The Short and Pointed 6-Week Tax Plan

October 15 seems so far away, doesn’t it? It’s just the first of September, after all. The problem for many small businesses, especially in a down economy, is that they are so busy running the business that no one even notices as September quietly rolls into October. And if you wait until October to start trying to put your tax return together, you are facing a near impossible filing deadline.

A common reason small businesses file an extension is because they don’t have all their information organized in time for their accountant to complete a tax return before April 15. Many of those who file an extension do so and then forget about the October 15 deadline because it’s so far away. At the current speed of business, six months seems like an eternity. The problem is that we are so busy trying to make a business run, addressing the hundreds of minor emergencies that crop up in a typical day, that we lose focus on getting our taxes together in a reasonable timeframe. 

Because we spend a great deal of our energy and time on helping our clients regain compliance at TaxMasters, we thought it might be effective to put together an easy-to-follow 6-week plan small businesses can use to make sure they get their taxes filed by the extension deadline on October 15. Kind of a preemptive action to help small business owners before they need us.

If you don’t start getting your tax information together now, you run the risk of missing the filing deadline, which means an automatic penalty. No one wants to pay the IRS more than they have to. So follow this plan and file on time this year. And remember that using a reputable tax professional to prepare your returns on time is one of the easiest ways to stay out of trouble with the IRS.

The Dates

September 1–Call your accountant and schedule the day you’ll provide your information

September 2–Physically put your hands on your income statements, expense statements, tax documentation, and other relevant paperwork

September 6–Start organizing all that stuff you pulled together on September 2 in a format your accountant can use

September 8–Chase down all your deduction information and add that to your file

September 9–Finish compiling all paperwork so you can hand it off on Friday

September 10–Deliver everything you put together to your accountant and schedule the pick-up date for no later than October 11

October 11–Pay the accountant and review your return

October 12–Take your time and review the return again, making certain you understand it

October 13–Finish working through any issues or questions you had about the return, sign it, and file it

October 15–Pat yourself on the back for a job well done and enjoy the fact that you are in compliance with the IRS

Following this schedule doesn’t necessarily mean you won’t have to call us in the future, but failing to file your tax return is the quickest way to attract unwanted attention from the IRS.

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation firms in the IRS tax relief industry. Patrick Cox and Tax Masters are located in Houston, Texas and the company is publicly traded under the ticker symbol TAXS.

Sole Proprietors Watch Out–Your Return May be Assigned to a Revenue Agent

Our sources are reporting that Treasury inspectors have recently lambasted IRS agents for not effectively finding all the unpaid taxes of sole proprietors. The Treasury inspectors completed a study of correspondence examinations on 2007 tax returns only to find that IRS examiners missed more than $16 million in unpaid taxes on sole proprietors in their limited sample.

It seems the failures lie in the correspondence examination process. In a face-to-face audits, the IRS process typically uncovers unfiled tax returns and unreported income. But with correspondence examinations, auditors failed to uncover these basic facts. As logic dictates, adding new steps to an already slow correspondence examination process will not speed up revenue collection for the IRS in a time when the tax gap continues to grow and the Treasury faces incredible pressure to generate additional revenue.

Face-to-Face Audits to Increase for Sole Proprietors

The IRS solution will reportedly be to adjust its selections procedures for auditing tax returns. This adjustment will call for tax returns from sole proprietors with unfiled tax returns or suspected unreported income to go directly to IRS Revenue Agents instead of going through the automated correspondence examination process.

In other words, if you are a sole proprietor with unfiled tax returns or unreported income, watch out. When Revenue Agents call, they are looking for what you have done wrong and for what they hope you are hiding. It is generally in your best interest to demand that a Revenue Agent speak to your tax representative before you say something you cannot take back. Talking to Revenue Agents can have devastating consequences to your personal finances and on your business.

At Tax Masters, we handle more audits in a day than most CPAs handle in a career. Do not wait until you are contacted by a Revenue Agent to act, you need to get into compliance before the IRS sends in the Agents. It is far less expensive to solve the problem before it is a crisis. If you are contacted by a Revenue Agent, we suggest you call us immediately. Speaking to them will likely make your problem much worse. Refusing to speak to them will make them quite mad, but it is your best option at that point. Be respectful, but firm and inform them you intend to hire a representative and you wish them to speak with your representative. As soon as you close the door or hang up the phone, call us at 1-800-581-0456 to discuss your tax problem and to hire the audit defense representation you deserve. Don’t wait for an appointment, call us today.

Protect Your Business–Hire Tax Masters for Audit Defense

An audit is serious and your business may depend on hiring the right audit defense. Choose wisely. Choose Tax Masters.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation firms in the IRS tax relief industry. Patrick Cox and Tax Masters are located in Houston, Texas and the company is publicly traded under the ticker symbol TAXS.

Have a Delinquent Tax Return… or Two… or Three?

Delinquent tax returns can mean big trouble for US taxpayers. With the current administration calling for more revenue officers and the IRS ramping up audits and looking to trim the tax gap, taxpayers who have not filed past-due tax returns are at serious risk. If you or someone you know did not file a 2008 tax return, you need to take action now and file that delinquent return before the IRS contacts you. The penalties and interest the IRS assess can increase if they have to bring a delinquent tax return to your attention. While the IRS trusts taxpayers to file their returns every year, they will also pursue the noncompliant tirelessly and punish them by making them pay additional moneys in interest and penalties.

Delinquent Tax Returns - A Spiraling Tax Problem

Especially in a down economy, when good people simply don’t have the money to pay the tax they owe, neglecting to file a tax return can be a costly mistake. For those who have not filed a return for a given tax year, it becomes easier to fail to file a second year and even a third, particularly if the IRS seems not to notice. Do not be fooled. The IRS can wait a surprisingly long time before notifying a taxpayer that they did not receive a return. And often this notice is accompanied by a bill that the IRS assesses based on what they think you owe for multiple years with penalties and interest tacked on.

If you have even one delinquent tax return, you need to file it tomorrow. And if you have several, you need take action to file today if the IRS has not yet contacted you. And if the IRS has already sent you a notice with a bill, it means they have already filed a substitute return for you and want their money. You need to contact us today so we can help you file your delinquent tax returns based on your actual income and take into account all deductions you have coming. When the IRS files a substitute return on your behalf, they use estimates for your income based on various facts they know about your earning history and do not allow for any non-standard deductions. We’ve stated this numerous times before–The job of the IRS is to collect revenue for the US government. Allowing the IRS to file a tax return for you is like handing your wallet to a stranger and trusting him to take only what he needs. It is imperative that you file all delinquent tax returns to make sure you pay the IRS only what you owe.

If you have delinquent tax returns or need IRS tax relief, call us today. Our tax consultants will diagnose your tax problem and build a customized plan for solving your tax problems. Do not walk into 2010 without a plan in place to resolve your tax issues.

Procrastination costs money when it comes to the IRS. Call us now.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax relief teams in the tax representation business. Patrick Cox and Tax Masters are located in Houston, Texas.

2008 Tax Season Draws to a Close

During a time of year when most IRS tax firms enter a quiet period of recovery after the frenzied tax season, at Tax Masters our day continues like normal. Most of our tax representation work actually occurs after April 15th. If you have an IRS tax debt or have serious tax problems, we stand ready to help you.

If You Did Not File, Act Now to Resolve the Problem

The first group of callers we see at this time of year tends to be made up largely of taxpayers who did not file their tax return or an extension. Because it’s after April 15, there are penalties and interest that will be assessed if you did not meet the filing deadline, but you should act now to correct this mistake before it becomes a more serious problem. Because of the current financial situation, many taxpayers may not be able to pay what they owe in full. Don’t let that be an excuse for not filing. It’s not illegal to owe the IRS, but it is illegal to refuse to file.

File Your Past-Due Tax Returns Now

Filing past-due tax returns is not particularly difficult if you know what you are doing and have good IRS tax representation. And if there is a tax debt associated with an unfiled return, it becomes more critical that you seek help in making sure you complete the process effectively, taking advantage of all deductions you have coming your way.

If You Filed an Extension, You Still Owe the Money

Also remember that filing an extension does not mean you are excused from paying what you owe. Interest accrues and does not stop accruing until you pay your tax liability in full or reach a settlement if you cannot pay.

Avoid Future Tax Problems

We work hard at Tax Masters not just in solving immediate tax problems, but in helping taxpayers understand how to avoid actions that can lead to additional tax problems in the future.  Tax representation to many firms is just about processing the payment, performing the service, and sending the taxpayer on his or her way. At Tax Masters, we want to help our clients get out and stay out of trouble with the IRS. If you have an IRS tax problem, give us a call today and talk it over with us at (866) 694-4018.

Until you need us,

Patrick Cox Tax Masters

Why Not Represent Yourself with the IRS?

I had a conversation this week with a bright enough fellow. He had gotten behind with bills and taken his 401(k) out to live on. Before he knew it, he was hit with the early withdrawal penalty and was soon in serious trouble with the IRS, owing tens of thousands without a way to pay it. He basically called to get as much information as he could out of us in hopes of taking what little information he could glean from our conversation so he could represent himself with the IRS. I strongly encouraged the gentleman not to take that course of action, but at the end of the day, sent him on his way with our best wishes and the reassurance that we would be here to help pick him up even after he made all the mistakes he was sure to make with the IRS. For the record, the worse off your problem, the harder it is to fix, the more it costs to fix, and the longer it takes. So the sooner you address your issues in the right way, the better off you’ll be.

From the Horse’s Mouth

I commented in January about Nina Olson’s report from the National Taxpayer Advocate’s office regarding her take on just how well the IRS did in 2008. One of the things she discussed at length is the fact that the tax code has become so complicated and convoluted that an entire industry is currently being supported by taxpayers who are simply trying to comply with existing tax laws.

It comes as no surprise that she goes on to discuss the fact that taxpayers with serious tax issues tend to benefit from IRS tax representation. Based on the statistics given by Ms Olson, we were able to draw the natural conclusion she could not explicitly state because of political reasons: Taxpayers are achieving more favorable results if they engage a qualified IRS tax representative.

Dangers of Engaging the IRS on Your Own

I’m going to remove my TaxMasters-hued glasses for a moment and simply record some things you might expect from the IRS if you are one of the self sufficient few who insists on doing this yourself. Before I continue, let me emphatically state that I do not recommend that you engage the IRS by yourself unless you are an enrolled agent, CPA, tax attorney, or another type of tax professional accustomed to dealing with the IRS routinely. With that caveat out of the way, here’s what the IRS has been reported to do when engaging in audits and aggressive collections activities. The IRS can:

• Assume the worst about you–that you are a tax cheat, that you are lying, that you are intentionally and criminally defrauding the US Treasury of funds
• demand that you pay immediately all the money you owe
• When you inform them you can’t pay the full amount they say you owe, set up payment plans you might not be able to afford because the IRS doesn’t ask you about all your expenses and you don’t know which expenses qualify, which don’t qualify, and how to present your bills to benefit your case
• File returns for you when you fail to file, excluding any non-standard deductions to which you are entitled, and then send you a bill to pay the full amount immediately along with all penalties and interest
• Ask you questions in an audit specifically designed to catch you off-guard to uncover additional information the IRS can use against you to collect even more revenue
• Ask your family, friends, neighbors, coworkers, clients, business associates, and employers leading questions about your financial situation, your purchases, your habits, and even your criminal history (whether you have one or not) in an attempt to get as much information against you as possible; and if they refuse to cooperate, there is always the fear of the IRS looking more closely into their affairs
• Take your money and assets regardless of how much you need to make payroll or to pay the bills necessary to keep your household or business solvent

The TaxMasters Benefit

We have made a living at TaxMasters by knowing what to expect from the IRS and by using their own rules, tendencies, and habits to protect our clients. For the do-it-yourself tax negotiators, I have a vital point to make. If you are facing an IRS problem, regardless of how you arrived at that problem, you are different from TaxMasters in one very important aspect. While you are facing uncertainty and fear about facing the IRS head on, we don’t have that fear at TaxMasters. We don’t fear negotiating with the IRS because we know their rules and we study their tactics and tendencies. We don’t get caught off guard or surprised by the IRS tactics that tend to strike fear into taxpayers.  We are successful at negotiating with the IRS because we do it every day and understand what constitutes a real threat and what IRS actions amount to nothing more than a toothless bark. It’s far easier to stop a punch if you know exactly when and how it will be thrown.

It’s Your Call

So think about it, yes? Those of you feverishly working through the latest do-it-yourself book or tax prep for dummies paperback, take a minute to think this through. Even if you are up to all the technical aspects of negotiating with the IRS, do you know when your negotiation tactic can be considered criminal? Do you know what questions the auditor can ask in an audit and how to redirect the auditor if they step out of line? Are you ready to use the law not only to represent yourself, but to hold the IRS agent pounding on your door accountable?

But even more important than any of these things… If you are afraid of the IRS, they will exploit that fear and are likely to take from you far more than you, or we, think is fair.

Until you need us,

Patrick Cox TaxMasters

Tax Masters Patrick Cox Fighting the Back Tax Trap

Another case just came across my desk that made me want to revisit what I’ve coined the back tax trap, discussed previously in the post titled Avoiding Unfiled Tax Returns - Patrick Cox Tax Masters and in Unfiled Taxes and Back Taxes - The Back Tax Trap.

Unable to Pay Back Taxes

Every year, we see an increasing number of taxpayers falling into this category. They typically arrive at the back tax trap by one of two routes. The first involves carrying tax liability past the time it’s due. If the taxpayer still doesn’t have the tax paid in full when they need to file taxes for the following year, they are discouraged and less likely to file on time. Particularly if tax debt increases over several years running, the taxpayer, out of frustration and despair, simply stops filing tax returns. The tax debt quickly builds and spirals out of control. This is not a good place to be and is the situation many retirees and fixed-income taxpayers find themselves in.

One, Two, Three Unfiled Returns

The second route typical of people who wind up in the back tax trap involves people who don’t have tax debt or tax problems, but for whatever reason fail to file a tax return for a given tax year. This happens for all kinds of reasons, from plain forgetting to file to not being able to file due to military service or a number of other situations. If the IRS doesn’t contact the taxpayer or file an SFR (substitute for return) in that first year, the taxpayer can be lolled into a sense of apathy, thinking perhaps that the IRS isn’t paying close attention. So they miss the second year, then the third. This can go on for a number of years, but when the IRS finally decides to act, the ramifications of the taxpayer’s non-compliance can be overwhelming. This tends to be the situation that plagues younger taxpayers.

When Unfiled Tax Returns Become Tax Evasion

Regardless of how a taxpayer winds up in the back tax trap, the weight of mounting IRS debt soon grows from a molehill into an unmovable mountain. Penalties and interest are the enemy of everyone with a tax debt. And continuing to allow tax years to go by without filing compounds and complicates the problem, making the taxpayer look like a tax evader to the IRS.

At Tax Masters, we take the time to understand your specific situation from your perspective and then recommend a course of action to solve your tax problem. We then contact the IRS on your behalf to make sure there is nothing in your file that you don’t know about or that might have been overlooked. At this point, we share with you exactly what the IRS thinks you owe and what collection actions are pending. Often our clients are in a bit more trouble than they realize. This review process with the IRS lets us redirect tactics and adjust the strategy for combating your specific tax problems.

File Every Year

The worst thing you can do as a taxpayer is to not file your tax return every year, regardless of what you owe and of how much the return might increase your tax debt. The IRS won’t even consider negotiating with you until all unfiled tax returns have been filed. And if the IRS has filed SFRs for you, there is still a possibility that you can reduce the amount you owe by letting us help you file a replacement return that takes advantage of all available deductions.

Call Tax Masters to Climb Out of the Back Tax Trap

If you are in the back tax trap, call us today. Depending on the severity of your situation and tax debt, every day that goes by without acting increases what you owe. If you are one of the taxpayers struggling with the fact that you still owe from 2007, make sure you file your 2008 tax return, regardless of whether you can pay the tax liability when you file.

Being in the back tax trap can be absolutely deflating. If you’re in this situation, we can help and the relief can start today. All you have to do is call us and tell us about your situation. You can reach our tax consultants at (866) 694-4018. We’ll tell you what we can do to correct the problem, discuss the options available to you, and talk about what it will cost to get the IRS to take the bulls eye off your back.

Until you need us,

Patrick Cox Tax Masters

End of Year Things to do to Avoid Unfiled Tax Returns

The turkey has either been thrown out or is now taking on a peculiar aroma in the back of refrigerators all over the US. The college football Bowl Championship Series has entered its annual question, irritation, and complaint period. 2009 is only two weeks away. In Houston, it was 34 degrees this morning and it snowed last week.

Being that I’m in the IRS tax relief business, when the weather turns cold and the year nears an end, my thoughts turn to paying taxes and the potential need for tax representation. I thought I’d mention just a couple of tips for things you can do now to make sure you’re ready to file your 2008 taxes and avoid the back tax trap.

Organize Receipts and Records Now

One of the most important things you can do to protect yourself from the IRS is to keep good records and keep them organized. As a tax representation firm, we get to know lots of people with lots of difficult and complex tax problems. We’ve realized from watching the tendencies of our thousands of clients that keeping good records helps taxpayers do more than save time. If a taxpayer has all records together, he or she is much more likely to file on time and avoid getting into a situation where he or she winds up with unfiled tax returns. As the year winds down, taxpayers need to collect and organize all relevant receipts, finalize mileage and log books, and buy new materials for keeping good tax records in 2009. This is a fairly simple exercise that can take as little as 30 minutes and can save you days of legwork and looking through a jumble of records in March or April.

Resist the Back Tax Trap and Unfiled Returns

Filing tax returns on time is critical to staying out of the IRS collections process. And the worst part about missing one filing deadline is that it makes it easier to miss the next, and the next, and the next, particularly if you think you owe more than you can pay. If you have one or more unfiled tax returns, I strongly encourage you to file those unfiled returns before the IRS contacts you. And if the IRS sent you notification that they have filed an SFR (substitute for return) on your behalf, you need to act immediately to file that past-due return so you can claim the deductions you have coming.

Tax Masters Solves Tax Problems

At Tax Masters, we don’t judge you for any past mistakes or decisions. We will listen to you describe your tax problem and let you know exactly what you need to do to resolve it. We are particularly good at filing past-due tax returns to get you back into compliance with the IRS, and in most cases, save you money. Call us today if you have unfiled tax returns so we can give you the tax relief you need. And get your receipts, logbooks, and documentation together now before the end of the year. At the very least, it will save you time in the spring. But more important, a little planning can keep you from sliding into the back tax trap with unfiled tax returns.

Until you need us,

Patrick Cox Tax Masters

IRS Enforcement and Past-Due Tax Returns–Patrick Cox, TaxMasters

The Election and Your Taxes

One of the things TaxMasters is good at is watching trends. For instance, we know that the IRS lays lower than usual heading into an election. Now with the election out of the way, we strongly suspect that letters are going in the mail this week and next. One of the easiest issues for the IRS to identify is the absence of past-due tax returns. Past-due tax returns also happen to be one of the things we can help you resolve fairly quickly if you beat the IRS to the punch.

Over the next few weeks, a whole new crop of audit notifications, substitutes for unfiled and past-due tax returns, inquiries about deductions, questions about dependents and unreported income, and notifications of taxes due will be making their way to people. If you receive any one of these letters, particularly if it’s a Notice of Intent to Levy and Notice of Right to a Hearing, contact us as soon as you get it. You are indeed in need of tax representation. 

Tax Enforcement Trends into 2009

There are several things we expect the IRS to focus on going into 2009. There has been quite a bit of buzz lately about the IRS tightening their grip and increasing their effort to monitor sheltered offshore income. This filing season, the IRS will watch foreign bank account reports (FBARs) more closely than in the past and will automatically penalize those who file the reports late.

The National Association of Tax Professionals (NATP) predicts that 2009 will see an increase in corporate and self-employed (Schedule C) audits. The intent would seem to be to generate more revenue, make up for the current tax shortfall, and encourage compliance in the face of the current economic downturn. The push to collect revenue will continue to pick up steam, especially as Commissioner Schulman works to prove himself to an entirely new administration.

If you are already having problems with the IRS, you need to resolve them now. If you have past-due tax returns or unpaid or delinquent taxes, it is in your best interest to call us before the IRS contacts you.  We will get started right away.  We will get between you and the IRS and make them treat you with respect.

Until you need us,

Pat Cox

The Back Tax Trap

We had a call today from a nice enough fellow. We got to talking about his tax problems and about the fact that the IRS was sending him letters about the remaining money he owed for 2006. As we talked, I was disheartened to find out that he had fallen into the classic back tax trap. Because of the fact that he still owed the IRS money from 2006, he has now failed to file for 2007. His logic is sound enough. If I can’t pay what I already owe, why file this year to let the IRS know I owe them even more that I can’t pay? But what the IRS sees is yet another violation for which they can tack on even more penalties and interest. What that means is that he now has the old problem with delinquent tax payments and a new, potentially larger problem with an unfiled tax return.

Don’t Let the IRS Bully You into Not Filing Your Tax Return

No matter how much you owe in back taxes, never let IRS tactics scare you away from filing your current tax return. Not filing can become a trend that digs you deeper and deeper into a hole. This is also a problem that will not go away on its own. Even more important, the IRS will not deal with you until you are current with all tax returns, regardless of what you owe. The lesson here is to file your return whether you can pay or not. No matter what the situation, always file a tax return.

What to Do From Here

So you’re saying, great Pat. I read this too late. What do I do if currently have past-due tax returns that I haven’t filed? The answer is easy. I’ll tell you exactly what we told the gentleman on the phone earlier. You have to get all those past-due returns in order before you can do anything else with the IRS.

TaxMasters Can Help

We see people regularly with three to five years of tax returns that haven’t been filed. Even up to ten or so years isn’t that unusual. One of our strengths is that we’re really good at getting people with past-due returns back into compliance. We have even successfully helped one specific taxpayer who had almost 40 years of unfiled returns.As always, TaxMasters is here to help. Call our tax professionals today at (866) 694-4018 or go to www.txmstr.com and let us get between you and the IRS. We can help you file past-due returns and help you find ways to pay delinquent taxes with fewer penalties. We are here to help.

Until you need us,

Pat Cox