Accounting News and Notes

Atlanta CPA: Is the IRS Knocking at Your Door?

Did You Just Receive a Notice of IRS Audit?

A Tax Summons?

A Tax Levy?

A Tax Garnishment?

IRS Forced Enforcement Collections?

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 Tax Man.

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies

Atlanta CPA: Dealing with the IRS

Straight Dealings with the IRS is Your Best Opportunity to Audit Success to Achieving a Successful IRS Representation Experience

Working with the IRS in an honest open and straightforward basis is your best bet to ensure that your audit experience, to the extent that it can be, is an success. Frequently I see clients who are audited because they have a business and attempt to prepare their returns on their own. Tax law should never be attempted to be understood or appropriately applied by anyone other than a CPA who is well experienced and seasoned in such matters. Just as Believers we have an Intercessor to talk to God on our behalf so should clients retain a CPA to work to ensure that they pay only their lowest legal possible tax.

Internal Revenue Service 

Dear Sir/Madam,

I am writing you in a good faith attempt to come to terms over the above taxpayers’ present predicament and to address their tax issues.  

I am willing/eager to supply you with any information that you might need in order to process the audit. I have enclosed the information that the client has forwarded for you to process the audit.

Since I have assumed the role as their financial adviser, I have consulted with them, and in good faith have pulled together all of the information that you have requested.

I appreciate your attention to this matter and look forward to working with you to close their file.

Sincerely,

John C. Dillard, CPA, PC, Partner in Charge

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as a Faith Based CPA

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies

Duluth/Gwinnett CPA on Home Mortgages…How to Best Avoid Defaulting

Selecting the Right Home Mortgage

With all the different types of mortgages and fund investment strategies it is difficult, if not impossible, for the average investor/home buyer to make a decision about what is the best type of mortgage to pursue: interest only, fixed, variable, or for what term. Care should be given in all financial matters to review a particular households short and long term needs and then ideally balancing as much of these as possible so as to gain as large a financial advantage as possible while not unnecessarily exposing your personal household’s finances.

With the spirals in the real estate continuing with no apparent end in sight, leveraging or mortgaging real estate still makes financial sense. However, just because someone is willing to give you a loan does not mean that it makes for wise financial sense for your family. Great care and due diligence should be exercised when taking out a loan. Though surely for most if not all of us the first home purchase is one in which we are apt to be the most highly leveraged. Having been fresh out of school and perhaps just starting our careers we do not possess the financial resources to place any substantive amount of down payment. However, for each and every subsequent purchase we should take great care to ensure that our wants do not exceed our ability to pay. Accordingly it is wise to be sure to add a substantive buffer between our monthly expenses and our monthly income as we can always be sure there will be bumps along the way causing minor as well as substantive financial pitfalls along the way. Therefore we should be sure to living well below the standard of living that our income allows us to do so that these downward financial turns which are certain to occur do not unduly affect our ability to keep the financial obligations we incur. Although the loss of a job or a medical illness which occurs over more than just a few months or even years is apt to derail even the best planners, we should be ready to stand up to smaller adversities by ensuring that we keep our debt load low.

Remember “Creative Financing” means that you probably cannot afford it. Although I seldom disagree with a clients decision to buy anything I do often debate the timing as to a certain financial decision so as to not unnecessarily expose your household or business financially. Prudence when agreeing to acquire a property and taking on a debt load will be critical to ensuring long term financial success. Just because a particular lender is willing to give you a loan does not mean that it is a wise decision. I suggest that for all major debt acquisitions such as homes, buildings, and cars that you consult your financial adviser/CPA well before a decision becomes emotional and your desires begin to outweigh your primary concern of protecting the family’s long term financial viability.

John Dillard CPA of His CPA PC (a Christian CPA firm) is an author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11′s: Job’s Journey.

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

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, Payroll Administration, Bookkeeping.

(Proudly Serving Alpharetta & Roswell for Over Thirty Years)

Sample IRS Audit Letter in Anticipation of IRS Audit

Proudly Serving Metro Atlanta as a Christian CPA for Over 30 Years

When getting ready for an audit the first best call is to a well experienced CPA to ensure that both your rights but more importantly that you return is correct and prepared to best ensure your lowest legal possible tax. As a Body of Believers, though we are to submit to Authority, we are not required either by tax law or by our faith to pay more than our fair share and therefore just and legally liable tax obligation/bill.

All correspondence with the IRS should be an ends to an mean and help to encourage the client, the IRS and their agent to close their file as quickly as possible, while ensuring that you pay only your legally liable tax. To that end I have provided the below sample audit letter detailing what we did, the terms and even enclosing the check to pay the taxes and interest in full while asking for penalty abatement. For the easier a CPA can make it on the agent to adequately and efficiently close their file is a win for both the IRS and the client.

Internal Revenue Service

401 W. Peachtree Street

Atlanta GA

Enclosures: Power of Attorney

Dear Sir or Madam,

I am writing you in a good faith attempt to come to terms over the above taxpayers’ present predicament and to address their tax issues. I am willing/eager to supply you with any information that you might need in order to process the audit. I have worked with the client to get their tax filings correct for the _____ tax year and payments current ASAP. To that end I have prepared for you a Form 1040X for the _____ tax year.

Enclosed please find a check for $____ to be applied as follows:

Tax $ _____

Interest $_____

With the payment of the tax and interest in full I am asking that any potential penalty assessed be abated. It is my goal to help in their efforts to return to compliance. Since I have assumed the role as their financial advisor (they had none previously), I have consulted with them, and in good faith and within 30 days pulled all of the information together that you had requested.

I believe the penalty abatement is a just request as I believe the IRS is a fair institution designed to help taxpayers pay their just taxes.

I appreciate your attention to this matter and look forward to working with you to close their file.

Sincerely, John C. Dillard, CPA, PC, Partner in Charge

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies

^{Atlanta CPA on Statute of Limitations on IRS Collections}

Know Your Tax Rights/Addressing Back Taxes with the IRS

^{Knowing the ins and outs of tax law can do much to help you along the way to make sure all of your tax issues are well understood and handled. Tax law is complicated, understanding some of the individual nuances will always be of great assistance. One way to be sure that you do not run afoul of a few of the basics will help you make wise and informed decisions. Just as a physician first strives to get a good understanding of the patient, their history and their symptoms before offering a diagnosis, so it is critical for a CPA to understand the underlying causes and tax problems, to address their causes and effects and to review original source documents that originally caused the liability to start with. If the taxpayers proceeds with haste rather than wise and judicious discernment, they may well lead themselves to far greater financial pain than originally existed. These basic tenants of IRS Statutes of Limitations will do much to enlighten potential tax opportunities and planning:}

^{Statute of Limitations on Refunds}

^{If you file a corporate or personal income tax return more than three years after the original returns due date, then any attendant refunds are lost forever. You cannot apply them to other outstanding years, you can not apply them to future years, as you get absolutely no credit for them at all. This is perhaps one of the greatest tax tragedies as I have personally witnessed taxpayers who would have otherwise received thousands and thousands of dollars of refunds forever legally lose their claim to any potential refund. Unfortunately there are no appeal options and once the three year statue lapses, it is over, you “cannot pass go” and your refund is forever lost.}

^{Ten Year Collection Period}

^{There is a ten year Statute of Limitation on the Internal Revenue Service ability to collect taxes. The ten year statute begins generally form the date the original return was filed or when the tax was assessed by the IRS. During the ten year tax period the IRS is able to use all of its collection tools including liens, levy, garnishment and seizure to protect the rights and interest of the Treasury Department/United States government. After the ten year period lapses the tax is no longer assessable by the Service. However during the ten year period, the taxpayer and the IRS may jointly agree to waive the ten year statute and extend the collection period. This may be advantageous when a taxpayers ability to pay may be improving and enforced collection efforts might prove to have disastrous effects.}

^{Suspension of the Waiver Period}

^{Generally speaking the statute of limitation period lapses after ten years after the return is originally due, filed or assessed. However there are several items which can legally extend the time period that the IRS has to collect outstanding monies. For the items below, the ten year statue is extended for the time the following events were occurring.}

^{Installment Plans. The time that a taxpayer is on a on a plan making regular monthly payments/an Installment Plan is not counted as part of the ten year periods lapsing and is therefore added to and extends the ten year original period.}

^{Suspension of Collection Efforts. If the IRS suspends collection efforts for a time in a effort to work with the taxpayer during legal or tax filings, this period as well is added to the ten year period when determining the statute of limitations. The most common examples of these would be time periods covering Installment Plans, submission and consideration of an Offer in Compromise and the periods covering that of a Bankruptcy filing.}

^{Tax Fraud. In the event that a taxpayer commits tax fraud there is no statute of limitations on either collections or for the auditing of applicable returns.}

^{Often toward the end of the ten year period, taxpayers will discover that collection efforts intensify as the Internal Revenue looks to collect any open tax monies due.}

^{Written by author John Dillard CPA of His CPA at 770 814 9304 and visit http://www.hiscpa.com/ (a 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.”}

www.HisCPA.com IRS representation, Offer in Compromise, Tax Problems/IRS Representation, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales and Bookkeeping.

Atlanta CPA: Addressing Back Taxes for Atlanta Taxpayers

The first thing we look to do when we meet with a client is to work to get their old back taxes filed. As soon as the back taxes are filed and we have worked with the taxpayer to ensure their present tax obligations are current. Then we can begin to address working with the taxpayer and the IRS to see what can be done to either pay the taxes and interest in full, while requesting penalty abatement by showing/proving reasonable cause as to why returns/taxes were late paid. Frequently this winds up being the best obligation as many/most taxpayers do not qualify to have an Offer in Compromise accepted as the process is much more involved and restricted. However we have great success at both.

How to Submit 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.

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Roswell, Sandy Springs & Tucker as a Faith Based CPA

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies

Atlanta CPA: Incorporating in Georgia…What to Be Sure to Do

The Incorporating in Georgia Series

There are many reasons a taxpayer may look to incorporate their business ranging from legitimacy, liability limitation and tax mitigation. Understanding these many nuances is your best first step in ensuring that you chose an entity type is best achieving success given your business model and operations. Entity selection is determinant on many issues ranging from citizenship, number of shareholders, ease of operation, tax obligations and year-end filings and even who your shareholders will be. Though many of these issues will conflict, working with a professional who is well versed in these issues will help you make the best election available for your new Georgia Business.

At His CPA We Cover a Wide Host of Full Service CPA Firm Services Including:

Atlanta Tax Problems, IRS representation, Offer in Compromise

Incorporation in Georgia, Corporate and Personal Income Tax Returns

Atlanta Part-time CFO, Virtual Controller, Business Planning

Atlanta Bookkeeping & Financial Statements

-Made any Necessary Tax Elections. All newly incorporated business’s will need a new Federal Identification Number/EIN, which can be applied for on-line at www.irs.gov/ Also companies that desire to become an S Corporation/flow through entity for tax purposes must file IRS Form 2553: Election by a Small Business Corporation within 75 days of the beginning of the tax year to which you would like to become effective. When incorporating with the Secretary of State a company is initially a C Corporation and has to file the S Corporation paperwork to become an S Corporation. LLC’s who wish to become an S Corporation for tax purposes should also file this form within the time allotment referred to above.

On an ongoing basis also many business owners fail to:

-Have an Annual/ Periodic Board of Directors Meeting. All C Corporations and S Corporations are required by law to have an Annual/Periodic Board of Directors Meeting. Failure to do this may indicate a lack of the owners respect of the “corporate veil” thereby potentially impugning their rights of personal legal protection.

-Have an Annual/Periodic Shareholders Meeting. All C Corporations and S Corporations are required by law to have an Annual/Periodic Shareholders Meeting. Failure to do this may indicate a lack of the owners respect of the “corporate veil” thereby potentially impugning their rights of personal legal protection.

-Paid the Company’s Annual Registration Fee to the Secretary of State. Failure to pay this fee can result in your business being listed as a Non-Compliant Entity or worse yet Administratively Dissolved by the Secretary of State’s office. The registration form should be filed online at www.georgiacorporations.org/

-Maintain a Valid Business License. Business licenses are to be obtained from the county the business transacts business in/has a physical presence. If the business is located with a town’s city limits, then the license is procured from the city.

For all business’s before you incorporate, it is prudent to first talk with a Certified Public Accountant to ensure that you select the right entity type for your business. To gain a basic understanding of these nuances visit http://www.hiscpa.com/article2.html To read more about the incorporation process visit the Georgia Secretary of State at http://sos.georgia.gov/corporations/filing_procedures_corp_2001.pdf

Atlanta CPA on Back Takes: Helping Atlanta Taxpayers Not Lose their IRS Tax Refund

IRS Tax Law has held/ruled for decades that refunds that are for old tax returns, for more than three years after their original due date, are not refundable to taxpayers. Conversely the IRS has ten years to assess and collect taxes for unpaid monies for ten years. Essentially tax law surrounding the “lost” status for refunds has remain unchanged for decades. Frequently I have prepared back taxes for taxpayers who are striving to get their old returns done and become and active, timely and compliant taxpayer.

Though when preparing old back tax returns one would prefer not to have a lot of taxes and attending penalties and interest assessed, it is often disheartening for a taxpayer to file a return that is over three years past due, only to learn that the otherwise refund they would be do, is lost, due to the three year statute of limitations.

Generally a refund claim is considered late if you filed the later of:

-Three years from the return due date of a timely filed and un-extended return.

-Three years from the date the IRS receives a late return or a timely filed, extended return.

It is always prudent to timely file and pay all tax returns as failure to do so can result in failure to file penalties, failure to pay penalties and additional assessed interest to add even of a more financial burden of what otherwise be due and payable. Working with a CPA who is focused on your future and not your past is a wise and judicious path to ensure tax and financial security.

Contact HIS CPA PC (A Christian CPA Firm) today.

To learn more about addressing IRS Tax Issues and Back Tax Returns visit http://www.hiscpa.com/working-with-the-irs.html

Atlanta Back Taxes, Atlanta Offer in Compromise, Atlanta Tax Mitigation, Atlanta IRS Representation, Atlanta Tax Levies, Atlanta Tax Liens, Atlanta IRS Asset Seizure, Atlanta Wage Garnishments, Atlanta Filing of Old Tax Returns

Award Winning CPA on Helping Clients With Offer in Compromise & IRS Tax Representation Issues

Proudly Serving Atlanta Tax Representation Issues for Over 30 Years

In light of the recent and dramatic downturn in the economy I have had to help many business owners and entrepreneurs file their final corporate/business and income tax returns to record the dissolution of their business. Whether you be a Partnership, Proprietorship, S Corporation, C Corporation, LLC or LLP there are certain steps and procedures that must be carried out in the closing of your business.

All business’s, per IRS rules and regulations, should file the last corporate income tax return for the business being sure to mark it as final. This would be a Form 1120 is a C Corporation, a Form 1120S if an S Corporation, a Form 1065 if a Partnership or multi-owner/member LLC, or a Schedule C as part of your personal return if either a Proprietorship or single member LLC. You would also want to be sure to notify the Secretary of State in all states where you business is either domiciled or legally registered.

Also you will want to be sure that you have filed all of the required payroll, sales tax reports, and business licenses. To gain a feel for these I suggest visiting:

Becoming a new Employer in Georgia Checklist
An easy to review source of many of the forms, applications, and procedures you will need to be apprised of to ensure compliance with a variety of taxing authorities. http://www.hiscpa.com/employee-checklist.html

Payroll Tax Withholding
Employers are required to withhold portions of each employee’s salary and pay additional taxes to local, state and federal governments. This article discusses the types of taxes that must be withheld or paid. http://www.hiscpa.com/payroll-tax.html

Managing Payroll Forms
Easily the most administrative burden of owning your own business, payroll is the bane of many who try to go it alone. http://www.hiscpa.com/payroll.html

Frequently when working with the IRS or state to resolve past and current tax issues, it is necessary to retain a CPA to help and assist in both the filing and payment of these monies. To that end, I have supplied below a sample letter filing a power of attorney to address all of their tax issues and final disposition of their business.

IRS

401 West Peachtree Street

Atlanta GA 30308

I am writing you in a good faith attempt to come to terms over the above taxpayers’ present predicament and to consider submitting an Offer in Compromise on their behalf. I am willing/eager to supply you with any information that you might need in order to process the Offer. I am working with the client to get their tax filings and payments current ASAP. 

Please note that I have advised the taxpayers that after the acceptance of their Offer that they must stay in compliance by keeping all of their filings and payments current for five years. They have further been advised that in the event they do no maintain the above that the previously accepted offer would be voided and the previously abated monies would be reinstated. 

Please suspend your file for forty-five days while I work to get from the client all of the information you have requested. 

Please cease all collection efforts while this Offer is being considered for submission and I work with the client to get all of their filings and payments current. 

Sincerely, John C. Dillard, CPA, PC, Partner in Charge

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies

Duluth/Suwanee/Johns Creek CPA Illustrates Addressing S Corporation Status with the IRS for a Georgia S Corporation

Determining Your Entity Type Will Affect Both Your Tax Bill and the Way You Operate

Frequently we are asked to follow-up after either a taxpayer or a prior accountant has filed a return in error to fix a prior misstatement or filing. Below is a sample letter one might use if you had inadvertently filed as a C Corporation when the business was an S Corporation and should have filed as a flow-through entity or an IRS Form 1120S:

IRS
Atlanta, GA 39901

Dear Sir or Madam

I am writing to follow up on your IRS Letter (copy enclosed). Please note I have enclosed a copy of the S Corporation return, as well as the S Corporation acceptance effective the beginning of the year. Please note the company was not a C Corporation for the tax year noted in the enclosed tax notice and accordingly should and should not file a Form 1120. Accordingly the tax monies assessed in the attached notice are incorrect as the company was an S Corporation for the 2009 tax year, as further reflected on the enclosed Form 1120S. If there had been a previously filed Form 1120 for the company, please void it as it is invalid. Please fix your records accordingly to show that the client was an S Corporation for the tax year in question.

Accordingly please refund any monies previously paid.

I appreciate your attention to this matter and please do not hesitate to contact me should you have any questions.

Very Sincerely Yours, John C. Dillard, CPA, President

When looking at what type of entity your business should be, we strive to balance the legal protection issues vs. the tax savings. Over the years, we have developed the mindset that there is no perfect election but there are ones that are better than others. To read more visit http://www.hiscpa.com/article2.html

Contact HIS CPA PC (A Christian CPA Firm) today.

To learn more about addressing IRS Tax Issues and Back Tax Returns visit http://www.hiscpa.com/working-with-the-irs.html

Duluth/Suwanee/Johns Creek/Lawrenceville CPA: Income Tax Preparation

Duluth/Suwanee/Johns Creek/Lawrenceville CPA: Financial Statements & Bookkeeping

Duluth/Suwanee/Johns Creek/Lawrenceville CPA: IRS Representation, Back Taxes, Offer in Compromise