Be Prepared Just In Case You Get Audited

Getting audited by the IRS is a hassle no one needs. So when you get the letter in the mail that an IRS agent is analyzing your tax returns, knowing what to expect to make the process run smoothly can lessen the pain.

The IRS selects audited taxpayers multiple ways. It can be completely random, due to mismatching documents, or the audited return was connected to another audited taxpayer, like a business partner.

An audit begins by getting an audit notice from the IRS in the mail. Notice can also come via telephone, but the IRS will usually send a confirmation letter.

After receiving the letter, the IRS agent should be contacted to schedule a meeting. You can also conduct the audit by mail. But be prepared.

You should know the details of your tax return like the back of your hand. Then, gather records and forms to support whatever the IRS is challenging. The IRS will indicate which records are needed.

After the IRS completes its audit, you’ll get a report outlining what the agent recommends and the amount you owe.

The IRS agent can then ask you to sign a form waiving your appeal rights. You can sign the waiver and pay the tax, or request an appeal with the IRS’s appellate division (but beware, the interest will accumulate during the appeal process).

If you’re one of the millions of taxpayers unlucky enough to get audited, you’re not alone. One out of every eight millionaires was audited in 2011 alone.

The IRS can initiate collection actions like wage garnishments or bank levies if you don’t pay your back tax debt. That’s why you’ll want to go with a tax attorney.

A tax attorney or tax professional can also ensure that the IRS doesn’t violate your rights. During an IRS audit you’re entitled to professional and courteous treatment, a private and confidential process, the right to know why the IRS is asking for your information and the consequences if it’s not provided, the right to appeal, and the right to hire a tax attorney.

A tax attorney can also help you obtain an IRS agreement that works in your favor. An IRS audit isn’t pleasant, but finally resolving your tax debt can be.

Tax Attorneys Help Famed Electronics Company Gut Tax Bill

Apple’s products are everywhere. The iPhone is one of the most popular cell phones on the market, and the iPad is increasingly becoming a necessity for white collar professionals.

But while Apple products are somewhat omnipresent, its tax bill isn’t. Recent reports indicate that through the use of international tax shelters and shell companies, the Cupertino-based electronics giant was able to decrease its tax bill by $2.4 billion.

Big companies using laws from foreign countries or other states to decrease its tax bill is nothing new. When people joke about companies hoarding cash in a Cayman Islands bank account, it’s usually about avoiding taxes.

Apple didn’t have to go to the Cayman Islands. Instead, it went to Reno, Nevada, known as the Biggest Little City in the World. Apple reportedly opened an office there with a few employees to collect and invest the company’s profits. That allowed it to avoid California’s 8.84 percent corporate tax rate and enjoy Nevada’s zero percent rate.

With an army of tax attorneys deployed to help it lower its tax bill, Apple joins other big corporations who try to lower or even ditch its tax bill altogether. In 2010, General Electric was able to pay no taxes at all with the help of its tax attorneys.

Apple’s methods are legal, but individuals trying to lower their tax bills by using certain deductions and other methods may be in for a big surprise.

The IRS is now auditing 1 out of every 8 or 9 US millionaires. And with 3.7 million tax levies waged by the IRS in 2011 alone, individuals aren’t likely to get as lucky as Apple.

You may not be an international corporation, but that doesn’t mean you can’t obtain a favorable outcome if you owe back taxes to the IRS. With the help of a tax attorney or tax professional, you can reach a deal with the IRS that Steve Jobs would be proud of.

Number of Seizures Equals Words in US Tax Code

Last year was a pretty busy one for the bean counters at the IRS, and for millions of taxpayers, too.

The IRS garnished wages and instituted bank levies 3.7 million times in 2011, leaving perhaps millions of taxpayers the subject of its collection actions. And a lot of work for tax attorneys.

How big is 3.7 million? About the size of the US Tax Code. One count indicates that the tax code has that many words. The tax code has become so fickle that over the past eight years it’s been changed at a rate of more than one a day.

Tax levies are one of the IRS’s favorite ways to institute its collection actions. There’s two types: continuous and noncontinuous levies.

Continuous levies are wage garnishments. They’re most common on income from wages, and can be used on contract income as well. A continuous levy stays in place continuously and leaves you with only a portion of your paycheck.

Noncontinuous levies are used on bank accounts, and can be used on contract income as well. It freezes your funds at its source and stays in effect for 21 days. After then, the IRS has the funds go straight into its coffers. During that three-week period the IRS can release the levy, but increased rules make releases a bit more difficult.

The 3.7 million figure is no small number, and shows that it’s a safe bet that IRS agents are more than happy to target taxpayers who owe back tax debt.

But hiring a tax attorney or tax professional can increase your chances of not becoming one of the millions targeted by IRS agents for tax levies. That’s a club you’ll be happy not to join.

 

$3.5 Million!? Yes, she saved a lot of 0000′s. 

Owing the IRS is very stressful. Whether you owe a few thousand or much more, the letters demanding repayment start stacking up, and pretty soon what started out as a small obligation has spun out of control into something completely unmanageable.

Take Penny S. from Michigan for example. She owed a massive 3.6 million, she hadn’t filed her returns in years, and the threats from the IRS revenue agents were getting more and more aggressive, with possible criminal prosecution. Thankfully, Penny called our firm to intercede, and the results were impressive.

The IRS had assessed the taxpayer over $3.6M in tax liability. StopIRSDebt.com completed years 1999-2006 US and State of MI individual income tax returns to bring the taxpayer’s account into compliance with the IRS. At the same time, we released a wage garnishment and placed the taxpayer on an affordable installment agreement to pay off the balance. All told, the tax debt was mitigated all the way down to $60,000. That’s less than 2% of the total tax debt owed!

At the end of the day, every individual and business is required to file a tax return. If this is not done for three successive years, the IRS can file criminal charges and attach assets at will. Penny S. had ignored this mandate, and her years and years of un-filed returns finally caught up with her and snowballed into a wall of IRS debt. Thankfully, the filed returns were quite the lifeboat, and allowed us to seriously knock down the amount owed.

Penny S. was given quite the second chance, but not everyone will float out of harm’s way. If you owe the IRS back taxes, remember to accurately file your returns. They are your first step towards preventing tax debt altogether, and can help you avoid stormy run-ins with the IRS that can sink your finances.

Prosecutors Go After Accused Mom to Pay Case Costs

Casey Anthony may have been acquitted for the murder of her 2-year old daughter, Caylee, but Florida prosecutors are still trying to make her pay.

It’s not in jail time, but state prosecutors are looking to make the 25-year old female-in-hiding pay back local law enforcement agencies for the costs of her trial and the search for Caylee after she went missing. Shortly after her early-July acquittal sent shockwaves across the United States, Casey was served with a Motion to Tax Special Costs of Investigation and Prosecution and to Reserve Jurisdiction.

While the name sounds complicated, Florida prosecutors are citing a section of state law that forces convicted people to reimburse law enforcement agencies for the costs of prosecuting and investigating their cases. How much Casey – who was convicted of providing false information to a law enforcement officer ­– will pay is up to a judge, but taxpayers footed nearly $520,000 for these costs alone.

If this legal tactic seems familiar, it’s because it’s similar to those that attorneys with the Internal Revenue Service pursue on delinquent taxpayers.

You may not be the defendant in a murder trial, but the IRS will go after your assets the same way Florida officials are going after Casey Anthony’s if you owe back taxes. Our advice? Contact a tax attorney and bite back.