Early last month, the IRS reported that e-filings for businesses had increased nearly 9% from the previous year. This increase continued a pattern of growth for e-filings which have steadily risen over the past 10-15 years. While a large percentage of this increase was due to corporations and partnerships electing to e-file their returns, there are benefits to any business, large or small, in filing and submitting its returns electronically.

Filing returns online is the most efficient way for a business to submit it returns. E-filed returns are processed more quickly than paper filed returns and allow the filer to receive a proof of receipt immediately upon filing. This service is available 24 hours a day, 7 days, and also has the option to set up a direct debit for returns which require a payment – such as 941 Withholding Tax Returns. It is also safer than mailing in returns as there is not the possibility of a return being lost in the mail. Lastly, e-filing lead to fewer errors on returns as the software for the website has a feature designed specifically to catch any mistakes or miscalculations.*Corporations and partnerships can get more information about IRS e-file at IRS.gov

Accessible tools such as these ultimately aid businesses in staying current and compliant with their filing obligations with the IRS. Being current and compliant means that all returns must be filed on time and all Federal tax deposits must be made on time and in full. In turn, this can save businesses money by avoiding the costly penalties for filing a return late or incorrectly. Staying current and compliant is a necessity when negotiating a resolution for any outstanding tax liability. Before the IRS will consider your proposal for resolution, you much show that your business is current and compliant with its filing obligations. This is also extremely important after a resolution has been reached. If, for example, a business has entered into an Installment Agreement, it must not accrue any new tax liability otherwise it risk defaulting that agreement.

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If at first you don’t succeed… A taxpayer that is seeking an abatement on penalties will initially have to make the request through the Collections Division or other functions within the IRS.  When unsuccessful at this level, it would be wise to escalate the request to the IRS Appeals Division. Appeals is independent from the Collections Division and is tasked with resolving disputes on a fair and impartial basis without litigation.

The Treasury Inspector General for Tax Administration (TIGTA) recently conducted an audit to evaluate whether penalties assessed against taxpayers were fully or partially abated in accordance with Appeals criteria.  On July 30, 2015 TIGTA issued a statement on its findings, noting that Appeals has the authority to abate certain penalties when the abatement request has been denied by another function within the IRS.  Furthermore, the statement pointed out that in Fiscal Year 2013, Appeals abated approximately $127 million in penalties.

Generally, the audit found that in most cases, Appeals properly accepted cases in which the IRS operating division had previously denied the taxpayer’s request for abatement.  There were, however, a number of penalty appeals cases that were not abated in accordance with Appeals criteria.  TIGTA noted that in some cases, they could not determine the justification that Appeals personnel used in granting the penalty abatement. Additionally, the Treasury also determined that a small number of processing errors and control weaknesses might have affected the outcome of penalty abatement decisions at the Appeals level.

While the audit went on to conclude that additional training was necessary for Appeals Technical Employees on the requirements for justifying, documenting and granting abatement on penalties, it nonetheless illustrated the point that Appeals is an effective venue for a second chance at abatement of penalties.

We understand that appeals can play an important role in obtaining a desirable resolution. Click here to learn more about how we assist you with your unique situation.

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There are already numerous cases when taxpayers have paid millions of dollars to the IRS to satisfy FBAR penalties. A similar thing happened to Carl Zwerner, a director at First State Bank in Florida. This 87 year old taxpayer now owes the IRS over two million dollars in penalties for not reporting the annual value of his Swiss bank account. This amount was calculated as 50% of the annual value of this account in 2004, 2005 and 2006. Although Mr. Zwerner’s case is more complicated than just a failure to file form 114, it is still a good example of the consequences of non compliance with IRS rules.

The IRS form 114 can be filed online through the Bank Secrecy Act (BSA) E-Filing System at http://bsaefiling.fincen.treas.gov/main.html. It is an easy to follow program that allows you to submit all BSA forms and to track the status of your returns online. The IRS also provides help with filing FBAR forms over the phone at 866-270-0733.

In addition, in January 2012 the IRS started a new offshore voluntary disclosure program for those taxpayers who failed to report their offshore income and foreign bank accounts in previous years. Although participating in this program will not eliminate all penalties, it is still a way to minimize the chance of criminal prosecution for failure to disclose foreign accounts and assets.

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It sounds like a real phone call from the IRS. Your phone shows a caller ID of the Internal Revenue toll free line, and a person on the phone seems to have your personal information, sometimes even the last four digits of your Social Security Number. You might even hear on a background how other “IRS agents” are making similar phone calls. However, there is something unusual about it.

The “pretend-to-be IRS agent” insists that you make a payment towards your tax debt immediately; otherwise you will face very unpleasant consequences. Depending on your situation and status, you might be threatened with a revocation of your Driver License, taking into custody, or immediate deportation.  Here is where you should start being suspicious.  The IRS will usually send a taxpayer a huge amount of letters and notices before the situation becomes serious enough and can lead to a legal collection action by taxing authorities. However, even then it is not up to the IRS toll free line employee to decide whether or not you will be arrested or sent out of the country for not paying your taxes.

Another indication that the person calling you has nothing to do with the IRS is that this person is willing to accept your credit or debit card number right away, over the phone. You might also be asked to make a wire transfer. Mr. Werfel has clearly stated that the IRS “will not ask for credit card numbers over the phone, nor request a wire transfer”.

To make the scam calls more convincing, scammers often follow up with another call, this time from the Motor Vehicle Department or police. Of course, none of this is real. What can you do in this frustrating situation? First of all, do not answer any questions. Ask the person on a phone for his or her contact information (just in case it was a real IRS employee) and say that you need to do some research first. Even if you are sure that you don’t owe any taxes, it does not hurt to confirm this with the IRS. You can get an answer to this question by calling the IRS’ real office at 1-800-829-1040. If you do have a liability the IRS agent will inform you about that and will provide you with the contact information of the person (or an office) that has been assigned to your case.

If, as a result, you discovered that a phone call you received was a scam, you should report it to the Treasury Inspector General for Tax Administration.  You can do it over the phone by calling 1-800-366-4484 or by visiting http://www.treasury.gov/tigta/ website.  There is a Report Fraud, Waste and Abuse button in the upper left corner of the page that you need to click to proceed with your report.

If instead of a phone call you received an email from someone pretending to be an IRS employee, don’t open any attachments, don’t click on any links. Just forward this email to phishing@irs.gov.

The post IRS Warns of Latest Phone Scam appeared first on 20/20 Tax Resolution.

This decision is just a follow-up of a law passed in 2013 as part of the Executive Budget. The State of New York hopes that the new plan will help collect an additional $26 million this year and increase state tax collection by $6 million per year after that.

The state has already started the process. About 16,000 notices have been sent to taxpayers, giving them 60 days to resolve their tax problems with the New York Department of Taxation. It does not necessarily mean that the liability has to be paid in full by this deadline. Setting up a payment plan for back taxes will be sufficient to avoid trouble.

If the problem is not taken care of within 60 days of the day when the suspension notice was issued, the taxpayer will receive a second letter, this time from the Department of Motor Vehicles, allowing an additional 15 days to take appropriate action. Failure to resolve the problem will result in the suspension of the taxpayer’s driver license.

It’s not news that the New York State Department of Taxation is not the most lenient tax collecting authority. It has very strict rules that have to be applied when the state collection officer makes a decision about repayment of the debt. To make things worse, New York state taxes do not expire in ten years as federal taxes do, which means taxpayers cannot really hope that their problem will take care of itself over time.

Among the most popular options to settle the debt with the New York Department of Taxation are an Installment Agreement (also known as a Payment Plan), and an Offer in Compromise. The first option allows the taxpayer to pay off the debt within a certain timeframe in equal monthly installments. The second is an agreement between the taxpayer and the New York State that allows the taxpayer to avoid full payment of the debt. Instead, the state agrees to compromise on a smaller amount, as long as this amount is the absolute maximum a taxpayer can pay without experiencing economic hardship. In both cases, a taxpayer has to stay compliant with all tax obligations from this point forward.

Compliance is one of the most important conditions that must be satisfied before any tax resolution options will be approved by the State of New York Department of Taxation. All missing returns have to be filed and processed before a taxpayer can enter into an Installment Agreement or get an Offer in Compromise accepted. This means that the 60 days that the State of New York gives its taxpayers is not at all excessive, especially considering that not every accountant is immediately available to start preparing returns as soon as he or she is contacted by a taxpayer. Waiting for the state to process filed returns may take even longer.

Even when all returns are filed and appear in the state computer system, negotiating the best resolution for the state back taxes is not the easiest work one can imagine. It requires knowledge of the state tax rules and regulations and experience in discussing tax issues with state tax enforcement officers. If you are in trouble with the state or federal taxes, call us for help today. At 20/20 Tax Resolution, we are not only happy to resolve your tax liability, but also provide free consultations for those who need it.

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