Trust Fund Recovery Penalty Averted!

Posted on January 25, 2016 by Kursti Nakagawa

Professional Tax Resolution latest Success Story: Trust Fund Recovery and Penalty Averted. The owner of BM Corporation contacted our office shortly after receiving a subpoena from the IRS requesting all of their banking records. Unsure of how to respond to the notice and fearful of the potential consequences it might hold, they contacted Professional Tax Resolution for help. Our staff responded immediately by filing a Power of Attorney and contacting the IRS Revenue Officer. Within a matter of three weeks, we had submitted all of the company’s back payroll tax returns and completed the necessary business financial statements. In addition, our tax resolution specialists had negotiated a tax settlement agreement for payoff of Trust Fund monies which included an initial payment together with a payment plan for the remainder the back tax balance owed. All of this work was done prior to the IRS reviewing the client’s bank statements!

As frequently happens, BM Corporation had responded to a cash flow shortage by using payroll tax funds to cover the operating expenses of the business. It was this situation that resulted in them falling behind on their payroll tax obligations. Although they had planned to catch up when their financial situation improved, this had not yet happened at the time they received the IRS subpoena requesting their banking records. Because payroll taxes include amounts that have been withheld from an employee’s paycheck and are being held in trust by the employer until payroll tax payments are due, the IRS purses collection of these taxes very aggressively. Had Professional Tax Resolution not intervened in the case of BM Corporation, the company would likely have been assessed very quickly and heavily.

The tax settlement situation described above illustrates how experienced tax professionals offer a distinct advantage in dealing with the IRS. They not only know the consequences of unpaid tax balances, but they know to resolve them in the quickest and most effective way possible. In the case of BM Corporation, speedy intervention on the part of the tax specialists at Professional Tax Resolution almost certainly avoided an assessment of the Trust Fund Recovery Penalty which is equal to 100% of the back payroll tax balance owed. Not only was the penalty averted and a payment plan put in place, but it was all accomplished prior the IRS even reviewing company bank statements!

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

Back Tax Balance Lowered by 80%

Posted on January 11, 2016 by Kursti Nakagawa

Back Tax Balance Lowered by 80%

When Mr. O contacted our office, he was at a loss as to how resolve a tax situation that had been developing over a period of years. Several years prior to this time, he had undergone a divorce which had thrown a monkey wrench into his previously stable financial situation. Since then, although he had continued to earn a good salary of over 200K, high alimony and child support payments had been absorbing a large chunk of his earnings. Fearing that he would be unable to pay the taxes owed, he had avoided the situation by failing to file income tax returns for several years. At the time he contacted our office, he was worried about the size of the back tax balance he might have accumulated over that period of time and unsure of how he would come up with the resources to pay it.

Immediately after Mr. O’s initial contact with our office, our tax professionals began collecting the information necessary to prepare and submit his back tax returns. Once this was done we had an accurate estimate of his back tax balance which came in at over 150K! Undeterred by this large dollar amount, our tax specialists moved forward with Mr. O’s case by completing a thorough analysis of his financial situation, the results of which showed that he would be a good candidate for an Offer in Compromise. Although our tax resolution team knew that this particular tax settlement agreement would be a difficult one to negotiate because of the client’s income level, we moved forward with submitting the necessary paperwork with the expectation of a positive outcome.

Although Mr. O is a successful man with a relatively high salary, his expenses are also high. A large part of his income is offset by child support and alimony payments which are both allowable expenses in determining a person’s reasonable collection potential. Our experienced professionals have successfully represented many clients before the IRS and are well aware of how such factors figure into the eligibility criteria for the various tax settlement options. In the case of Mr. O, we were able to determine that his overall financial situation placed him within the guidelines for receiving an Offer in Compromise. Once all was said and done, the IRS accepted his offer for 20% of the original back tax balance owed. This was a major victory for both our team and Mr. O!

Audit Reconsideration Eliminates $100,000 Tax Balance

Posted on December 2, 2015 by Kursti Nakagawa

Audit Reconsideration Eliminates $100,000 Tax Balance

When Ms. H contacted our office, she was panicked over how to pay a back tax balance of $101,000. She had recently received an official IRS Letter informing her of a balance due and threatening enforcement action since she had not responded to previous notices. This was followed almost immediately by a Notice of Intent to Audit. It turns out that Ms. H had sold her personal residence in a previous tax year and had forgotten to report the sale of the home on her tax return. Although the IRS had sent various letters informing her of the discrepancy and assessing a tax balance due, she had not received them due to the fact that she had been moving around.

Our office quickly began working on the client’s back tax issues. We filed Powers of Attorney with the IRS and the California Franchise Tax Board and followed up by contacting both tax agencies to ensure that the client’s accounts would not be subjected to any collection activity while our tax professionals the prepared an audit reconsideration packet. Within a few days, we had submitted a complete audit reconsideration request to the IRS and had stopped the CA FTB from assessing Ms. H’s accounts. The final ruling from the IRS was very favorable. Not only did our client not owe a back tax balance, but she received a refund of $8,000 from funds the IRS had withheld from previous tax years!

The tax settlement case of Ms. H illustrates several important points. First and foremost, it shows that a reputable tax settlement firm offers a huge advantage to clients who are trying to resolve on outstanding tax balance. Not only do these professionals know exactly what problems to look for when analyzing a client’s finances, but they have the experience necessary to successfully resolve those problems with the IRS and State Tax Agencies. In addition, this case shows that receiving a Notice of Intent to Audit does not necessarily mean that the recipient will owe a large tax amount. In addition to plain old random sampling, a tax return may be selected for audit for a variety of reasons including a filing error or missing tax information. Such was the case with Ms. H whose return was targeted for closer scrutiny due to her failure to report the proceeds from the sale of a home. Once the error is corrected and an accurate tax situation is presented for examination, the audit may actually result in a reduced tax balance or even a refund as happened in the situation described above.

Offer in Compromise Resolves $40,000 Tax Debt

Posted on November 4, 2015 by Kursti Nakagawa

Offer in Compromise Resolves $40,000 Tax Debt

Mr. J came to Professional Tax Resolution through a referral form a close friend. With a wedding on the horizon, he was looking for a reputable tax resolution firm that could help him clear up his back tax issues in a quick and efficient manner so that he would have a clean slate going into his new marriage. Although the initial contact was though email, Mr. J immediately set up a face to face meeting with our tax professionals. Upon his own admission, he had failed to file his income tax returns for the previous two years because he could not afford to pay the tax balances owed. At the time of our first meeting with him, he had accumulated an outstanding tax balance of over $41,000, an amount that he was unable to pay.

Our tax specialists immediately sprang in to action, submitting his past due tax returns and evaluating possible methods for resolving his outstanding tax liability. After a complete financial analysis which showed that that Mr. J did not have the current income or the available assets to pay the full amount of his accumulated tax debt, our tax professionals decided that he would be a good candidate for an IRS Offer in Compromise. Having determined that his income and expenses together with the amount of his back tax balance fell within guidelines established by the Fresh Start Initiative, our firm prepared and submitted an Offer in Compromise proposal for a settlement amount of $6180. Following a two month waiting period, this settlement amount was accepted by the IRS with no objections.

The case of Mr. J highlights the importance of using a knowledgeable and experienced tax resolution firm when resolving a back tax balance with the IRS. In order to successfully resolve his back tax issues, our tax specialists completed a thorough analysis of his financial situation in addition to making an accurate determination of the exact amount of his tax debt. Following this, we applied our knowledge of the specific Offer in Compromise eligibility criteria in order decide whether he would be a good candidate for this particular tax settlement option. Once this had been determined, our professionals completed and submitted the Offer in Compromise request according to the strict guidelines established by the IRS. As we do for all of our clients, we did the necessary footwork to present Mr. J’s best offer upfront in order to minimize negotiations and not allow the IRS any room to question his financials. With our help, Mr. J is now tax free and ready to begin his life with his new bride.

Tax Debt Reduced by Filing Past Due Returns

Posted on September 8, 2015 by Kursti Nakagawa

Tax Debt Reduced Through Filing of Past Due Tax Returns

Sometimes resolving a back tax balance is as simple as filing past due tax returns. The case of Mr. P involved just that! When he contacted our office, he had not filed either his corporate tax returns or his personal income tax returns for the last 10 or 11 years. Unsure of how to proceed and fearful of the potential consequences of his negligence, he contacted the tax settlement specialists at Professional Tax Resolutions for advice and help. Our team informed Mr. P that it would be necessary to contact the government immediately in order to collect the specific details necessary to come up with an appropriate plan of action. Among other things, we needed to know exactly which tax returns had not been filed as well as what back tax balances were showing for each year. In addition, it was imperative that we obtain a list of the official tax documents that the government had on file for each year that tax returns had not been submitted.

Anxious to put his tax problems behind him, Mr. P was eager to get started on his case. Within a few days, our tax professionals had contacted the government, received the requested information and were ready with a plan of action. Once our client had compiled the accounting records for his corporation, we compared them to those we had already received from the IRS and began to prepare the corporate income tax returns. Concurrently, we prepared M. P’s personal income tax returns for all years where one had not been filed. After all was said and done, the corporation was set up on a payment plan with the IRS and the FTB balance was lowered to the amount of the franchise fee plus accumulated penalties and interest. In addition, the client’s personal back tax balance was reduced by 80% with both the federal and state tax agencies.

As is evident from reviewing the case of Mr. P, it is important to select a tax professional who has a thorough understanding of the specific back tax issues one is facing. In particular, when a business entity is involved, it is important to choose a tax specialist who understands business accounting and entity taxation as well as the effect business income has on the individual’s personal tax balances. The tax team at Professional Tax Resolution is well equipped to resolve both personal and business tax issues. When a business is involved, they understand the interconnectedness of personal and business taxes and realize that it is important to consider both in order to come up with the best possible plan of action.