Wednesday, February 27, 2013

IRS Letter CP2000 - What Is It? How Do You Deal With It?

IRS mail can be scary.  I receive IRS mail relative to the Enrolled Agent designation (EA) and every time I feel a pit in my stomach when I receive one, even though I know it’s probably nothing more than an EA notice. Now, think of our clients knowing they owe money, the simply tend to delay opening the mail. Or, bury it somewhere in their desk, briefcase, or in the backyard. Gut wrenching.

We received a CP2000 notice on behalf of our client recently.  The IRS Notice CP2000 is a proposed change to your tax return.  Proposed, meaning it is not final.  However, the IRS notice looks like a collection notice. Very intimidating.

The CP2000 notice can be very confusing.  A few things to think about:

- The amount due is PROPOSED!!! DO NOT PAY IT until you fully understand the accuracy of the notice

- The amount due can be agreed to, partially agreed to, or 100% challenged

- The IRS collects MILLIONS OF DOLLARS every year from taxpayers who may not owe the entirety of the    proposed change

In other words, if you receive a CP2000 notice from the IRS take note of the date.  You will have 30 days to agree, partially agree, or challenge the notice you received. If you have questions on the notice do not hesitate to contact the IRS to ask questions.  Have a full copy of the notice, a full copy of the tax return for the year the IRS is proposing the changes, and have any and all documentation relative to preparing the return in hand. Seek out advice from Highland Tax Group, Inc.! We can be reached at 720-398-6088 or at

Thursday, February 21, 2013

10 Steps to Avoiding an IRS Tax Audit

Avoiding an audit MSN Money offers ten tips on how to avoid an IRS audit. MSN Money

The link above is a quick video pointing out 10 tips to avoiding an IRS Audit. According to the video someone filing a schedule C with their return is 10 times more likely to be selected for an audit.  In my professional opinion you can avoid an audit if you fly below the radar, pick the right preparer, take the deductions you are entitled to, and if it sounds too good to be true when you receive your return, it probably is. Remember, check your return and it might even be a good idea to get  second opinion from another preparer.  Also, check the credentials of your preparer; is the preparer you hired an Enrolled Agent, or a CPA? Don’t be afraid to ask for references.  Further, don’t be afraid to ask the preparer to explain your return.  I am in the middle of a tax audit right now for a client who did the right thing for many years, but trusted his preparer to inform him of rules and regulations, inform him of what is needed to prepare an accurate return, as well as tell him rules regarding his losses.  Unfortunately, he has a preparer who did not do the right thing and now the IRS is challenging the following:

- Hobby Rules (A business must make a profit at least 3 of last 5 years)
- Schedule C Mileage
- Schedule E Tax on Rentals
- Schedule C Business Expenses

He may end up owing quite a bit of money due to the fact the IRS may not allow any of his Schedule C deductions, the tax paid on one of his rentals, as well as the mileage taken during the year.  Overall, we will be able to assist with both the audit and the ensuing tax liability.

If you or someone you know is undergoing an audit, a reconsideration, or a CP2000 letter also known as a proposed tax increase, feel free to call us at 720-398-6088 or check out our website at 

Monday, February 18, 2013

Doubt as to Liability Offer In Compromise

I recently acquired a client who is in need of a doubt as to liability offer in compromise.  The doubt as to liability offer in compromise is a tricky one. Here are a few things to keep in mind:

- You must dispute you owe part of the tax debt or all of the tax debt
- You must dispute the amount of the tax debt
- You must fill in form 656-L Form
- You do not need to fill out a financial form 433-A or 433-B
- You must include a statement indicating why you feel you do not owe the tax or the tax is incorrect
- You must offer an amount more than zero (I usually try to offer one trust fund recovery penalty module)
- Lastly, you cannot dispute an amount owed that has been entered into a judgement or has been decided and subsequently entered by way of the US Tax Court

Most of the doubt as to liability offers I have filed have been for the Trust Fund Recovery Penalty assessed against an individual.  The liability stems from a business 941 tax liability and is a penalty assessed if the IRS feels the taxpayer acted willfully or responsibly in the collection and failure to remit payment. In most if not all circumstances the IRS acts inappropriately asserting non-liable parties for simply being a check signer, a corporate officer, husband, or wife, employee, bookkeeper, or a payroll specialist.  If the trust fund liability is not appropriately discussed during the interview process, the taxpayer does not have representation, or has poor representation, the IRS will assess the debt.  I feel strongly the IRS should change the processes behind the assessments as they have too much power when it comes to wrongful assessments.

None the less, the form 656L can successfully get someone settled out of the trust fund assessment, once assessed.  There is another method used to challenging an assessment which is by way of an 843 claim. However, I can address the 843 claim in another blog post.  It is similar and there are various pro's and con's to filing an 843 versus an 656L.

As always I would STRONGLY recommend if you have been adversely affected by a trust fund assessment to call us immediately to discuss your options. We can be reached at 720-398-6088 or on our website at


Wednesday, February 13, 2013

IRS Budgetary Concerns Make it Harder to Resolve Tax Accounts

Interesting article regarding budget cuts.  In short, our jobs will be more difficult, resolution timelines will lengthen, and the IRS will make it harder for taxpayers to resolve their own issues.  IRS budgetary cuts beyond the levels they are already at could have serious effects on our representatives, taxpayers, economy, and tax system as a whole.  While the IRS has made efforts to get up to speed as far as technologies are concerned, they have let customer service fall by the way side.  Again, the IRS continues to struggle to resolve outstanding accounts making it harder and harder for the layman to resolve their own outstanding issues.  Call us today for your free consultation if you have or know someone in tax trouble. We can be reached at 720-398-6088 or at

Tuesday, February 12, 2013

IRS Issues 1.2 Million Dollar Refund!

It is always good to see the IRS issue refunds, especially for income tax, penalty, and interest. Remember, the IRS is not always right although they would like to think they are!

IRS ordered to refund $1.2 million to Ciminelli - The Buffalo News … via @TheBuffaloNews

Friday, February 8, 2013

Choose Your Tax Preparer and Your Tax Representative Wisely

The article below explains how to choose your tax preparer wisely. Based on the most recent news the tax preparers have won a small battle but have not won the war.  Tax preparers require no more than a PTIN to prepare returns.  Be selective.  I strongly believe the same goes for choosing a representative.  Follow the suggestions below:

-          Are the professionals working your case experienced?
-          Are the professionals working your case Enrolled Agents?
-          Will you be working directly with the professional you have hired?
-          Is the professional you are working with substantiated by an independent third party such as the         NAEA (National Association of Enrolled Agents) or the NATP (National Association of Tax Professionals)?
-          Is the company “guaranteeing” savings?
-          Are the owners of the company willing to talk to you?

What makes us different? Why should you choose Highland Tax Group, Inc.?

-          Mike Wallen is an Enrolled Agent
-          Enrolled Agents are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the Internal Revenue Service
-          Mike Wallen is the owner of HTG and will be working with you directly to resolve your case
-          HTG will accommodate you as far as our fees are concerned
-          HTG will give you an honest and fair assessment thus outlining your options so YOU may choose the path to resolving your case.