revenue Manual. Some examples include death, serious illness, or unavoidable absence, fire, casualty, natural disaster, or other disturbance, unable to obtain records, and mistake was made. The IRS also has a first time penalty abatement policy for certain types of penalties if you qualify.  I'll evaluate your penalties and if a favorable opportunity exists to abate them we will craft you a penalty abatement request for submission to the IRS.

Robby

I have tax problems. How much does it cost for you to help me?

We get this question on a regular basis. Usually it is the second sentence in the phone calls we receive. Since we have no idea how large your tax issues are and what is required to resolve them, we ask "What do you need done"? The typical answer is, "I don't know". Well, since you don't know and we don't know how about you signing the IRS power of attorney that we prepare and lets find out.

We will contact the IRS normally on your first visit and retrieve the necessary documents to determine what needs to be done to get you in compliance. At that point, we will tell you what your situation is and what documents need preparing. If an IRS collection action is imminent we can discuss your options to get some additional time to bring you into compliance. We don't charge for the initial visit as you are deciding if you want us to help you and we are evaluating whether we can reasonably expect to help you. After we get the documents and determine a course of action we will discuss fees. If you have state tax issues we approach them in the same manner.

www.selphandfridaycpa.com

I received an IRS notice. What should I do?

Read it. If it is certified mail, go to the post office, get it and read it. This sounds simplistic but I have represented many people who just ignored the notice. It's not likely to go away. It will continue on until you respond. It may be a minor issue that can be resolved with a written response or a phone call. If it is more serious, then you can limit your options or make the issue harder to resolve by not responding. Many notices will have a notice number and tax period in the top right hand corner. If this is the case, we can tell you what the notice means with that information. If it has an amount due, don't just pay it in hopes you will be left alone. You may not owe it. Let's get a thorough understanding of what the notice is and whether the amount due is valid before you open up the checkbook.

Robby
www.selphandfridaycpa.com

National conference

As Fellows of the National Tax Practice Institute, Robby and I just completed 24 hours of intensive graduate studies in the area of taxpayer IRS representation at Las Vegas, NV.

The course of study was led by some of the nation's leading attorneys and tax practitioners in the field.  The topics included, offers in compromise, appeals, collections, and tax court proceedings.  We devote substantial time and resources each year to network and study with such experts.  We believe this investment helps us to bring our customers a high level of quality service.

If you have an IRS problem, let us put our training and experience to work for you. 
Call us at 903-792-0281.

Joey
www.selphandfridaycpa.com