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Do I have to make estimated tax payments?

tax problems Jul 19, 2021

The IRS philosophy is when you get paid, they get paid. If that does not happen, interest and penalties are assessed. You absolutely need to pay most of your tax bill during the year or as income is received. This is really an issue for self employed individuals, business owners and investors.

Many times, the reason these taxpayers don’t make estimated tax payments is because they don’t know how much to pay, when to pay or how to pay. The income from one year, may not be a fair representation of income of the following year, which makes it difficult to calculate how much tax to pay in. Another issue is that many taxpayers believe that estimated tax payments must be made Quarterly. This means that a realtor with sporadic commissions, is expected to hold a tax payment for an entire quarter and then make their estimated tax payment. By this time, they have paid current and past due bills from periods when they did not have the cash to make those payments.

Investors...

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Will Your Passport Be Revoked?

tax problems Jul 19, 2021

Kiss that 14 day cruise, Mexican vacay and international jaunt goodbye! It doesn’t matter that your vacation package is not refundable!

The FAST Act allows the IRS to share or certify your tax debt with the State Department, who in turn will revoke or refuse to renew your passport. This law is not limited to criminal tax matters, nor matters where the IRS may believe there is a flight risk. Any seriously delinquent tax debt over $52,000 is where the rubber meets the road.  Here's the thing: a debt is not considered seriously delinquent if you have an accepted installment agreement or an accepted offer in compromise. Fun fact, the $52,000 includes penalties and interest.

There are 3 requirements for a tax debt to be considered “seriously delinquent”:

  1. Tax has been assessed. (there are ways to prevent assessment)
  2. The liability is greater than $52,000
  3. A lien was filed with no exercise of CDP rights or a levy was issued.

Your passport is not at risk if:

  1. You...
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Damn! The IRS revoked your passport. Do you want it back?

tax problems Jul 19, 2021

The IRS revoked your passport. To reverse IRS certification, you must fully pay your balance or make a payment arrangement.

You will receive notice CP508C to advise you that your tax debt is considered seriously delinquent and the IRS has provided that information to the State Department. At this point, the State Department will not renew your passport or will refuse to issue a new passport. They can remove or place limitations on your current passport. Prior to certification, a debt can be paid down. After certification, you cannot partially pay.

Before denying a passport, the State department will hold application for 90 days to allow you to either resolve any errors, fully pay the debt or enter into a payment arrangement.

Now, if you receive Letter 6152, the IRS is asking the State Department to revoke your passport. This is generally reserved as encouragement for Taxpayers who conduct offshore activities or interests or if they believe a revocation will facilitate payment of the...

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My Accountant Told Me That I Only Need To Pay Net Payroll.

tax problems Jul 19, 2021

First of all, fire them!

So many business owners come to me in an absolute panic because on the advice of their Accountant, they have not had the cash to pay their payroll taxes, so they have only been paying net payroll. This means that quarter over quarter their tax bill has been growing and growing. The penalties and interest alone get out of hand.

Payroll taxes are very special and very complex. Unlike income tax, which is maintained in the entity in which it is assessed, payroll tax includes a trust fund, which means that you are holding money that belongs to your employees in trust. They gave you the money in the form of federal withholding, state with holding, social security and medicare tax, which was deducted from their paycheck and they trust you to pay their money to the proper government agency.

The IRS goes crazy when you do not pay payroll taxes. They are like HOLD UP! You are not paying the payroll tax that you owe, but then you took money from your employees that...

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Is The IRS Running Out of Time To Collect From You?

tax problems Jul 19, 2021

The IRS only has 10 years to collect from you.

So why are we still talking about 2010???

I have helped so many Taxpayers resolve their IRS debt simply by reviewing their account transcripts. The IRS does not have forever to collect what you owe them. They have 10 years from the date of assessment. This is commonly referred to as the collection statute expiration date, or CSED. The clock starts with the date the tax has been assessed. This means that it is beneficial for you to file your tax returns on time.

I have taken a cursory look at intake forms and wondered why Taxpayers were still trying to resolve debts from tax years 15-20 years ago. While there can be many reasons why those old years may still be in play, one of them is that the 2008 tax return was not filed until 2012…..WHY…WHY…..WHY….. The debt from that year could have been off of the table for good, but NOOOOOOOOO…… You want to give the IRS an extra 4 years to collect…...

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IRS Post Traumatic Stress Disorder Is Real

tax problems Jul 19, 2021

Owing the IRS and dealing with their collection tactics can be very stressful. It can be the source of anxiety, illness and depression.

Even after the controversy is resolved, the trauma remains. I have seen clients continue to exhibit certain behaviors indicative of continued fear of the IRS enforced collection action. Many taxpayers who have experienced bank levies, who no longer owe the IRS and are not in jeopardy of a levy, continue to be uncomfortable putting money in their bank accounts. This is sad because they are unable to enjoy the convenience of modern day banking.

I have seen Taxpayers have full blown anxiety attacks if they receive a letter from the IRS in the mail. They have not opened it. It could be a $1,000,000 check, it could be an address change confirmation. All they know is that it is from the IRS and that alone causes acute anxiety.

One of the strategies that helps these tax payers recover from. Their IRS post traumatic stress is education.  We fear what...

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Are You A Ghost Employer?

tax problems Jul 19, 2021

Some people think they are so slick. Others genuinely don’t know the proper way to administer payroll and/or payments for contracted services. Handwritten 1099s and W-2s are a red flag that people have no clue or are trying to do something raggedy. Derrick Guiliam, Director of the IRS Small Business Self Employed unit said that they are playing no games with fraudsters. So don’t get caught up!

The Ghost employer project is a new and special initiative the IRS has launched to address the issuance of fraudulent employee tax documents. I believe that this initiative was launched to address the rampant fraud around PPP loans. In this scheme, bogus businesses prepare payroll tax returns in order to maximize their PPP loan amount. However, the reports and corresponding employee documents are not filed. Another scheme occurs when a bogus employer issues a W-2 or 1099 to an employee (but not really) to prove income, but the corresponding W-3 or 1096 form was not prepared or...

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Why am I getting all of these IRS notices and what do they mean?

tax problems Jul 19, 2021

IRS notices are like the worst thing you can receive in the mail. People go through their mail and sit the IRS letters to the side as if to say, I will get to those later. I don’t want to read them now. What if it says they are coming to get me? What if it says I am going to jail? What if it says that I owe them $1,000,000 plus interest. What if they are going to take my house. The stories that we tell ourselves when the IRS sends letters. Now, granted, most of the time the letters are not love letters, but sometimes they are not hate mail either.

The IRS send millions of letters each year just to say “Hey girl…. You know you still owe me that money. You should really start to pay me. Call me so that we can figure it out.” Others are more aggressive, but that is usually how the series begins.

Think about the steps you would take if someone owed you money and acted like they didn’t see you were trying to call them or did not respond to your texts. You...

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Is Your Bank Account Safe?

tax problems Jul 19, 2021

Has your stomach ever dropped while riding a roller coaster? That is the feeling you get when the IRS levies your bank account. It feels like instant illness. When you owe the IRS or State agencies, they have the power to levy your bank account. This means that they can take all of the money out of your account without you knowing and without your permission. It doesn’t matter that your daughter is getting married and the money for her reception is in the account. It doesn’t matter that the money that you need to close on your new home tomorrow is in the account.

POOF! Its gone. And you feel sick. The stress people feel when dealing with IRS debt can literally make them sick.

Don’t let your tax debt get you to this point. Don’t let your tax debt make you sick. Don’t let your tax debt linger on until your bank account is levied.

5 ways to avoid an IRS/State bank levy:

  1. Read the notices you receive. You have several opportunities to resolve the matter...
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