April 20, 2021

Paid Tax Preparers Fail to Register for IRS’ New PTIN

“The IRS began a new initiative in 2010 that was designed to prevent fraud and the wrongful filing of information with the IRS. This morning, the IRS announced that over 100,000 tax preparers failed to comply with the new requirements that were made, and many individuals and families have been left unsure as to exactly why their tax returns have taken longer than usual.

The new initiative set into place last year required that tax preparers register with the IRS to receive an identification number to be used in all of the returns they prepare, while the latter portion of the initiative would include an exam and annual training to help with errors and fraud. Although an estimated 712,000 preparers have already registered under the new requirements, the IRS sent out over 100,000 letters this morning informing those that were unaware or failed to comply to the new laws set into place.

No penalties or fees will be applied to those who failed to comply to the new laws set into place, but instead the letter will include a detailed explanation of the new requirements and the steps that tax preparers can take to legally register themselves with the IRS. A fee of $50 per return may be applied in future cases, and court orders barring individuals who fail to comply repeatedly can be issued as well.

The IRS has also sent out a warning advising citizens of fraudulent tax preparers who may refuse to sign your returns in an attempt to avoid the new laws. Any individual entity or company that claims to charge fees based on the size of your returns or promise you a larger refund should also be avoided, as this is another tell-tale sign of fraudulent activity that might prevent your tax returns from being given to you entirely.

A reported 80 percent of U.S. Taxpayers go through a registered tax preparer or computer tax software to file for their taxes at the end of every year, so the report of over 100,000 preparers that failed to comply to the new laws has certainly turned quite a few heads. Still, a vast majority of professionals in America were able to register under the new laws and submit tax forms that were in complete compliance.”

Washington Post

IRS: 100,000 Tax Preparers Fail To Follow New Rules

IRS Says 100,000 Tax Preparers Fail To Follow New Rules

IRS Says 100,000 Paid Tax Preparers Fail To Follow New Registration Rules

100,000 Paid Tax Preparers Fail To Follow New Registration Rules

Offer in Compromise: What Is It and How to Make One

An IRS tax audit can go one of two ways: either the auditor finds everything in order as documented, or there is a financial discrepancy—usually not in your favor, either. Owing a few hundred or even a couple thousand dollars may not be awful, but what if your worst fears are realized and you suddenly owe thousands of dollars—maybe millions– in back taxes to the IRS? More money than you can possibly afford to pay…?

Offer in Compromise

For individuals, owing back taxes that exceed a few hundred or a few thousand dollars could spell financial ruin. The impact to your life could be tremendous. There is an old adage that says, “You can’t squeeze water from a stone.” Simply put, if you can’t pay it, it might behoove the IRS to consider a lesser amount. Enter, the “offer in compromise.”

An “offer in compromise” is a document you may use to make a formal financial offer to the IRS that settles your tax obligations. The IRS accepts two versions:

  • Offer in Compromise when you are unable to make payments or pay in full for back taxes owed.
  • Offer in Compromise when you disagree with the auditor’s findings and are unwilling to pay the amount the IRS demands. This is a “Doubt as to Liability” document.

An “Offer in Compromise” sounds great, right? Here’s the answer to your prayers for the back taxes you owe. Unfortunately, the burden of proof is yours to prove you legitimately are unable to financially repay all that you owe in back taxes. You can pay some of it, but not all. And you will prepare an offer in compromise to suggest the amount you can pay.

Does an Offer in Compromise Make Sense?

Frankly if you gypped the IRS out of money it’s owed, then you should make good on it. But honest mistakes do happen. Even dishonest ones. And the IRS makes mistakes, certainly. To legitimately qualify to use an offer in compromise you must be able to provide financial proof of your inability to make full repayment, either in a lump sum or through a payment process.

Making an Offer in Compromise

The IRS.gov website maintains all the forms and documentation you need to file a formal offer in compromise. Beware of businesses outside the IRS selling services related to filing offers in compromise. If you need assistance navigating this negotiation, you may consult with a tax attorney.

Tip: Check local and regional bar associations for tax attorneys that work pro bono.

Remember, there are two types of Offers in Compromise and you may download them through the IRS website. Read all the instructions carefully before submitting them and complete the worksheet in the Offer in Compromise Booklet, (Form 656-B) to make sure you are eligible to be considered.

Your application requires you submit an application fee and a percentage of your initial tax payment.

For detailed instructions and current Offer in Compromise applications, visit the IRS.gov website.

IRS Audit: What to Expect and How to Prepare

Every year around tax time fears are renewed. What if I screw up my taxes? What do I do if the IRS wants to look at my financial records? Will an IRS audit ruin me financially? Will it ruin my business?

IRS Audit

A Tax Audit

An audit, in general, is a formal review or analysis of…something. In regards to the Internal Revenue Service (IRS), an audit is an official review or examination of your income and asset-related records associated with a recent tax filing. Large businesses and corporations often come under audit scrutiny for financial recordkeeping.

Contrary to popular belief, the IRS audits only those tax records you’ve filed in the last few years. So, if you made a mistake on a tax return 10 years ago, they will be unable to audit you for that.

What about your tax return could prompt an audit? Imagine the millions of tax returns the IRS is required to comb through annually. Typically, only those that clearly deviate from the norm are subject to review, whether you’re an individual or a business.

What to Expect from an IRS Audit

Unfortunately we hear news stories about millionaires and celebrities who’ve been audited and owe many thousands or even millions of dollars in back taxes. That type of news does little to calm fears of an audit.

In the event the IRS finds something peculiar about your tax records, you can expect the following:

  • An IRS auditor will contact you through by phone and mail to notify you of the finding.
  • Some audits are handled through mail or correspondence, while others are face-to-face interviews, often held at a local IRS office. A business audit may be conducted on the premises, where most financial records would be immediately available.
  • Your personal and financial information should be handled in complete confidentiality—an audit can be embarrassing. You should also be notified of your rights, as they relate to an audit.
  • Once the review of your records is complete, the auditor may be satisfied that everything is correct and accounted for, or he or she may indicate that there was in fact an error that could cost you in back taxes. You have the right to request a further evaluation with another auditor if you disagree with the initial findings. And in cases where you may owe an exorbitant amount of money, you may even be able to leverage an “offer in compromise.”

Preparing for a Tax Audit

When you receive notification of your audit and the information you’ll need to provide, begin to collect it immediately. Theoretically you should have readily available all the records you used to prepare your taxes. But if anything is missing you can help ensure you have time to account for it, or time to contact the auditor to notify him or her of the missing documentation.

You may have a lawyer or a tax representative help you during your audit process. Many businesses already have tax lawyers available for just such situations. If you’re an individual, you might consult your tax preparer about representation—many of them offer this service.

The best advice: adhere to best-practices for financial record-keeping—it’s the best defense against an audit.

For additional and up-to-date information on IRS audits, visit IRS.gov.

Last Minute Deal on 2011 Budget Averts Government Shutdown

“Congressional leaders have been scramble at the 11th hour to reach a broad agreement that will enact a 2011 budget for the federal government, and in doing so, avert a total shutdown of the goverment and all that entails.

2011 budget

There is promising news coming from both sides of the aisle, with Democrats and Republicans reaching a temporary budget that will have to be approved by the House of Representatives and Senate.

This last minute agreement is just a temporary measure that funds the goverment through the end of the current fiscal year, forestalling a much larger fight on deciding a proper budget, as well as getting the United States’ fiscal house in order by tackling the deficit and debt.

LIke most other legislation, normal everyday citizens will likely have to ‘wait until its passed’ in order to figure out how it will affect them and determine what changes in the IRS tax code it might contain.”

More information: http://www.denverpost.com/nationworld/ci_17831347

How To Maximize Your Tax Refund -

Many people wonder how to maximize their tax refund. Most of the ways to go about doing this are relatively simplistic. People must understand the laws and be able to use them to their advantage. Most of the time it is best to consult with a certified public accountant to get the greatest deals possible.

Tax Refund

When any person owns a business they need to keep very detailed records of all the deductions that they are going to take. Sometimes people can write off things that they could not normally if they were not running their own business. If a person needs supplies for their business this is usually something that they can easily discount for themselves.

People also need to think about whether or not they qualify for tax credits offered for parents. Now more than ever in the car economy it is very clear to see that raising a child is a very expensive job. Most parents automatically qualify for the minimum amount of deductions related to their dependent children.

it can be very difficult to make sure that a person has all of the documents necessary to qualify for every break that is available to them. Keeping all receipts is extremely important so that a person has a paper trail should they ever have to go through an audit. Being audited is one of the most difficult things that anyone could ever have to deal with on any level.

When people purchase a new home they usually qualify for a break because they were not property owners previously. People also need to investigate whether or not they qualify for discounts because they are receiving a disability benefit. Many individuals do not realize that they will pay less when they are receiving a government check.

If a person is involved with some sort of business venture they can deduct all of the learning material that they need in order to be successful in the business. Any supplies that a person has purchased that did not sell during the year are also available to be taken as a discount.

The laws need any different state are usually very different from each other. It is very important to make sure that a person has the proper knowledge to be able to take advantage of state and federal deductions are a failure to do this will lead to many problems in the future for a person that does not understand the laws properly.

It can be very easy to understand how to go about getting a very high tax refund. People must educate themselves so that they are not missing out on any of the many deductions that are available for people that are intelligent enough to take advantage of them. Sometimes people need to ask for a device so that they understand all of the options they have available. Failure to understand how to go about getting the highest available amount of money is not in the best interest of any individuals.

For more information visit http://www.irs.gov/individuals/article/0,,id=96596,00.html

How To File Your Tax Return Online

Preparing your tax return online has become a vastly popular method in the past few years. This is much more convenient, allowing you to do it from the comfort of your own home at your own convenience. And it is much cheaper than hiring an expert to do the work for you. The average American will spend $300 on tax preparation by this traditional method. However, those who use online filing services will only spend around $35. Prepare your tax documents online, file them, and then get your refund much more quickly.

In the past, tax preparation was considered far too difficult for the average individual to attempt on their own. However, the unveiling of new software programs has made this ideal feasible. In fact, it has made the process so much more simplified that anyone can follow the clear step by step instructions and get through the process. The only people who may not wish to use this are those with complicated tax matters.

Tax Return

If you have chosen to go this route, then you should choose and register with a selected filing website a few days ahead of time. This will give you assurance that you are ready to go with no unforeseen interruptions or delays.

The tax programs that are out are designed for the average consumer to be able to use and understand. You will usually just be asked a serious of questions to which you much reply. These will all relate to your personal and financial situation.

You may need to have a number of financial and personal documents on hand so that you are able to answer the questions correctly. You will need access to things such as: your income slips, your form 16 from your employer, your permanent account number, your social security number, receipts, and other personal financial information.

You are eligible for the free file program if you make under a certain amount of money each year, around $56,000. For more information about this, you can check the IRS website where it is all explained in detail. Even if you make more than the required amount, you will likely be able to find an online service that will file your taxes for a very small fee.

After you have filed your taxes online, you will receive a notice from the IRS, usually in about a week. This notice will let you know whether your file was accepted or rejected. If for some reason it was rejected, they will give you notice explaining why, and you should have the opportunity to correct the problems and resubmit it.

If your forms are accepted, then you will be able to rest in ease. Your tax refund will usually be received within a few weeks, and it will be deposited directly into your bank account. This allows you to be able to have access to it more quickly, and you will not have to worry about it getting lost in the mail, or losing it after you have received it.

For more information visit http://en.wikipedia.org/wiki/Tax_return