Tuesday, December 13, 2011

Tax Resolution Services Include State Tax Liabilities

The purpose of this post is to advise my client's, prospective client's, and other professionals on how to deal with the State Taxing Authorities. Most State Authorities operate without efficiency, they are understaffed, underpaid, and overworked. Therefore, their objective is to collect the outstanding amount owed as quickly as possible by way of levy, garnishment, and seizure and sale of business or personal assets.

We recently had a client come on board with a State of Colorado tax liability (withholding taxes) totaling over $53,000. We called the representative on file, after a few weeks of messages left, the State of Colorado went out to my client's business location and left a 3 day notice to seize and sell the assets of the business if the liability went unpaid. We immediately got on the phone with the representative and started discussing strategy.  At first she mentioned the State of Colorado would only extend a 3 month agreement.  We kindly informed her this would not work for the client. We decided to take a look at other agreements that had been set up over time with other associates in our office.  With this being said, we found the State has extended a 12 month agreement, 6 month agreement, 8 month agreement, and a 15 month agreement, all with a 25% down payment to accompany each agreement.  So we ran these options by the client and we decided on 25% down with payments over the next 8 months. As soon as we could we sent a proposal in writing to the Group Manager, as well as the State Revenue Officer to avoid potential collection action.  The State Revenue Officer emailed us back and indicated the agreement would be reviewed by a higher authority and she would get back to us by next week.

Long story short, we secured the agreement we wanted by virtue of patience and hard work. We saved the client from being seized and arranged a payment plan that would work for both the State of Colorado and the client. It is important to remember when dealing with any State Tax Agency to stay in touch, put everything in writing, and follow up promptly with the Revenue Officer and the Group Manager. Otherwise, you could be left holding the ball for a client in desperate need of resolution, when a resolution could have been obtained without unnecessary collection action.

Please visit our website at www.highlandtaxresolution.com or feel free to call us directly at 720-398-6088.

Monday, December 12, 2011

Reinstating Installment Agreements

We have had to revisit installment agreements for various different reasons. A few reasons have been for lack of payment, accrual of additional taxes, failure to remit timely payments, and so forth. What is important to remember is the installment agreement usually can be reinstated rather quickly. The appropriate and following steps must be taken:

- Contact your Power of Attorney right away and fax any and all notices to his/her attention
- Have the Power of Attorney read the notices (if they have not received copies already) and dictate next steps
- Once the next steps are determined, make sure all notices are calendared and appeal rights are adhered to
- A financial statement form may need to be revisited, filled out and turned in, but many times a call will resolve the situation

Usually the IRS will reinstate the agreement, charge a user fee, and you will need to start making payments immediately. It is important to remember that once an installment agreement is reached, pay close attention to the terms of the agreement. The following must be maintained throughout the duration; staying current and compliant, filing current returns timely, paying current taxes timely, paying installment payments on time and in full by the due date, taking notice of any addition or increase to the agreement, taking notice of a 1 or 2 year financial review once the agreement is set up, paying any and all notices if additional tax, penalty, or interest amount is accrued and informing the IRS as such.

Remember, if you are a current client and your agreement defaults, please contact us immediately to assist you with the reinstatement work involved.

Feel free to contact us at 720-398-6088 or on our website at www.highlandtaxresolution.com.

Direct Debit Installment Agreements and Liens

The IRS is making changes to the lien process whereby the IRS will allow liens to be withdrawn under certain circumstances. The circumstances are as follows:

- Taxpayers need to have an assessed personal balance due of less than $25,000
- Taxpayers need to enter into a direct debit installment plan
- Taxpayers on existing payment plans can convert to the direct debit installment plan

Of course, there is a probationary period to ensure all payments are made timely, but the benefit here is the liens are withdrawn. Of course, please seek our professional advice for more detail. We can always be reached at 720-398-6088 or at www.highlandtaxresolution.com.

Best of Luck!!

In Business Taxpayers: Things to Watch Out for When Filing an Offer in Compromise

If you own a business, operate a business, or have ownership percentage in a business, beware of the repercussions it could cause with regard to a personal Offer In Compromise.

A personal Offer In Compromise under doubt as to collectibility, or effective tax administration is an offer to settle the outstanding amount owed for any personal income tax, Civil Penalty, or any other personally assessed balance due. When filing a personal offer in compromise the IRS takes into account all personal assets, equity in assets, bank accounts, and of course an income and expense ratio as well. As of late, the IRS has been asking individuals who have ownership in a business (as little as 5%) to disclose the financial situation of the business. This can cause a sticky situation to arise between business owners, shareholders, and non-liable partners of the business.

The best advice we can give is to have the individual filing for the Offer to disclose a valuation of the business up front. Try to take into consideration the value of the business, percentage, or shares if the individual were to "cash in" and receive either a profit or the initial investment back. It is best if this information is offered up front as to not cause scrutiny upon investigation of the Offer In Compromise.

I would suggest seeking out a professional at Highland Tax Group, Inc. prior to filing an Offer In Compromise on your own. Good luck!!!