Written by Scott Allen

Will the IRS be willing to accept a low offer in compromise if they know I can discharge the taxes in a bankruptcy?

Arizona IRS Offer in Compromise

I have seen where the ability to file a bankruptcy has had a positive effect on getting an Arizona IRS offer in compromise accepted if there are genuine areas of disagreement on how assets should be valued in determining the offer amount.  I have also seen situations where the IRS will not budge on an offer amount even if you decide to file a bankruptcy.  There is a lot of variation in the way the offer in compromise group handle offers when the option to discharge the taxes in a bankruptcy is available.  If the tax debt is on a current year, the IRS knows that you must wait three years from the due date of the return before you can file a bankruptcy.  In that case, the option of filing a bankruptcy would not be taken into consideration.  Each situation has to be evaluated on its own merits.  Working with a professional who has seen lots of Arizona IRS offer in compromise’s accepted when a bankruptcy is an option is the only way to get an objective opinion.

Scott Allen E. A.

Tax Debt Advisors, Inc for Arizona IRS Offer in Compromise

www.taxdebtadvisors.com

 

Written by Scott Allen

Independent Contractor or Employee?

Are you an Independent Contractor or Employee?

This is a big issue that can have a drastic impact on how you are taxed.  If you are getting a 1099-Misc you are an independent contractor—you are considered self employed the same as if you had your own business.  You will have to file a Schedule C and pay Self-Employment taxes of 15.3% of your net income in addition to income taxes.

If you really are an employee, there is no Self-Employment tax, but you will have Social Security and Medicare taxes taken out which amount to 7.65% of your gross income.  In most cases you are better off being treated as an employee.  Employers reduce their taxes by paying you as an independent contractor as well as avoid paying benefits such as health insurance.

If you are being classified incorrectly as an independent contractor, you can correct the problem by filing a relatively new form with the IRS—Form 8919, Uncollected Social Security and Medicare Taxes on Wages.  By filing Form 8919, so you avoid paying Self-Employment taxes.  This form can be filed when you file your individual tax return.  In addition you will need to send in a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding separately.  You will be required to pay your share of Social Security and Medicare taxes.

Many clients do not do this out of fear that their employer will terminate their employment.  By filing a Form 8919, your employer will have to pay their share of payroll taxes and will be fined for filing and paying late.  Employers will also be fined and pay a late fee on Unemployment taxes.

If you are terminated as an employee because of this, you do qualify for unemployment compensation based on the rules of your state that you reside.  Ultimately the IRS will make a determination of your employment or independent contractor status.  Your employer has the right to contest your status.  If your employer appeals and you are considered an independent contractor, you will have to amend your return and pay the additional taxes associated with being self employed.

Tax Debt Advisors, Inc

Scott Allen, EA

 

 

Written by Scott Allen

What you should know about the Taxpayer Advocate Service—TAS?

Taxpayer Advocate Service in Arizona

The Taxpayer Advocate Service –TAS, was set up to assist taxpayer who feel that the IRS process is not working properly.  The TAS represents you and is free to all taxpayers.  One becomes eligible to use the TAS after they have tried to resolve their tax problem through normal IRS procedures and failed.  This service is available for individuals and businesses.  Each State has at least one local taxpayer advocate office.  For more information on when to utilize the services of TAS you can contact me or call them at 1-877-777-4778.

Tax Debt Advisors, Inc     Scott Allen E.A.    Helping Taxpayers in Arizona

 

Written by Scott Allen

Is the IRS kinder and gentler?

Is the IRS kind?

In the last 44 years, we have seen little change in the attitude or position of the IRS towards collection of taxes owed.  The IRS is just an extension of our federal government.  It is a huge bureaucracy and the culture within the IRS is very slow to change.

What changes is the areas of emphasis in their work.  They will try different systems and strategies but they always come back to what has worked in the past.  For example, the IRS has been contracting with outside private debt collection agencies.  If you have absolute power to take someone’s property and wages, why would you even think that another collector without those powers could do better?  It was doomed to fail from the start.

The IRS will replace the private debt collection agencies by hiring over 2000 new collection officers in 2022.  These new bill collectors hired by the IRS have the power to file liens, levy wages and seize property.  Most will have the ability to do extensive investigations and they will likely make their first contact with you at your home or business.

IRS Commissioner Doug Shulman said, “I believe this work is best done by IRS employees, and I believe we have strong support from the Administration and the Congress for increased IRS enforcement resources going forward.”  Some clients interpret “kindler and gentler,” to mean the IRS will make it easier to pay or let you pay less than your fair share.  Kindler and gentler was just mask.  It is the same tiger behind the mask and as I have said many times, “when your head is in the mouth of a tiger, say nice tiger.”

We do not know how the IRS will place these new collections officers.  Will they go towards local enforcement by hiring more Revenue Officers or towards centralized collections by hiring more personnel at the Automated Collection Service?  Now that we are more than half way through 2022, we still do not see any significant change because of the number of new personnel hired by the IRS.  That is understandable since it takes about two years before they are turned loose on taxpayers.  Right now most are acting in supportive roles.

Scott Allen E. A.     Tax Debt Advisors, Inc     stopIRSaction.com

 

Written by Scott Allen

What Should I do if the IRS Knocks on my Door in Arizona?

IRS Knock on my Door in Arizona

If a Revenue Officer knocks on your door in Arizona, technically you do not have to let them in.  But you should be courteous and ask if you can have a representative contact them.  A good way to respond is to say something like, “I will provide all the information you request, but I would like to consult my representative and have them represent me.”

A Revenue Office is entitled to your financial information but it is best to request a list of all the information that they want and a reasonable deadline.  It is too easy to try to please the RO and not provide accurate or complete information.

Most Revenue Officers are please that you have representation as long as they respect the person you choose.  Many national companies have poor track records with the IRS and the RO will usually ask who you are considering using.  They cannot make suggestions on who to use but they will likely tell you if you are considering someone with a bad reputation.  The key here is to handle unannounced IRS visits with courtesy, but remember you have rights to representation before disclosure.

Scott Allen E. A.     Tax Debt Advisors, Inc     Mesa Arizona    taxdebtadvisors.com

 

Written by Scott Allen

IRS Notices

IRS Notices on Arizona Taxpayers

Here are the three most common IRS notices:

CP 2000—Proposed Changes to Your Return/Notice of Unreported Income.  If income has been reported to the IRS that is not on your return you will get this notice.  If you disagree with this notice you have 30 days from the date of this letter to file an appeal with the IRS Appeals Office.

CP 22E—Examination Adjustment Notice, Balance Due.  This notice explains the amount due from an audit.  You can either pay the amount due or set up an installment arrangement.  If you qualify you can also file for an Offer in Compromise.

CP 523—IMF Installment Agreement Default Notice.  This letter informs you that the IRS intends to terminate your installment agreement.  You have 30 days to file an appeal if you do not agree that your installment agreement should have been put in default status.

Scott Allen, EA

Tax Debt Advisors, Inc helping Arizona Taxpayers

taxdebtadvisors.com

 

Written by Scott Allen

IRS much more aggressive on filing Tax Liens

IRS Tax Liens

The IRS has aggressively increased the number of liens issue in 2009 over 1999—475% more.  Even Nina Olson, the national tax payer advocate concedes that it is causing unnecessary harm to some taxpayers and even reducing the amount the IRS is able to collect.  Olson told CNNMoney, “Taxpayers are being greatly harmed for very little benefit to the government.”  Nina says that tax lien issuance is one of the top five problems that Congress must deal with to help taxpayers.

When you are under threat of a tax lien being filed, it is important to consider arguing, with professional help, the disadvantages a tax lien will cause to delay the payment of delinquent taxes.  The IRS allows taxpayers an opportunity to argue their case before the Office of Appeals.  Serious consideration of filing an appeal should be made so that you are not limited in your ability to pay off your tax debt due to a tax lien.

Scott Allen E. A.

Tax Debt Advisors, Inc

taxdebtadvisors.com