IRS Tax Debts

What You Should Know If You Didn’t Pay Your Tax Balance by July 15

Published on: November 18, 2020 | by Enterprise Consultants Group

Due to the COVID-19 pandemic and all its surrounding circumstances, the IRS chose to shift the tax filing deadline. This essentially moved the usual filing date for 2019 taxes from April 15^th to July 15^th. Whether you owed taxes to the IRS or they owed you a refund for that year, the applicable deadline was still July 15^th, giving all taxpayers a few extra months to get their affairs in order. However, now that that date has come and gone, some people may have filed their returns but not paid any amount owed. In addition, others may not have sent in their return at all, either waylaid by the pandemic or afraid of having to pay the IRS an amount that they cannot afford. No matter which category you fit into, it’s important to know that you still have options.

Now Is the Time

If you haven’t already filed your 2019 return, regardless of whether you owe taxes or not, now is the best time to file. Don’t be afraid of having to face the penalties and other fees handed down by the IRS. They will work with you. However, they cannot do anything if you haven’t filed your return.

Five Steps To Follow If You Receive a Collection Notice from the IRS

Published on: October 21, 2020 | by Enterprise Consultants Group

Although the IRS is persistent when it comes to collecting debts owed, such as unpaid taxes, they also contract with a number of private collection agencies tasked with sending out notices and contacting people who owe back taxes. This can make the collection process a bit muddled and confusing, because there are many scammers out there claiming that people owe debts to the IRS, attempting them to trick them into paying up. These scams can be tricky and financially ruining. In order to ensure that you’re working with legitimate people contracted by the IRS, as well as paying on an actual tax debt, there are several steps that you should take when a collections notice appears in your mailbox.

What You Should Do If You Receive a Collection Notice

In order to prevent people from falling prey to scammers who claim they are working with the IRS to collect back taxes, they have set up a number of safeguards. If you receive a notice from the IRS or one of their contracted collection companies, there are a number of things that you should do in order to not only ensure that the debt is legitimate but also to make the proper payment arrangements to cover any debts that you do indeed owe.

Yes, The IRS Can Find Out How Much Money You Have

Published on: September 23, 2020 | by Enterprise Consultants Group

It seems at times as though the IRS is an all-knowing, all-powerful entity that no one can escape. You can’t run, and you can’t hide. They know how much money you make, how much you have in your bank and investment accounts, and even how much you won while playing roulette at the casino last week. But the real question is: do they truly know all of this? Or do we just assume they do? How can they obtain all this personal information? The answer is pretty simple. In reality, the IRS does have plenty of financially insightful access to everything from your bank accounts to every tax form submitted with your name and social security number on it. But is there a limit to “Big Brother’s” financial access?

How Does the IRS Know That I Have Undisclosed Income?

The IRS uses a sophisticated computer system in order to match up your income as reported on your tax return with everything that your employers have reported under your name and social security number. For example, if you submit a return that only has the money that you’ve made from one client or job, neglecting to enter any of your other income, the IRS’ computers will catch the mistake. Then, you’ll receive a letter from them informing you of their findings and their impact on your current tax situation.

How to Prepare for an IRS Audit & State Audit

Published on: September 18, 2020 | by Enterprise Consultants Group

Audits are not a welcomed entity in anyone’s eyes. So, if you’ve just received a notice informing you of an impending IRS audit and state audit, do not panic. In some cases, people or businesses are selected for an audit at random. In others, an IRS audit is triggered by issues with your tax return, either because something appears irregular or incorrect or people associated with you, such as your business partners, are being audited as well. This dreaded process if often filled with stress and fraught with mixed emotions, because it may result in you having to pay fines or back taxes if the IRS or state agents find discrepancies on your filed tax forms. The good news is that riding out an audit doesn’t have to be scary or intimidating, as long as you have professional tax accounting guidance and representation.

How Will You Be Informed of a Pending Audit?

Depending on the type of audit and the inconsistencies found in your taxes, you’ll either receive a certified letter or an official IRS agent will come knocking on your door. In most cases, a letter comes first. It will describe the type of audit that you’re facing (more on that below), as well as how the IRS will further contact you in order to obtain your records.

Why You Should Hire Professionals to Prepare Taxes

Published on: September 11, 2020 | by Enterprise Consultants Group

Let us begin with a simple question: who prepares your taxes? Many individuals and small businesses attempt to go it alone to cut costs, which can be problematic in a few different ways. Many times, you do not have sufficient time to prepare the documentation properly, so you opt for shortcuts that result in audited by the IRS. You might also make simple, unintentional mistakes because you are trying to balance your company’s financials and your daily business operations, leading to mistakes in your accounting. Though it will require an upfront expenditure, it will save you time, money, and future headaches.

Here are some of the many benefits that a tax professional can bring to the table for your business.

Making Estimated Payments to the IRS

What to Do If You Haven’t Filed Your Taxes in Years

Published on: August 21, 2020 | by Enterprise Consultants Group

Life can get busy, and sometimes, things slip your mind, especially when you’re moving in eighteen different directions at the same time. However, when that “something” consists of your tax returns, you could be in quite a bit of trouble with both the state and the IRS. Even if you regularly pay taxes and should be receiving a refund every year, you still need to file your returns by the deadlines set forth by both the Federal Government and the government of the state in which you reside. Otherwise, you face having to pay steep penalties, having your refund check delayed, and other serious issues. If you owe back taxes, you could face even more severe financial ramifications, such as having liens placed on your property or having your bank accounts levied.

What to Do If You Haven’t Filed Your Taxes in Years

No matter the reason is as to why you haven’t filed your taxes, it’s important that you take the first step necessary to remedying the situation. Although you should always seek the help of a professional tax expert who can walk you through the situation and negotiate with the IRS or state on your behalf, there are some initial actions that you can take on your own.

Divorce and Taxes Owed

Published on: August 19, 2020 | by Enterprise Consultants Group

Divorcing your spouse can be a complex undertaking and involves more than simply splitting up jointly owned bank accounts and properties. It also means ensuring that your taxes are completed and filed properly. A number of issues can pop up while completing taxes in the middle of a divorce, some of which may require you to file tax return(s) with your soon to be ex-spouse. In other cases, a change of marital status can result in having to file taxes quite differently than you are used to, leading to the high probability of making a mistake.

Filing Tax Returns Jointly

According to current IRS regulations, two spouses who are in the middle of a divorce, yet not officially divorced at the end of the tax year can file a joint tax return. Even if both individuals are no longer residing in the same location, as long as they are still legally married and no official divorce decree has been approved by the courts, that joint return is valid.

High-Income Individuals with Unfiled Tax Returns Might Be Getting Visits from IRS Revenue Officers

Published on: February 26, 2020 | by Enterprise Consultants Group

The IRS must follow a series of procedures to collect unpaid taxes. The first step is to send written correspondence to the taxpayer informing them that their tax return is overdue and advising them of the penalties for continuing to fail to file. From there, the IRS may place a lien on a taxpayer’s property, followed by the execution of a levy. It could hand long-delinquent cases over to private debt collectors. Our Los Angeles tax advisors have observed that the IRS recently announced that revenue officers (ROs) will be visiting high-income taxpayers with at least one unfiled tax return in 2020. “High-income” in this instance means annual income of more than $100,000.

What Is a Revenue Officer?

ROs work at IRS field collection offices located around the country. Their job is to collect unpaid taxes, but their powers in that regard are somewhat limited. They are civilian employees, not law enforcement officers. They therefore do not wear a uniform or carry a firearm, and they cannot make arrests. They carry identification cards, not badges.

If an RO has reason to believe a criminal offense, such as tax fraud, has occurred, they must refer the matter to the IRS’s Criminal Investigation Division (CID). CID agents carry badges and can make arrests.

Tax Relief Available for Discharge of Certain Student Loan Debts

Published on: February 6, 2020 | by Enterprise Consultants Group

Student loans account for a substantial portion of this country’s total indebtedness. Outstanding student loan debt is estimated at $1.5 to 1.6 trillion. The U.S. Department of Education (DOE) holds almost all of this debt, giving it substantial power over repayment, forgiveness, and discharge. Normally, discharge of debt is considered a taxable event. The IRS has established revenue procedures creating a “safe harbor” for discharges under certain DOE programs. Our Los Angeles tax advisors observed that it recently issued a new revenue procedure expanding that safe harbor.

Student Loan Discharge Programs

The DOE maintains several programs that allow partial or total discharge of student loan debt in specific situations. These programs only apply to student loans made or guaranteed by the DOE.

Closed School Discharge

The Higher Education Act (HEA) of 1965, as amended in 1986, directs the DOE to discharge the student loan debt of a borrower who is unable to complete their studies because their school closes, or because of certain fraudulent actions on the part of the school. Borrowers must apply to the DOE to obtain a discharge under this program. They must be able to demonstrate that they were either enrolled in the school or on an “approved leave of absence” at the time of closure, or that they withdrew 120 days or less before the school closed.

Taxation of Social Security Benefits

Published on: January 28, 2020 | by Enterprise Consultants Group

The Social Security program has provided benefits for millions of people in its eighty-five years of existence. Political compromises have kept the program going as the cost of living has increased faster than wages. One of these compromises resulted in the assessment of federal income taxes on some Social Security benefits. This only applies to taxpayers with income above a threshold amount. Even if an individual’s income is above the threshold, only part of their Social Security benefits are taxable. Not all benefits payable by the Social Security Administration (SSA) are subject to federal income tax, and our Los Angeles tax advisors can explain the extent to which tax rules apply.

Types of Social Security Benefits

The SSA is an independent federal agency, meaning that while it is part of the Executive Branch of the federal government, it is not part of a federal executive department. Much of the funding for SSA programs comes from payroll taxes. The agency administers numerous benefit programs, including:
– Retirement benefits, which are available to people who have made a minimum number of payments into the program through their payroll taxes, and who have reached the age of sixty-two;
– Social Security Disability Insurance (SSDI), which helps eligible individuals who are unable to support themselves because of an injury or medical condition;
– Survivors benefits, which provides assistance for family members of SSA beneficiaries; and
– Supplemental Security Income (SSI), which pays benefits to elder individuals, blind individuals, and individuals with disabilities.

Most of these benefits are taxable if the individual meets the income threshold. Dependent or survivor benefits received by a child are usually not taxable, unless the child has sufficient income to file their own income tax return. SSI benefits are not subject to federal income tax under any circumstances.