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.

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!!!

Partial Payment In Business Installment Agreement Saves $200,000!

We have worked with this taxpayer for quite sometime. He came to us in the fall of 2010 with a tax liability totaling over $200,000. He had a lot to do prior to setting up an agreement with the IRS as the business was not current or compliant with any obligations at the time. As you are all aware, a taxpayer must be current with the Federal Tax Deposits and tax returns prior to setting up an agreement.

After getting the taxpayer current and compliant we submitted a financial form that showed the taxpayer could pay roughly $500 monthly toward the liability. After working with the Revenue Officer for several weeks he agreed to set up the plan. The plan will pay out approximately $40,000 over the remaining life of the collection statutes. A net savings of over $200,000 will be realized over time after all interest and penalty accruals have been accounted for.

Another great success story is finalized as we maintain operations and keep people employed!!

Assessment Statutes Expire Saving My Client $180,000!

The IRS has an assessment called the Trust Fund Recovery Penalty which is used to assert a penalty to the responsible parties in a business when dealing with outstanding employment taxes. The IRS has a 3 year period of time to do this. The 3 year statute begins upon the actual filing of the return and original tax assessment. If the IRS misses this timeline, they cannot assess the taxpayer with the trust fund recovery penalty. I believe I have explained the trust fund previously in a different post. However, let me revisit; the 941 tax is made up of Federal Withholding, Social Security, and Medicare pulled out of each employees paycheck. The employer matches this amount as well. The Trust portion is the employee withheld portion only. Officers, shareholders, CFO's, Treasurers, and Partners can all be responsible for the trust portion of the debt. If held liable, liens will be filed, levies will ensue and other collection action will take place against the individual. Our client, by virtue of time, will be free and clear from the trust portion of the debt.

Our client ran a business and managed to incur a $302,000 liability to the IRS for employment taxes. These accruals took place over a 4 year timeline from 2003 up until 2007. The last ASED (Assessment Statute Expiration Date) expired on 4/15/2011. We estimated the trust portion of the debt to be around $180,000. Our client will no longer be responsible for paying this back or at risk for assessment.

We have managed to wrap up the old business, close it out, and save our client $180,000!!

Partial Payment Installment Agreement Saves 1.3 Million

Our client came to us with well over 1.5m owed in back 941 tax liability. They were also missing several 1120 tax returns, 940 tax returns, and 941 tax returns. After about a year of working with the taxpayer, keeping them protected from aggressive collection action, and working with the Internal Revenue Service, the taxpayer was finally able to file all missing returns. Upon filing all the missing returns, the business was able to stay current and compliant with all Federal Tax Deposits.

At first the IRS thought the business could pay closer to $15,000 monthly, an amount that would suffice and pay the liability off over time given the collection statute. However, the taxpayer indicated she could not afford this amount, nor did the financial data show the business could afford a large payment. The IRS also wanted to seize assets and real property to help pay down the tax liability. All seizure would do is put the taxpayer out of business and 50 people out of work. We were able to convince the Revenue Officer working the account to set up an agreement of $2,000 monthly. The IRS decided to not seize the business location or shut them down. Over the next 100 months the business will pay back $200,000.

We consider this a great resolution as it keeps 50 people employed, 50 families fed, a business going that has been open for over 40 years, and the economy in a small town alive. We take pride in what we do to save businesses across America from closing down. If we can work out an equitable resolution with the IRS and keep people employed, we know we have done our job correctly!

Offer In Compromise Saves Taxpayer 85%!

Our client came to us last fall with a unknown tax liability. She also needed her 2009 tax return prepared. After preparing her 2009 tax return, we determined that she owed approximately $30,000 in taxes and a total of $35,000 with penalty and interest. After reviewing the financial statement we made the determination that she qualified for an Offer In Compromise.

Her liability incurred was based on life insurance distributions that were never paid back. These distributions go back to the year 2000, but when she couldn't pay back the amount of money taken over the last 10 - 11 years, it was taxable in the most recent year. Our client is just under the age of 30 years old. She works as a secretary for a tech company in the local area. She doesn't make much money, has 1 child, and very limited resources to pay her tax liability. We offered the value of her assets consisting of equity in two vehicles, totaling just over $5,000. The Offer In Compromise doubt as to collectibility was the appropriate Offer In Compromise to file.

After the IRS was aware of how the liability was incurred, reviewed the financial documentation, and discussed the Offer In Compromise we submitted, they agreed on a settlement. The taxpayer was very happy with the results needless to say. If you are looking to settle on your tax liability and want to know if you qualify for an Offer In Compromise, call us now at 720-398-6088 or check out our website at www.highlandtaxresolution.com.

Saved Corporate Officers From $200,000 in Trust Fund Assessments!

The trust fund portion of the tax liability owed by a business is made up by the medicare, social security, and federal income taxes withheld from employees paychecks. When an officer of a corporation does not in turn take these monies and remit them to the Federal Government, the officer can be liable for what is called a trust fund assessment, or Civil Penalty. In essence the employees are "trusting" the employer to remit these taxes on their behalf so they pay in their fair share of SSA, Medicare, and Federal Withholding.

Our client came to us owing the government over $300,000 in 941 liability to the IRS. We immediately started having them remit voluntary payments to the IRS and designating these payments toward the trust portion of the taxes. After our initial financial review we determined the business could afford to pay approximately $5,000 per month toward the liability. We offered this proposal to the IRS. After much consideration, a few appeals, and waiting on the IRS to get back to us the proposal was accepted. The revenue officer we worked with also worked on the trust portion of the liability as explained above. She determined both officers were responsible. At first, the liability was calculated incorrectly, but we will save these details for another posting.

When it was all said and done, we were able to negotiate a stay on the trust assessment. We had convinced the Revenue Officer that due to the liability, installment proposal, and the fact the taxpayer had made well over $45,000 or so in voluntary payments, that she should hold off on assessment. She ultimately agreed and had the taxpayers sign a waiver agreeing to an extension of the statue to collect. All this means is she did NOT assess the trust fund to the officers. Liens will not be filed against the officers, and the collection department with the IRS will not attempt to collect on this liability. The business has been current and compliant with all Federal Taxes due and current with installment payments. Our client was ecstatic when we told them the IRS would not be assessing the trust at this time.

Remember, if you work with the IRS diligently, comply, and know your rights, great things will happen!!

Crossing your T's and Dotting your I's

As we all know when dealing with the IRS it is important to make sure you cross your T's and dot your I's.

We recently had a client who came to us with a closed business. He wanted to simply pay the trust portion of the liability (Federal Income Tax, Social Security, and Medicare withheld from the employees checks) and close the business formally with the IRS.

We assisted him with the closure of the business and gave him the appropriate payoff for the trust fund. The business owed closed to $50,000 in 941 tax liabilities upon closure, the trust fund was $30,000. The client paid the $30,000 in trust fund with one check. We filed all the final returns, final financial statements, recorded the final bank statements, and informed the IRS of the closure. We also disclosed the asset situation (taken over by a factor at closing). Upon finalizing all the documentation informing the IRS of the dissolution, the IRS determined the business liability to be currently non-collectible.

So remember, obtaining all the required information prior to addressing the IRS liability is key in obtaining a successful resolution!

Tis the Season for Filing Returns!

Tax season is upon us and the deadline is quickly approaching to make sure all personal income tax returns are filed with the IRS and State taxing authorities. Please be sure to get your tax return information over to your tax preparer or CPA as quickly as possible.

Keep in mind, we now prepare all types of returns here at Larson Financial, Inc. We prepare 1120's, 1065's, 941's, 940's, 1040's and all State returns associated with each particular entity.

Please call today for a free quote and we will be sure to prepare and finalize your tax returns!

Cheers!