There are many types of accounting, tax and tax settlement service providers. CPAs and accounting firms typically provide tax preparation services to businesses and individuals but rarely devote much effort to actual tax settlements. On the other hand, tax resolution and tax settlement firms focus mostly on settling outstanding tax debt without ensuring that all available tax code benefits have been used on the original tax filings. Professional Tax Resolution combines the expertise of tax settlement professionals and experienced, licensed tax preparers. The first step in any tax settlement case should be to confirm that the reported tax liability is correct and that all available tax code benefits have been utilized. Following that, a tax debt resolution plan can be mapped out.
Jeff F. came to us shortly before the April 15th filing deadline. A successful chiropractor, Jeff had made large tax payments for himself and his corporation for many years. However, he owed a large tax liability for the previous year and had failed to make estimated tax payments for the current year. We told Jeff that we would be happy to prepare his individual and corporate tax returns and suggest a tax settlement option for the balances owed. Although his original tax filings had been prepared by two well established CPA firms, we suggested that we would review them prior to recommending a tax settlement plan just to confirm that the balances owed were correct and that no tax code benefits had been missed.
After reviewing the most recent returns, it appeared that, as expected, the returns had been filed properly. However, one important tax benefit had been overlooked. Jeff’s business is located within an Enterprise Zone that offers specific state tax benefits for companies located within the zone. One of the benefits is a state hiring credit made available to employers meeting certain specific criteria. Companies who qualify but have failed to claim this credit are permitted to amend returns and claim missed credits providing the returns are filed within the statutory amendment period. The vouchering process to obtain these credits is fairly involved and takes several months to complete but we determined that the potential tax benefits were worth the time and expense.
After several months of reviewing employee qualifications we were able to obtain qualifying vouchers and identify over $75,000 in unclaimed state tax credits for prior year’s tax returns. The best news was that the returns fell within the statutory amendment period so the refunds could still be claimed. In addition, the credits would apply to subsequent years so the client would be able to claim as much as $15,000 in tax credits for each year going forward. While these refunds only applied to state tax balances, the client was able to use the past refunds to pay outstanding IRS balances.
Complicated tax settlements are what we do at Professional Tax Resolution. This is yet another example of how a qualified tax settlement firm can provide real solutions to taxpayers faced with a significant amount of IRS tax debt.
