Accounting News and Notes

Tax Problems, Resolution and Advocacy

CPA Serving Atlanta GA & Beyond

Working through tax problems is not as easy as they make it sound on television ads. You cannot just meet with an IRS representative, file an Offer in Compromise or get on an installment plan and all will be better. The last national acceptance rate that I saw published the rate of successful completion of Offers in Compromise to be approximately 22%; this means that you would have a 78% chance of failure. As a Body of Believers we are all called to submit to authority and to that end we should all pay our just and fair taxes. Our tax system is one of voluntary compliance and to this end we should and need to stay true. But there are many options when dealing with tax issues and there is not a one size fits all mentality that should be applied to resolving tax issues. These ideas will help you begin to understand what is and what is not in your best interest in dealing with your IRS or state tax problems.

Tax Liens, Levy, Levies and Garnishments. The Department of Treasury/Internal Revenue Service has many tools in its tool box to encourage you to pay promptly. The ultimate in all professional representations should be to avoid as many of these as possible with the goal of preventing an undue headaches, which may occur when Tax Liens, Levy, Levies and Garnishments occur. All of these are effective means the IRS has at its disposal to encourage and indeed force collection of open and due tax monies. It is most wise to deal proactively with back tax  and payment issues to ensure that enforced collections are not necessary as they do much to limit your possible options for successful tax resolution.

Tax Relief. Tax Solutions. Tax Help. Each and every situation is different. Like snowflakes, there are no two tax situations that are the same. Though you may feel you need a tax attorney, and your might if going into tax court, most all tax issues may be resolved well before the collection process goes “legal”. Frequently taxpayers with several years worth of tax returns to both file and pay are well served by a CPA who is well versed in tax preparation issues and the IRS collection process as well. The goal of all parties should be for resolution of issues “for once and for all” and to get back into the system as a “compliant taxpayer” by both filing and paying all future taxes on a timely basis.

Tax Options & Alternatives. Tax representatives who offer to “settle for pennies on the dollar” may not always have your best interests at heart, as there should not a one stop way to fix all tax issues. For example, many who originally feel they are best suited for an Offer in Compromise or an Installment Agreement soon learn that these are not in their best interests. Many who initially are set out up on a payment plan to the IRS soon thereafter discover that the penalties and interest are growing more rapidly than the amount of their payments, thus continuing their downward financial spiral. Similarly, Offers in Compromise are often submitted for taxpayers for who are not good candidates for the Offer Process itself. Care should be taken on the front end to verify that all candidates for an Offer in Compromise are well-suited and are well-qualified candidates for this process.

Taxpayer Advocate. Find a CPA who looks after you and to whom you believe has your best interests at heart. Check references, meet face-to-face, gain a good understanding of the CPA’s depth of knowledge and understanding of not only what created the tax issues but also your ability to communicate with him/her. Also be sure that your CPA, does not have a “program” and an “up-front fee”. Payment as services are rendered, such as one would do with an attorney or a physician is your best bet to stay in tune with all actions done on your behalf.

Working with the IRS. Working with the IRS, rather than against it, is your best option to ensure that both your rights as a taxpayer and U.S. citizen are protected and that you solely pay the taxes, which are due, using every option that a CPA has available. The collection process and representation issues take time. To learn more visit these fine articles:

Solving IRS Tax Issues
Don’t fight the IRS but work with them to resolve your tax problems. Discover a myriad of legal ways the IRS is eager and willing to work with you to resolve any unpaid debts, penalties, and interest.

Paying Your Taxes - Withholding and Extensions
Paying your taxes made easy. This section will enable you to quickly grasp the general guidelines of tax law requiring that you pay taxes as you earn money. As well, extensions and their uses and limitations are disclosed and discovered.

How to Avoid an IRS Audit
Discover simple steps that you can do to help prevent an IRS audit. Though the tax code is at times very difficult to understand and comply, these basic simple steps will help you avoid an IRS audit.

Solving IRS Tax Problems: Submitting an Offer in Compromise
When all else fails and if you qualify, the IRS and Georgia both have a program which will enable you to work to solve the severest tax problems.

Written by John Dillard CPA of His CPA at 770 814 9304 and visit www.hiscpa.com (an Atlanta Christian CPA firm). At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.” We advise clients on: IRS representation, Offer in Compromise, Incorporation in GA, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain and Decatur, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock

How to Process an Offer in Compromise with the IRS: Determining the Offer Amount

So you have tax problems, which seem will never go away. You work diligently to get all of your returns properly prepared and now you receive an IRS notice that promises liens on assets, levies to bank accounts and garnishments to your wages. Each notice shows up with the balances due creeping higher, always a bit more than the last. You owe for years of back taxes, penalties and interest and the amount due now seems insurmountable. Perhaps you have even been on an installment plan but the amounts you are paying monthly are less than what is being assessed for additional penalties and interest. Facing what feels like an insurmountable debt,  may well give you the sensation that your are entering the twilight zone. You do have options with one of those being the possible submission of an Offer in Compromise. There is light at the end of the tunnel, but it requires determination, resolve and the experience of a CPA who is well versed in these matters.

Though there are many forms to complete including Form 656, which is where the actual offer amount is documented, Form 433A for wage earning taxpayers and Form 433B for businesses owners. Forms 433A for individual taxpayers and Form 433B are the predominant source of information for both taxpayers as well as the Internal Revenue Service to determine a settlement amount. In general terms, the settlement amount is calculated by taking the total of a taxpayers net worth and their excess cash flows (discounted into today’s dollars) over the next five years.

Determining Net Worth

A taxpayers net worth is determined first by adding up all of the assets that a taxpayer owns. This would include their home, furnishings and fixtures, vehicles, cash balances, cash surrender value of any insurance policies, real estate investments, stocks, bonds, and essentially every other asset that a taxpayer owns. If married and submitting a joint Offer in Compromise then the assets reported would also include any assets of both spouses. From the total of the assets, one would subtract the outstanding debt for which a  taxpayer has including home mortgages, car loans, credit card debt, equity lines, and generally all of the outstanding loans one has. All of debts (if submitting a personal offer on Form 433A and if submitting a corporate offer on Form 433B), are generally listed on the forms alongside the asset to which the debt relates along with detailing the monthly payment being made and any available credit, which is at present unused.

Determining Excess Cash Flows

Perhaps the most elusive portion of determining the offer amount is the calculation of what excess cash flows are available to the IRS and can be applied against any outstanding monies due. In layman’s terms, this determination is based upon the result of listing a taxpayers monthly income and qualified expenses. The income sources would generally list all taxable income that a taxpayer has been receiving and may be reasonably expected to receive in the future. Also a detailed listing, by category, is prepared showing all a taxpayers monthly expenditures by category. For individual taxpayers ,the IRS has statutory tables which are used to prepare the monthly amount listed. These tables are based upon the monthly income of a taxpayer as well as their family size. The expenditures detailed are frequently the most widely discussed and debated of all the items listed anywhere on the offer forms as often what a taxpayer feels is a necessary and required expense is not viewed in the same light as the same by the IRS. After any monthly excess is determined then this total is multiplied by sixty months (five years) and then discounted back into today’s dollars. This calculation is then added to the net worth amount, as determined above, to list the initial offer amount.

Offer Submissions

Both the IRS and GA are encouraged by tax law, but not required, to cease all collection efforts while an offer is being considered, as long as they feel the offer is being tendered in good faith. Just as the IRS desires to work with taxpayers who have a valid offer for them to consider, so should taxpayers only submit offers if they truly qualify. In this way, both parties are best able to work in good faith to resolve and satisfactorily determine a fair settlement amount.

Getting a good Atlanta CPA to help with your tax issues is your best first step to obtaining sound business and tax advice helping to ensure the likelihood of your business and family home finances.

Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.HisCPA.com

At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”

We advise clients on: IRS representation, Offer in Compromise, Incorporation in GA, Corporate and Personal Income Taxes, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond.

Submitting an Offer in Compromise: Which Tax Forms to Use 

If you have a large tax bill owed to either the IRS or Georgia, there is a tax process called the Offer in Compromise which may be well suited to help you get beyond the mountain of tax debt and to negotiate a fair and just settlement with the IRS. The process requires you to be current on all of your tax filings and payments, thus the Internal Revenue Service or Georgia will first need to be able to verify that all of your respective corporate and personal income taxes, payroll taxes, and sales tax reports have been appropriately filed. If you are a corporate taxpayer or have been a proprietorship and have a payroll, the IRS will need to be able to ascertain and confirm that you are current on these payments and filings as well. If you are doing an Offer in Compromise to the state of Georgia then having your payroll reports, income taxes and payments current as well as any applicable sales tax reports will also be a pre-requisite to submitting an Offer.

Submission of an Offer in Compromise. Filing of the Offer Form (Form 656), the Collection Information Statement for Wage Earners and Self-Employed Individuals (Form 433-A), and the Collection Information Statement for Businesses (Form 433B) are the core paperwork to be initially submitted with the Offer  in Compromise. Attendant with this filing is wide host of required documentation which needs to be submitted with the Offer to validate the deductions claimed.

Form 656: Offer in Compromise. This form is the actual Offer itself. The Offer when submitted to the Internal Revenue Service needs to include a check for $150 along with a check for at least twenty percent of the amount you are  proposing to settle your total outstanding taxes. On the Form you will also indicate how the balance of the monies will be paid after an Offer in Compromise is accepted. Generally the best option is to pay the balance within thirty days of acceptance of the Offer, although by law the IRS can extend a payment schedule for up to two years.

Form 433A: The Collection Information Statement for Wage Earners and Self-Employed Individuals. This form is used by all taxpayers who are filing an Offer in Compromise for tax monies, which they personally owe. Accordingly for all those who receive a paycheck with payroll withholding or have a business proprietorship will utilize this form to file along with Form 656. This form will list all of a taxpayers (and if a joint offer, their spouse as well) assets, liabilities, credit lines, insurance values, retirement plan balances, monthly cash inflow and outgo in accordance with prescribed IRS criteria. Attendant to the forms instructions there is a wide host of documentation which also should be attached including monthly pay stubs, bank statements, billings/statements, and proof of expenditures.

Form 433B: Collection Information Statement for Businesses. If you are submitting an Offer in Compromise for your business for either payroll taxes withheld and not paid or for unpaid income taxes if a C Corporation, then you will use Form 433B for the submission. This schedule will also list all of the assets and liabilities of the business along with a profit and loss showing the year to date profit for the current year. Most of this information can be obtained from the company’s internal books and records (i.e., their balance sheet and profit and loss). Details of where the company banks, account numbers, loans, loan numbers, offsetting balances, monthly payments are examples of the additional information which will also need to be supplied. Copies of items such as the last three monthly bank statements, open accounts receivable and accounts payable detail will also need to be provided.

Generally an Offer in Compromise will take at least a year to process and it is not a task you will want to take on without the skill of a good Atlanta CPA to guide you along the way. 

Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.HisCPA.com

At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”

We advise clients on: IRS representation, Offer in Compromise, Incorporation in GA, Corporate and Personal Income Taxes, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond. 

Back Taxes, Liens, Levies, IRS Problems, IRS Representation, and Offer in Compromise

When the IRS Tax notice arrives always remember to first breathe deep and then to contact a good CPA you can trust. Tax notices are always based upon information solely that the IRS has. A good CPA, who also specialized in tax representation issues, can bring information to light that will frequently dramatically lessen the amount of tax owed and perhaps even the totality of the bill. For example, if your business received Form 1099’s indicating earned business income that is most often all that the IRS knows and if you have not yet filed your return. Accordingly in this instance, the IRS will not be aware of the many valid business expenses you might have against same for which a CPA can help you file the right returns and address.

Offers in Compromise. These are still great options for those who qualify but I suggest retaining only those with a proven track record and to pay for professional fees as they are delivered rather than up front. In this way you will by nature of the relationship with the CPA, have a much more interactive and communicative relationship as this tax issue is addressed.    http://www.hiscpa.com/working-with-the-irs.html

Tax Liens & Levies. Having a CPA who is well versed in these areas will do much to make sure both your rights as a taxpayer and U.S. citizen are protected as well as to see that collection efforts, where appropriate, are deferred to allow you and your CPA ample time to address sensitive and complicated tax issues.      http://www.hiscpa.com/offer-in-compromise.html

IRS Representation. Just as you would not go into a court battle without an attorney so should you not try to address critical business and personal tax issues without a CPA who can guide and assist during this process.     http://www.hiscpa.com/irs-audit.html

IRS Problems. IRS Problems do not have to be permanent and working with a CPA who knows the ins and outs of how both the IRS and tax law works will do much to mitigate your pain and financial outlay.    http://www.hiscpa.com/avoiding-audits.html

IRS Issues and those to states as well can be solved. Working hand in hand with a seasoned and wise CPA will do much to resolve these past issues so you can get on with the living of today.

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, and Decatur.

Solving IRS Tax Problems & Offer in Compromise in Atlanta                   www.HisCPA.com

At His CPA PC we work hard helping clients with Solving IRS Tax Problems and with their Offer in Compromise. We work the old fashioned way by working to make sure you pay your lowest legal tax. Discovering how the IRS process works will help you learn what you can do to help keep your head above water. Contact John Dillard CPA today at 770 814 9304.

 How to Survive an IRS Audit: A Taxpayer’s Guide to Success

How Audits are Selected
Learning about how audits are selected is the first step to discovering how to overcome the emotional and financial distress that normally occurs as part of the audit process. Lifting this veil will help keep you on an even keel in learning how to deal with the IRS audit.       www.hiscpa.com/irs-selection

When the IRS Notice Arrives
Rather than beginning the process in fear, discover how you can better prepare yourself so that you are not surprised at the audit process and its ultimate results. By seeing through to the other side you can best ready yourself to close your audit with no adjustments and no additional monies due.     www.hiscpa.com/irs-audit

Working with the IRS: Keeping your Tax Bill Manageable and Under Control

Solving IRS Tax Issues
Don’t fight the IRS but work with them to resolve your tax problems. Discover a myriad of legal ways the IRS is eager and willing to work with you to resolve any unpaid debts, penalties, and interest.    www.hiscpa.com/working-with-the-irs

Paying Your Taxes - Withholding and Extensions
Paying your taxes made easy. This section will enable you to quickly grasp the general guidelines of tax law requiring that you pay taxes as you earn money. As well, extensions and their uses and limitations are disclosed and discovered.  www.hiscpa.com/paying-taxes

How to Avoid an IRS Audit
Discover simple steps that you can do to help prevent an IRS audit. Though the tax code is at times very difficult to understand and comply, these basic simple steps will help you avoid an IRS audit.   www.hiscpa.com/avoiding-audits

Solving IRS Tax Problems: Submitting an Offer in Compromise
When all else fails and if you qualify, the IRS and Georgia both have a program which will enable you to work to solve the severest tax problems.   www.hiscpa.com/offer-in-compromise

Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.Hiscpa.com

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond.