Anybody can be tax preparers, so you should choose one wisely to avoid IRS issues because of mistakes on your tax return.

You can choose a tax preparer with the help of the following factors:

• Know the tax preparer’s service fee. If a tax preparer establishes his fee on a percentage of your refund or claimsGo the other way if a tax preparer establishes his fee on a part of your claim or refund.
• Stability is vital. Find a tax preparer who will be around after April 15 and will be available to answer queries from you or the IRS if they arise.
• The tax preparer’s references should be checked out.
• Find out if charges have been filed against the tax preparer with the Better Business Bureau or if he’s affiliated to any associations.

• Check the tax preparer’s credentials, and note that only CPAs, enrolled agents, and attorneys can represent you in an appeals hearing or audit.

During your meeting with the tax preparer, he will want to see your records and receipts. Questions about your deductions, expenses, and income may be posed. They are willing to make changes if mistakes are uncovered and are able to assist you at an IRS audit, as well as guarantee the accuracy of their work.

The form has an area that the tax preparer must fill out and sign. Remember, you’re responsible for the accuracy of everything on your tax return, even if someone else prepares it. Before you sign your return, you must review it. Check your name, address, and social security number(s) to make sure they’re right. Always sign in ink and don’t ever sign a blank return. Keep a copy of the return for your records.

If you want to resolve your IRS problems and pay off your liability, you may want to think about an Offer in Compromise (OIC). Depending on the circumstances, it’s possible to pay less than what you owe by negotiating with the IRS.

You can determine if you qualify for an OIC by examining the IRS Form 656 booklet.

You’ll need to prove to the IRS that you meet any of these conditions in order to qualify for an OIC:

• Doubt as to collectibility – There’s doubt on the IRS’s part that it will collect your tax bill from you at present or later.
• Doubt as to liability – This is uncertainty that you even owe the tax bill or that the assessed tax is accurate.
• Effective tax administration by giving evidence that paying the tax liability is unjust as it’ll cause you financial crisis.

The Best Offer

The money that the IRS could collect from your future income and the realization value of your assets are what is calculated for the sum of the OIC.

The amount the IRS could take if they seized your assets and sold them at present is the realization value of your assets. Debts connected to the property will not be included. To determine this figure, the IRS utilizes a “quick sale value”, meaning 20% less than the fair market value.

In coming up with with this sum, you don’t have to include personal or household effects. You should include luxury items, though.

The balances of your retirement plans also should be included, less the taxes and penalties connected with cashing them in, with an explanation of how you arrived at the amount you supplied.

You might wish to read the roster of items you may exclude from asset calculation in the IRS Publication 594, The IRS Collection Process.

You deduct your necessary living expenditures from your monthly income to establish your future income. This is your disposable income. This amount is then multiplied by the number connected to the type of payment plan you want to use.

Payment Plans

• Cash Offer � You will settle in a lump sum within 5 months of IRS notification that the OIC has been accepted. Multiply your future income by 48.
• Short-term Deferred Offer � You will settle the amount of the offer after 91 days but within 2 years of the IRS notification of acceptance. Multiply your future income by 60.
• Deferred offer – your future income multiplied by the months remaining on the statute of limitations for collecting your taxes.

You have heard of the Trust Fund Recovery Penalty. Trust funds that are not settled are evaluated with penalties. How are Trust funds defined? Trust fund is money withheld from an employee’s paycheck. It may be Medicare, FICA, or federal tax that’s held in trust until a federal tax deposit is made.

Any individual, whether an employee, officer, or director of a corporation, who has the power to collect, account for, and pay trust funds is liable for these funds.

Anybody liable for collection and payment of trust funds and knowingly doesn’t do so is assessed with this penalty. An IRS agent might do interviews of those in the company to figure out who is liable. He will be finding out who made crucial decisions, had authority to sign company checks, had the ability to pay the company�s bills, and who did the tax reporting. It might even turn out to be multiple people. The penalty isn’t divided equally; each individual needs to pay the entire sum until the penalty is settled in full.

If you are one of these individuals, you must know your rights. Know if the right amount was assessed. This sum is equal to the unpaid balance of the trust fund tax. You might wish to check into being eligible for an Offer in Compromise or if there is a possibility of reaching an installment agreement with the IRS.

Whatever the case, you need us! Our office can help you walk through the many factors of the Trust Fund Recovery Penalty. We can provide guidance through the appeal process so you can assess all the possibilities.

Your IRS problems are growing if you owe a tax liability. Penalties are assessed to unpaid taxes until the bill is paid in full. It may be compounded by IRS personnel or IRS computer.

Originally meant to discourage taxpayers from missing tax payments, penalties are now a source of additional revenue for the IRS.

Categories of Penalties

• Combined Penalties
• Late Filing of Tax Return Penalties
• Failure to Pay Taxes Penalties
• Fraud Penalties
• Accuracy Penalties

An accuracy penalty of twenty per cent is imposed if you downplay your tax return’s income tax liability.

Fraud penalties are assessed if you fraudulently excluded or understated your income on your tax return. This is 75% of the exluded figure.

Failure to pay taxes penalties are compounded at 0.25% to 1% each month of the figure you failed to pay on time. It begins at 0.50%. If you arrive at an installment agreement, this is dropped to 0.25% every month. If you don’t pay and are later served with a Notice of Intent to Levy, the penalty can raise to one per cent each monthon the amount due. This penalty begins on April 16 and 0.50% is compounded to your liability on the 16th day of each month.

Penalties for late filing of tax return can range from five per cent to twenty-five per cent montly.

Combined penalties are combinations of two or more penalties and they add up fast.

If the mistake was caused by incorrect advice from an IRS official and you can show it, the IRS will not evaluate penalties. Prove that when you necessitated the IRS for advice, you gave correct tax information to the IRS.

If you will prove reasonable cause why you did not comply with the tax law, you can get rid of or lessen penalties. This should be done in writing.

Reasonable cause can be financial, medical, and personal issues, or anything that proves that you acted with “ordinary business care and prudence, and a valid reason for failing to act.

You need to know that interest and penalties are accumulating if you haven’t filed your tax returns because you can’t settle them. This IRS issue should be settled, so look for a way.

Not filing your tax returns is worse than filing them late and owing the IRS tax debt. It is a felony if you do not file a tax return and you owe taxes but there’s no criminal penalty if you file but cannot settle your taxes. You could be sentenced to one year in prison and/or fined up to $25,000 each year for every unfiled year if you continue to not file your taxes.

The IRS uses its computerized Information Returns Program (IRP) to match up W-2’s and 1099 income reports to determine if people have filed a tax return. This tool is very efficient. Before the IRS knows that you haven’t filed your tax return, get organized and get it done!

Filing Your Return

• Gather all documents together. Get your W-2�s and other papers together. If you determine that there are documentation missing, request duplicates from the IRS.
• Prepare your tax returns. Get a tax professional or do it yourself. A tax professional can be available to answer any questions and deal with the IRS when needed.
• Know all about tax refunds. An unfiled tax return might still have a tax refund. You need to be aware of the time limit for refunds and also be prepared to have the IRS utilize this refund for settlement toward your tax bill.
• Fully settle your tax debts. You should prepare a plan to let you settle your tax debts. Cooperate with the IRS and obtain advice from a tax professional to protect yourself from an IRS probe. You’ll have to qualify for an Offer in Compromise or an installment agreement. Your IRS issues will go away with a good plan.
• Future planning is important. Evaluate your tax situation with a tax professional and plan strategies that will minimize your taxes and help you reach your economic goals.