Accounting News and Notes

Don’t Delay When the IRS Comes Knocking; It Will Cost You More Than Just Extra Money

Do you remember the old car commercials of years back, when the auto mechanic would say “you can pay me a little bit now or more later”. Though the commercial ran decades ago, I have never forgotten the axiom. Similarly, I believe the medical community as well as Benjamin Franklin who teaches us that “an ounce of prevention is worth a pound of cure”. This is perhaps no truer than in the case of being sure that you both timely file and pay your income taxes. To help guide you in what to watch for, I will walk you through some of the common misconceptions about the U.S. tax system and dealing with the Internal Revenue Service.

Common IRS Fallacies Taxpayers Fall Prey To

Constitutional Privilege. There are certain radical sects who have take the position that the IRS and its collection of income tax are unconstitutional. Nothing could be further from the truth. The IRS, like all governmental programs are initially organized and obtain their authority to collect taxes and indeed their laws to enforce from Congress/the President.

Exempt. Frequently taxpayers will feel that their earnings either because of their legal status as resident aliens, individuals here on a Visa, illegal residents or students are exempt from the payment of income tax. Though there are many nuances with some of paying taxes as a student, such as whether you or your parents claim you, may vary, all people here in the U.S. are required to pay income taxes on their earnings. In fact, all U.S. citizens are resident aliens are required to pay income taxes on their world-wide income, regardless of what country the monies were earned in. For example, if you are a U.S. citizen but live and work in Italy, you are required by U.S. law to pay income taxes on all of your world-wide earnings regardless of whether you earned the money here or overseas. However, tax law does allow certain exemptions to certain countries based upon either IRS statutes or tax treaties allowing taxpayers to receive a credit or offset against your U.S. taxes to statutorily offset and reduce the U.S. taxes paid, thereby giving credit for monies earned and taxes paid overseas.

Procrastination. If you fail to handle your responsibilities and duties, they do not go away in fact they most always get worse, not better. I spoke with a client recently whose tax obligations as a result of failure to file penalties, late payment penalties where their tax obligation had grown by almost a 100% over five years. Imagine what would happen today if you suddenly learned that you owed the IRS $15,000 for the current tax year. That, in and of itself, would be a difficult amount for any of us to address. However if we fail to file for several years and to pay the required taxes as they are due, then the $15,000 we might have otherwise have owed per year/years, will now grow exponentially as waiting has cost us dearly.

Don’t be led astray as there is no get rich schemes, no magic pills to take to either improve your cash flow or your credit, no legal tax schemes that create refunds out of thin air. By working closely with a CPA you are most apt to receive good counsel and ensure that you do not fun afoul of the TaxMan.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ 

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Atlanta CPA on Handling IRS Tax Levies & Wages/Salary Garnishments by the IRS

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A Layman’s Guide to Understanding Tax Issues with the IRS

The best first step to beginning to address old personal tax returns that are either unfiled or unpaid is to assess the damage, count the cost, and to lay out a tax strategy that best suits your needs. Working with an experienced CPA is your best first step in this process. Tax problems, if left unattended will worsen, dramatically over time as penalties and interest continue to accrue and the collection efforts mandated by the IRS become increasing frequent and severe.

Tax notices are mailed to taxpayers according to statutory requirements giving taxpayers time and notice to favorably respond Failure to adequately address open tax monies.

Like in our lives, we have to deal with the consequences of our action and to be able to aggressively work to address problem areas and to put them behind us. I believe in the axiom that either “we are to aggressively deal with tax problems or know that the IRS and their collection process will aggressively deal with us.” By dealing with the tax issues we face we are best able to begin anew as a compliant and paying personal or corporate taxpayer.

Tax problems come in many varied forms and are cover many different segments of tax law including some of the most severe collection practices possible:

IRS Tax Levies

An IRS Tax Levy is where the IRS will levy monies out of your corporate or personal account as applicable to satisfy tax monies owed. When monies are collected by the IRS in this method, or typically any other entity the monies are seized, by a bank for example, and then remitted over to the Department of the Treasury/IRS. A levy is problematic for a taxpayer because critical and needed funds are withdrawn from an account at a time when a business or individual may be able to least afford it., thus further documenting, why it is critical to aggressively work to resolve IRS tax issues.

Wages or Salary Garnishments by the IRS

Wage and Salary Garnishments by the IRS are real attention getters the IRS has in its “collection toolbox” to ensure payment of outstanding tax obligations. When an employer receives a garnishment from the IRS for one of its active employees, it is required by tax law to withhold monies from an employee’s regular payroll. These are severe in that the amount of salary garnished is large leaving a taxpayer/employee with only a fraction of their regular net pay. Getting IRS tax problems resolved quickly before a garnishment is enforced is always in the best interest in keeping personal finance interruptions to a minimum.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting and Bookkeeping.