Trust Business Consultant 

 Accounting  and Business Valuation

Blog

Blog

Late Tax Returns

Posted on October 11, 2016 at 2:00 PM Comments comments (14107)

Filing late or past due returns may not be as difficult as you think.

If you need additional time, we can usually help you get an extension of time to file or temporarily suspend collection activities.

If you can’t afford to pay your taxes, we can help negotiate a payment plan that you can live with;

If you have lost or misplaced your tax information, we can get much of this information for you;

We can help prepare the late returns, obtain favorable payment options and get your life back on track!

Why You Should File Late or Unfiled Tax Returns

Taxpayers should generally file all tax returns that are due, regardless of whether or not full payment can be made with the return for a variety of reasons.

First, failing to file a tax return will often result in a failure-to-file penalty. Filing a late return may help to reduce your tax penalties even if you cannot pay the taxes owed.

Second, the collection period in which the IRS can collect taxes on your return is limited. By filing a late return, you may are limiting the time period in which the IRS can collect taxes. Failure to file your return extends the collection period indefinitely.

Third, you may be entitled to refunds. Even if you owe taxes for some years, you may be due refunds for others. Your time to receive refunds, or apply overpayment from some years to others in which taxes are owed is limited. Don’t let this happen to you! Get your refunds or tax credits before its too late!

What Happens When You Don’t File Your Return

If you don’t file, the first step the IRS will take is to determine whether or not you need to file and what taxes may be due. You may not need to file a tax return if your total income is less than the minimum amount required to file a return or the income you earned is of a character in which tax filings are not required.

Once the IRS determines that you need to file a return and that taxes may be owed, the IRS may send you a friendly reminder notice that your tax return has not been received and request you file your return as soon as possible. Once you receive this letter, the chances are pretty good that the problem is not going to go away. If you moved, never received or never opened the letter – this does not help you.

You are still obligated to file. Don’t ignore these letters any longer – let us represent you!

If the IRS determines that you have not filed your tax returns and it appears that you owe taxes, the IRS may prepare a return for you (substitute for return) and hold you liable for the taxes owed. Unfortunately, the amount determined by the IRS is usually MORE than the taxes you really owe because the information used by the IRS is limited. Don’t let the IRS do this! Prepare your return with us and let’s get all the tax benefits and deductions your are entitled to.

Once the IRS determines you owe taxes, the IRS will begin its collection enforcement of these taxes. This may include levying your bank accounts, levying your wages, recording federal tax liens, etc. This is not where you want to be! Whatever circumstances apply, it is important that you take steps to file your tax returns now (even if you owe money that you cannot pay). The filing of your tax returns can help reduce penalties that may apply. Furthermore, filing your returns and acknowledging your debt may eliminate the filing of a tax lien by the IRS thereby hurting your credit and amounts you may need to borrow. Don’t let this happen to you. Once the collection process begins it becomes more and more difficult to stop it. Let us represent you!

How to Prepare and File Late Tax Returns

Our procedures for filing late tax returns are very similar to the procedures we use in filing your tax returns on time with one important exception. Our IRS representation services will almost always include:

• contacting the IRS to acknowledge your tax filing delinquency and informing them of your efforts to comply,

• requesting temporary relief from ongoing collection efforts to allow additional time to prepare your returns;

• gathering information from the IRS regarding what may be owed, what penalties and interest may have been assessed already;

• gathering information from the IRS on what sources of income and deductions have been reported;

• recalculating penalties and interest and helping you to abate these amounts wherever applicable

Paying Taxes Late

Whether paying with a timely filed tax return, or filing late and paying late after receiving a bill from the IRS, taxpayers are encouraged to pay the taxes they owe in full. If taxes are not paid, and no effort is made to pay them, the IRS can ask a taxpayer to take action to pay the taxes, such as selling or mortgaging any assets owned or getting a loan. If no effort is made to pay the bill, or make other payment arrangements, the IRS could also take more serious enforced tax collection action, such as levying bank accounts, wages, or other income, or taking other assets.

Once the total tax liability is determined, we explore the various payment options that may be available to you. There are generally four options available:

1. Pay your tax liabilities in full;

2. Pay the full amount of your taxes owed over time;

3. Pay less than the full amount of your taxes;

4. Make no payments until some future date in which you may do any of the above

Whatever circumstances may apply, we can help you negotiate a payment agreement that you can live with to help you get back on track. Call us for a free tax consultation!

 

Testimonials

Our company has been a customer of the firm for approximately 5 years now ... our business was unfortunately affected by a Civil Tax Penalty... we sent the case over to the firm for representation and managing. Immediately the firm acted upon the issue without rest ... the penalty was deducted from our account and we were able to continue business without any other concern than to make sure our business thrives while keeping the peace of mind of our officers intact. This is why it makes sense to hire a company such as CPA Miami. They accompanied us in the good times, but when the bad times came, they also stepped in with a straight forward and determined approach to bring the financial well being of our company to safety. We can't be more thankful for their excellent service on this case and their continued support throughout these 5 years plus. If only our recommendation served to bring them other clients in the future, then we'd feel our gratitude is towards the path of repayment.

-- Marcos Perez

Very knowledgeable, friendly and timely service. Have been a happy and very satisfied customer since 2009

-- Kathy Gutierrez

12 Things You Need to Know About the IRS Audit

Posted on October 11, 2016 at 1:50 PM Comments comments (20184)

12 Things You Need to Know About the IRS Audit

This year we compiled a list of perhaps the most important things you need to know about getting audited by the IRS. The “good news” is that IRS office examinations are perhaps at an all time low. The “bad news” is that there are perhaps more examinations than ever but most of the examinations are done by getting a letter from the IRS or correspondence audits. Make no mistake that getting that IRS letter is still an audit and you’re probably going to need professional representation even if first appears like something you can do yourself. If the IRS finds a problem in one year there’s a really good chance they’re going to look at the year before and the year after as well. Here’s a list of 12 IRS Red Flags you’ll need to look for.

 1. LEAVING OFF INCOME FROM YOUR RETURN

Perhaps this is the most common mistake we see! Just because you didn’t put it on your return, doesn’t mean the IRS doesn’t know about it. Do you really want to risk it? It doesn’t matter if its $100 or $100,000. Leave it off and there’s a really good chance you’ll get caught. Simply saying you forgot about it, or you really didn’t make any money after considering your expenses is not good enough. The IRS won’t usually call you in on this for a year or two later. The IRS generally has three years to audit you. If you leave it off and its large enough, no matter what your expenses were, the IRS now has six years to audit you. Most common here are self-employment income and stock sales. It doesn’t matter that you didn’t make any money. What matters is that you didn’t report it and you should have.

 2. MEALS AND ENTERTAINMENT

You will need to support business meals and entertainment deductions. Simply paying these expenses through your business account is not enough. The IRS will take the position that all amounts claimed for business meals and entertainment is not deductible. You will need to support who, when, why and the amounts paid for each expense. Don’t make the mistake of trying to write-off every little meal expense. Chances are good that you’re not entertaining business clients at McDonalds or PizzaHut. Chances are you’re trying to deduct all your meals just because you have a business. Well … you can’t. Meals and entertainment is perhaps the most frequently attacked deduction by the IRS because the IRS knows that you most probably didn’t keep the documentation you need to support your deduction. On the other hand, just because you didn’t do everything “right” doesn’t mean you’re not entitled to the deductions. It just means that you’ve got a lot of work ahead to sort this out before you get to the audit.

 3. AUTOMOBILE EXPENSES

Claiming amounts paid for business automobile use will be disallowed where you cannot support the business use of your vehicle. Hopefully, you already know that the IRS requires you to maintain mileage logs showing who, when and why you used your vehicle for business. Simply paying these expenses through your business account is not enough. The IRS will often take the position that amounts claimed for business automobile are not deductible. The “burden of proof” lies with you (not the IRS) to show that amounts you claimed are both reasonable and ordinary. Just because you don’t have the mileage logs doesn’t necessarily mean you don’t qualify. For example, you may be able to show bills for auto repairs that have your mileage on different dates showing how much you actually used your car. You may also be able to assert reasonableness of the deduction given you occupation if, for example, you are a realtor or Uber driver. There’s often a lot that can be done here given that you’re working with the right professional.

 4. HOME OFFICE DEDUCTION

Claiming the home office deduction is allowed only when you exclusively use a portion of your home for business. Perhaps the most difficult hurdle to overcome is the exclusive use requirement. Having a spare bedroom which has your desk and computer is not enough. A multi-purpose room in which you keep your home gym equipment or also serves as the kid’s playroom will almost certainly disallow the deduction. Having an office or place of business outside of your home where you work will similarly cast doubt on whether or not the home office is actually needed, or one of convenience for you. Recent changes in tax law also allow for a “safe harbor” method of taking the deduction for a smaller amount. Many taxpayers simply don’t want to take the deduction feeling its an audit red flag. That’s not necessarily correct. If you’re entitled to it, you probably should take the deduction. If its questionable, you may opt to simply not go there. A well-seasoned tax preparer will probably be your best source to see what works for you.

5. CLAIMING LABOR EXPENSES

Now I’m not talking salaries here. I’m talking about expenses you pay to others who do work for you. This ranges from your lawyer, your accountant, your assistant, your workers to even the people who clean your office. Don’t give them a Form 1099 and you’re probably not going to get the deduction. It doesn’t matter that you paid it. You didn’t report it. Argue the point and you could get hit with penalties for the failure to report it and withhold taxes. You can even get hit with penalties for the failure to claim them as your employees.

 6. “I’VE GOT NO RECEIPTS”

This is a big one! Just because you paid for it, doesn’t mean you can take the deduction. The law is clear. You need to maintain evidence of what you paid, to whom and for what. Going to Best Buy and spending $1,000 does not necessarily mean you spent it on new office equipment. You could have simply bought school supplies for your daughter. You need to have receipts of what you purchased and why.

 The “good news” is that even if you have no receipts, you may be allowed many deductions that can be reasonably expected based on the work that you do based on supporting case law. Its not the best position to be in but in some cases we have no choice but to assert this privilege where your receipts have been destroyed or otherwise lost. Its never in your best interests to simply withhold information you may have or otherwise be able to get if you put in the time and efforts. However, in those cases where absolutely nothing can be found, you may have no choice.

 7. LIVING EXTRAVAGANTLY

You may not feel your living extravagantly, but the IRS agent may disagree! Showing up with a new Gucci purse, putting the keys to your new Mercedes on the table, or inviting the revenue agent into your house may all seem innocent enough … after all, you paid for all these items with income you claimed. Or so you thought. But that examiner may find your lifestyle a bit too lavish based on the income you’re reporting. Even if someone gifted it to you the question remains “why”. Did you know that someone giving you money or property over $14,000 is usually required to file a gift tax return? Inviting the IRS to your office or home sometimes can’t be avoided. Having professional representation will help you prepare your answers and avoid embarrassing situations.

 8. INTERNET POSTING

Sure, you’re proud of your business. And you may even embellish your qualifications on the Internet. After all, who doesn’t. Your internet site makes you look like a “big shot” with lots of customers, experience, references and pictures. But what if that’s really not you. What if you claim your sales are much larger than you’re reporting. Or what if your friends on FaceBook are not the most honest people around. What if your big mouth gets your friend to report you to the IRS as a tax dodger. Ask me about the time I mistakenly posted something negative about the IRS on the Internet and received 3 calls from the IRS the same day! The IRS is watching and you can be assured the IRS agent will be looking you up as well. After all, it only takes a few clicks.

 9. CLAIMING EDUCATION DEDUCTIONS

Yes, you can receive a tax credit for expenses paid for education. However, not everyone qualifies. Just saying you did doesn’t work. Qualifying educational institutions are generally required to report your qualifying expenses. If you take the deduction you can almost guarantee the IRS will look for the matching deduction reported. If no deduction was reported you’re going to have to explain yourself. Claiming the deduction and wait until you get caught doesn’t work either. You’ll get nailed for taxes, penalties and interest and will likely be on the IRS watch list for sometime thereafter.

 10. USING UNQUALIFIED TAX PREPARERS

Just because a tax preparer has a license doesn’t mean he’s any good. Disreputable tax preparers are looking to get your business by promising you a bigger refund or charging you less than you paid last year. And he’s looking to get all your friends business as well. When your friend at work tells you to use his guy and you’ll get a bigger refund, simply run the other way. That type of preparer is not worried because by the time you get audited, he’s long gone. You can’t get them on the phone, they moved, they don’t have copies of your records are all indicators that’s he not the guy for you. Even worse, when one other person’s tax return is examined, and the preparer did it wrong, the IRS is on the lookout for other tax returns that preparer put his name to. Even worse when you get audited and now they’re auditing your friend’s return as well. Get on the IRS watchlist this time and there’s a good chance the IRS will be looking at you again.

Representing taxpayers in an IRS audit is sometimes not my favorite type of work. It can be costly and often result in you getting hit with taxes, penalties and interest on any changes tax may result from the audit. I would much rather tell you you’re getting money back!

 Our office handles most correspondence tax audits throughout the US and office examinations in Miami-Dade, Florida, Broward and Palm Beach counties for both individual and business taxpayers. Make no mistake about it – not having professional representation can hurt you. It can result in multiple year audits, multiple year tax adjustments and the assessment of tax penalties you may be able to otherwise avoid. Trying to do it yourself to save a couple of bucks will almost always result in you digging yourself deeper and perhaps paying more than you have to. Professional representation requires significant planning, document gathering and most often the reworking of your tax returns. Most of our work is done prior to contacting the IRS.

 There is no such thing as a “simple” IRS problem

The IRS settlement process often requires months of correspondence that cannot be done in a single visit for even the most simple examinations.

 We identify exposure areas to help you from having your tax problems from coming up again. If you owe money to the IRS, you should be prepared to pay it. If you cannot, we can often help arrange a payment plan or other tax settlement on your account. As each situation is a little different you should be prepared to discuss how we can best help you.