A group of tax professionals who have deep and diversified tax experience, a passion for technology, and the desire for helping others. We created Bullseye Tax Relief as a platform for helping businesses and individuals with their tax problems.
It sounds great. Make an offer to the Internal Revenue Service (IRS) to erase your entire tax bill! It is not that simple. If you can afford to pay the tax debt, you will be required to do so. By not paying the tax bill, you can incur a larger tax bill: one that includes penalties and interest! Not to mention, the IRS can place a tax lien or levy on any or all of your properties or bank accounts to collect the entire tax bill. So, why would the IRS accept an offer that is less than the taxes owed? In a previous blog, we discussed that eligibility for an Offer in Compromise is determined by being able to pay the tax bill, with or without placing a financial hardship on the taxpayer. There is also the question of doubt of whether the taxpayer owes the tax bill. There might have been an error on the IRS part, or an error in reporting income, or …? Before you can apply for an Offer in Compromise, you must meet a certain set of IRS requirements. You must make sure that all your tax documents have been filed on time in addition to these requirements. Furthermore, you should not have any past due penalties remaining on any previous tax debt. Here are some additional requirements that must be met or your application for an Offer in Compromise will be denied:
Before the Process:
The Process Itself:
Advice: Although anyone can apply for an Offer in Compromise, the question is: should they? The application process is complicated, involving a lot of math and completing forms, not to mention corresponding with the IRS. This is best left to an expert. Call us today. We can advise you as to whether an Offer in Compromise is in your best interests. There may be a better option that fit your needs. Call us now. The post Eligibility for an Offer in Compromise appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/eligibility-for-an-offer-in-compromise/
0 Comments
Scenario: you receive a tax bill from the Internal Revenue Service (IRS) for a staggering amount. You think to yourself: how am I ever going to be able to pay this AND all my other bills? Do I have to sell my car … my house …? Several people have had to tackle this struggle. You are not the only one. That may bring some comfort … for a moment at least. Fortunately, there are some other alternatives available for people in your situation. These are known as tax resolution options. This is what Bullseye Tax Relief specializes in. We will discuss each of them, one at a time. The first one we will discuss in an Offer in Compromise. So, what is it? An Offer in Compromise (also known as OIC) allows you the option to settle your tax debt for less than the amount you owe the IRS. It was created for those taxpayers who could not pay their tax debt in full without experiencing a resulting financial hardship. Depending upon your financial situation, it may be impossible for you to pay your tax debt in full, even with the aid of an installment plan or other tax resolution option. An Offer in Compromise is extremely helpful to those with the severe inability to pay off a tax debt. You can pay your tax debt off completely by negotiating an amount with the IRS. This amount can be exponentially smaller, and your slate is “wiped clean” by the IRS, giving you a fresh start. To qualify for an Offer in Compromise, you must first submit the proper forms to the IRS. The amount you offer them must meet their specific set of rules and considerations. There are three different situations that make you eligible for an Offer in Compromise:
As you can see, an Offer in Compromise is definitely a tax resolution tool. This tool can be used for employment tax resolution for businesses. If you receive a tax bill that you cannot afford, please contact us immediately so that we can help with your tax problem. Consultation is free! Our following blogs will discuss the eligibility and process of an Offer in Compromise so please visit us again. The post What is an Offer in Compromise? appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/what-is-an-offer-in-compromise/ Almost no one is excited about paying individual income tax. First, it is time-consuming. The research, reporting, calculations and the filling out of tax paperwork can be daunting. Even preparing taxes by computer tax software can be a hassle. Of course, you can hire a tax preparer to do this task, but you still must supply the information via receipts, bank statements and the like. You also must pay for these services. Even after the income tax return is signed and filed, some people still spend time thinking of the “what is”. What if I miscalculated the amounts? Suppose I transposed a number or two? What if I took a deduction I was not qualified for? What if I missed a deduction? Will I be audited? So, why do we have this process if it is so time-consuming, laborious, expensive, and (pardon the pun) so taxing? Well, taxes have been around for over 4,500 years. The earliest known tax took place in Mesopotamia where people paid their taxes in the currency of the time, i.e. livestock. That’s right, people paid their taxes with sheep, goats, cattle, etc. Imagine sending the Internal Revenue Service (IRS) a chicken with your income tax return! Ironically, the United States was founded to avoid high taxes. Remember the slogan “no taxation without representation”? The King of England had taxed the colonists heavily on just about everything. In 1765, the Stamp Act required taxes to be paid on all legal and business documents. The colonists objected since this form of taxation did not give them any political voice or input regarding taxes. The colonists eventually revolted, most notably in the Boston Tea Party. There were no taxes when the United States was first established. The first federal income tax was created in 1861 as a mechanism to finance the Civil War. By passing the Internal Revenue Act in 1862, Congress created the forerunner of today’s IRS, named the Bureau of Internal Revenue. Having placed excise taxes on just about everything, the Bureau and the tax lost support and was repealed in 1872. Congress passed the Wilson-Groman tariff in 1894 which established a tax rate of 2% for annual incomes over $4,000 or the equivalent of $118,000 in 2019 currency. The revenue from this tax was to replace the revenue lost by tariff reductions. However, in 1895, the U.S. Supreme Court ruled this income tax unconstitutional since it violated the 10th amendment to the U.S. Constitution forbidding any powers not expressed in the Constitution. Only power to impose a direct tax by apportionment according to each state’s population is granted in the Constitution to Congress. Ratified in 1913, the 16th Amendment, granted Congress the power to tax personal income. The new tax system collected the taxes at the source, prior to employees receiving their paychecks. In 1914, the Bureau of Internal Revenue released its first income tax form, Form 1040, which is still the form individuals use to report their income tax today. However, no one paid any taxes during the first use of the form. They just submitted the form to the Bureau to be checked for accuracy. Ironically, even in 1915, both Congress and the public voiced concerns about the form’s complexity and its difficulty in preparing and filing their income tax returns. Sound familiar. Our next blogs will discuss individual income taxes in further detail. The post Individual Income Tax – a necessary “evil” appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/individual-income-tax-a-necessary-evil/ According to the Small Business Administration’s Office of Advocacy, 99.9% of all the businesses in the United States are small businesses, translating into a total of 31.7 million businesses spread throughout the nation. There are 60.6 million small business employees which translates into a total of 47.1% of all employees working throughout the nation. Businesses drive the economy of the United States since they both supply labor and customers, goods, services, payments and revenues. Small businesses generate 44 percent of the economic activity in the United States. There are several types of businesses, each with its own set of advantages and disadvantages. However, no matter how the business is organized, it must still pay business income taxes according to its type. Tax monies allow the government to pay for the infrastructure, defense and social programs for the people living in the United States. Both people and businesses benefit from the government spending tax monies. Now, some businesses pay their taxes directly to the Internal Revenue Service (IRS) in the form of regular deposits. These monies are withheld from the employees’ paychecks of the business and are later deposited with the IRS. There is another type of business structure that pays taxes differently. These are partnerships and can include sole proprietorships, S corporations and Limited Liability Companies (LLCs). Partnerships instead file an annual information return since each partner reports profits and losses on their own individual tax returns. This is referred to as a “pass through” business, which is the dominant business structure in America. They are not subject to corporate taxes. Profits earned are “passed through” the business and reported on the business owners’ personal income taxes. This eliminates the two layers of taxes that corporations pay: one at the corporate level and one at the shareholder level. These businesses also pay self-employment taxes and state and local taxes. Payroll taxes comprise most of the taxes that businesses pay. Payroll taxes include Federal income tax, Social Security and Medicare tax, Additional Medicare tax, Federal unemployment tax (FUTA), excise tax and self-employment tax (SE), if applicable. The Federal income tax is paid as it is earned since employers withhold the appropriate amount from their employees’ paychecks. They then hold these monies in trust to be paid to the IRS at designated times. Most businesses use a Federal Tax ID Number or Employer Identification Number (EIN) for the identification and tracking of such tax reports to the Internal Revenue Service (IRS). It is absolutely necessary that employers pay these Trust Fund taxes to the IRS on time. Utilizing collected tax monies for purposes other than paying these taxes is illegal. This act will result in not only all the tax monies to be paid to the IRS, but penalties and interest as well. Furthermore, a Trust Fund Recovery Penalty (TFRP) can be assessed against you personally. Personal assets of the employers and/or persons responsible for collecting and depositing the tax monies with the IRS can be seized to pay these back taxes. Liens and levies can also be utilized by the IRS to ensure payment. If you receive a letter from the IRS regarding back payroll taxes or a tax lien on your business, DO NOT ignore it. Instead, contact us immediately so that we can assist you with payroll tax resolution options. Tax resolution help is our specialty. We can also help with payroll tax as a service so that you can avoid the hassle. Payroll taxes will be further discussed in future blogs. The post Businesses and Taxes appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/businesses-and-taxes/ The Trust Fund Recovery Penalty (TFRP) can be avoided by ensuring that all employment taxes are collected, accounted for and then sent to the IRS for payment when required. Make sure these tax payments are on time and accurate. If you do this correctly, you will avoid any Trust Fund Recovery Penalty (TFRP) assessment by the IRS. Withholding trust fund taxes from the IRS can lead to heavy fines for any party involved. Not only are you hurting the IRS, but you could also be significantly harming your employee(s) by not documenting their payments of their share of these withheld taxes. These payroll taxes include the payment of the Federal income tax, Social Security tax, Medicare tax and self-employment taxes, if applicable. A Trust Fund Recovery Penalty is often stressful for all responsible parties and businesses involved. There are a number of options for successful employment tax resolution. If you feel that you may be liable for TFRP, have received notice from the IRS that they are assessing a TFRP against you, or you just want to avoid the hassle of this responsibility altogether, then contact us for help with payroll tax. The IRS will issue IRS Letter 1058, Notice of Intent to Levy and Right to Request a Hearing or IRS Letter 3172, Notice of Federal Tax Lien File and Your Rights To a Hearing before it imposes a levy. You must have a Collection Due Process (CDP) hearing within 30 days of the notice. To request a hearing, you must fill out IRS Form 12153, Request for a Collection Due Process Equivalent Hearing. The IRS can impose a Federal Tax Lien or a levy against you for the tax amounts due. They will first issue letters. It is extremely important to respond to these letters immediately. Liens can be attached to your home, making it difficult to sell or refinance the home. The IRS can impose a tax lien on your business. If a lien has been imposed by the IRS, you will need help with this payroll tax problem. Payment of the taxes owed in full, using installment agreements, or entering into an Offer in Compromise are options. A Notice of Levy is much more serious action than a lien. If you receive a Notice to Levy your business bank account, the IRS will immediately attempt to seize funds directly out of that bank account. Under U.S. Federal law, a levy is an administrative action by the IRS to seize property to satisfy a tax liability. The levy “includes the power to seizure by any means”. Once the IRS levy is in place, they will seize assets until the tax liability is paid in full. If you disagree with the IRS in what they say you owe, you can file the CDP (Form 12153) request only within 30 days of this notice. Otherwise, you forfeit your right to object. Levies can be stopped by requesting a Collection Due Process (CDP) hearing or a Collections Appeal program or by entering into an Installment Agreement or asking for an Offer in Compromise. Dealing with the iRS can be overwhelming. We have many years’ experience that can help with payroll tax problems. Tax resolution is our specialty, so please contact us immediately. The post Collection Due Process is a last chance for tax resolution appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/collection-due-process-is-a-last-chance-for-tax-resolution/ Previous blogs regarding employment tax resolution have covered the payroll taxes, Trust Fund Recovery Penalty (TFRP), Trust Fund Penalty Assessment and an introduction (Part 1) to the Trust Fund Penalty Assessment Interview. We will now continue discussing the interview. As I stated earlier, the Trust Fund Penalty Assessment Interview is a tool that the Internal Revenue Service (IRS) uses to track down the person responsible for collecting and depositing with the IRS all payroll taxes. There are several possible candidates: board members, owners, directors, an employee tasked with that responsibility, and even third-party payroll tax providers. This is just the first part of the process, i.e., determining the person responsible for failing to collect and/or deposit the payroll taxes with the IRS in a timely manner. The second part of the TFRP Penalty involves the willfulness of this failure in collecting and paying these taxes. Determining the willfulness of the failure to collect and/or deposit these taxes is indicated by the act(s) itself/themselves. Willfulness is determined as the person responsible: 1) must have been, or should have been, aware of the outstanding taxes and 2) either intentionally disregarded the law or was plainly indifferent to its requirement (no evil intent or bad motive is required). In essence, anyone responsible for collecting these funds can be held responsible. So, if you know these funds are not being collected and/or paid, you can be held accountable. If the failure to collect and/or pay the taxes was an honest mistake, then immediate payment of the full amount of the tax owed or the implementation of an installment agreement can help with the employment tax resolution. The Trust Fund Recovery Penalty assessment is 100% of all employment taxes owed (Federal income tax, Social Security, Medicare, and self-employment tax, if applicable), plus penalties and interest. So, for example, if the employment tax for one employee is $1,000 and the tax was not paid for an entire year, then the tax due would be $12,000, just for the taxes. Multiply the amount for each employee that the tax was not paid. This amount can be staggering and detrimental to any business or person. Personal assets can be seized to pay the debt. That is the reason why collecting and/or paying the tax is so important. What if you are not responsible for the failure to collect and/or pay employment taxes? If you are not responsible for the failure, then you will need help with payroll tax from a tax professional. Dealing with the IRS by yourself can be frustrating, time-consuming, expensive and non-productive. You have 60 days to respond to the letter from the IRS stating that they are planning to assess the Trust Fund Recovery Penalty against you. Being honest and upfront is the fastest way to get this matter resolved. Although you may be liable, it is best to contact a tax professional to confirm liability and assist you with moving forward. If you believe yourself to be innocent and should not be held accountable, then contact us immediately to assist you. We can help with payroll tax so please contact us for any questions or assistance with your current situation. Check for more information on our tax problem resolution services page. Upcoming blogs will further discuss tax resolutions. The post The Dreaded Trust Fund Penalty Assessment Interview – continued appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/the-dreaded-trust-fund-penalty-assessment-interview-continued/ As stated in previous blogs, the Trust Fund Penalty Assessment Interview is a tool that the Internal Revenue Service (IRS) uses to determine who is the person(s) responsible for not collecting and/or depositing the Trust Fund Taxes (also known as payroll taxes or employment tax) with the IRS in a timely manner. As a reminder, Payroll taxes include the monies withheld by the employer from its employees’ paychecks, which include Federal Income Tax, Social Security and Medicare Tax, Additional Medicare Tax, Federal Unemployment Tax (FUTA) and Self-employment Tax (if applicable). These monies are also referred to as Trust Fund Taxes because the employer holds them in trust before depositing them with the IRS. Whenever the IRS fails to receive these Trust Fund Taxes from a business, it will contact the owner by letter indicating that the IRS may assess a Trust Fund Penalty or TFRP Penalty against the person(s) responsible for this failure. This can not only include the owner of the business, but other responsible persons as well. If a board member, director, manager, employee tasked with the responsibility or even a third-party provider of that service neglects to collect and pay the monies, the IRS will investigate. It is best to pay the amount due immediately so that no interview is necessary. Using the Trust Fund Tax monies for purposes other than depositing it with the IRS is illegal and will trigger an E4180 interview. This may result in a Trust Fund Recovery Penalty (TFRP) against the responsible person(s). What is an E4180 interview? An IRS agent will conduct an interview in person or via phone with the person(s) the agent believes is responsible for the failure of receiving the Trust Fund Tax monies from the business. It can be quite nerve-racking. Perhaps understanding the nature of the questions may help. First, the questions come from IRS Form 4180, hence the name of the interview. The IRS will not give you this form before interviewing you. However, you will receive a completed copy after the interview. By visiting the IRS website, you can see the form itself. Let’s review the form section by section in this blog.The first section identifies the person interviewed by name, social security number, address, phone number and job title. If the business uses a third-party provider for payroll services, another section is completed. The second section involves your responsibilities as they pertain to payroll, taxes and deposits, including the dates that you were responsible for those duties. Some of the questions are:
You are also asked to identify any other individuals with those responsibilities, including their name, address, position and dates during which time they had these responsibilities. The next sections include questions as to whether other financial obligations were paid instead of the payroll taxes and who paid them. Paying other bills first is illegal. The next set of questions ask when you first were aware of the unpaid taxes, what actions did you perform to ensure that the taxes were paid, were there any discussions regarding the nonpayment of taxes and with whom, and who handled IRS contacts during this time. Other questions regarding your actions with third-party providers for payroll taxes are also asked. The last section involves the required excise tax returns. By collecting and paying the business’ payroll taxes on time with the IRS, you can avoid any Trust Fund Recovery Penalty. If you do receive a letter from the IRS regarding a TFRP Penalty, call us immediately for assistance since providing the proper information to the IRS timely is very important and can save you money and time. Our next blogs will explain the process further. The post The Dreaded Trust Fund Penalty Assessment Interview appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/the-dreaded-trust-fund-penalty-assessment-interview/ Owning and operating a small business is no easy task. There are many tasks to accomplish … many “hats” to wear. Inventory, customers, services and then the “hard stuff” to do. That is … calculations. You calculate the expenses of the business which include buying inventory, equipment or supplies. You calculate the monies paid out in bills for utilities, rent, perhaps vehicles. But the calculations involving taxes can be the most complicated and most important part of your business. Miscalculating payroll and the resulting payroll taxes can have dire consequences. Besides that, these monies must be deposited with the Internal Revenue Service (IRS) on time every time. As a business owner, it is your responsibility to withhold these monies from your employees’ paychecks and deposit them timely with the IRS. Of course, you can designate another person or even a company to compete this task. However, you are still the ultimate person with this responsibility. As a reminder, payroll taxes include Federal Income Tax, Social Security and Medicare Tax, Additional Medicare Tax, Federal Unemployment Tax (FUTA) and Self-employment Tax (if applicable). There are various tax tables that can be used to determine the amounts for these taxes. There are also various requirements and limits for each of them as well. These amounts can be calculated using the IRS tax tables and charts. Now we all know that life can sometimes throw us a few punches. We may forget, we may be busy. We all have been there, done that. Unfortunately, there are also consequences to “forgetting” to pay the payroll taxes. The IRS expects us to collect and pay these payroll taxes to them on time regardless of what is happening in our lives. You are holding their monies “in trust” until you deposit it with them. In other words, they are trusting you to deposit these withheld monies to them on time. So, what happens when you do not collect, deposit or both? That triggers a Trust Fund Penalty. A Trust Fund Recovery Penalty (TFRP) can be assessed if the unpaid trust fund taxes cannot be immediately collected from your business by the IRS. The taxes may have been collected by you, or not, but they were not deposited with the IRS by the deadline. According to the Tax Code, the individual responsible for the collection and deposit of these taxes can now be held liable for penalty for the willful failure to collect, account for, and/or pay to the IRS these taxes for the business. So, is just the business owner responsible and therefore liable? The TFRP can be assessed against anyone who is responsible for collecting and/or paying withheld employment taxes and who willfully fails to collect and/or pay these taxes. This can include not only the business owner, but officers, directors, board members, Payroll Service Providers, and even employees tasked with that responsibility. The IRS can even assess the penalty against more than one person. The key is that the failure to collect and/or pay the payroll taxes to the IRS is WILLFULNESS of the action or failure to act. Willfulness is determined as: a) a person must have been, or should have been, aware of the outstanding taxes and b) that person either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required). If the IRS believes you or your business may be liable for the TFRP, they will begin the process by sending you notice that they are planning to assess a TFRP against you. Time is short. You have but 60 days to appeal or pay. Contact a tax professional immediately so that this penalty is not assessed against you. Bullseye Tax Relief is available to help. Call us immediately to discuss your options. The post Payroll Taxes Must Be Collected and Deposited appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/payroll-taxes-must-be-collected-and-deposited/ So, you have decided to start your own business. Great! Congratulations! According to the Small Business Administration, there are 31.7 million small businesses in the United States, representing 99.9% of the total businesses here. Small businesses power the economy. Whether your business reflects one of your hobbies that has developed into a passion or you have finally decided that it is better to work for yourself, there is a lot of work ahead of you when you start your own business. Most entrepreneurs think of inventory, office equipment and supplies, technology and rental space when starting their business. Many business owners neglect another important part of owning and operating a business: the collection of and payment of taxes to the Internal Revenue Service (IRS), and state and local governments, which include business licenses. Whether you work for yourself and are the only employee of your business or you hire other employees as direct hires or contractors, taxes must be collected and paid accordingly. Employers must withhold taxes from their employees’ paychecks. These taxes are commonly referred to as “payroll taxes”. Employers collect the taxes throughout the year and deposit them with the IRS and other governmental agencies at designated times of the year. Furthermore, they must provide their employees with a W-2 form (Wage and Tax Statement) at the end of the year. Payroll taxes include: Federal Income Tax, Social Security and Medicare Tax, Additional Medicare Tax, Federal Unemployment Tax (FUTA) and Self-Employment Tax (if applicable). The calculation of these taxes is fairly straightforward. The Federal Income Tax is calculated using tax tables provided by the IRS. The monies collected for this tax is used by the government to pay for services that benefit the entire nation, such as the building and maintenance of the infrastructure, governmental services, military and other services that the United States government provides its citizens. Employers must also withhold part of the Social Security and Medicare taxes from the employees’ wages and then pay an additional matching amount. These funds provide monies and medical services to retirees. Since 2013, employers have been exclusively responsible for withholding 0.9% Additional Medicare Tax on each of their employees’ wages and compensation that exceeds a threshold amount according to the employee’s filing status. Employers also report and pay the Federal Unemployment Tax (FUTA). Since employees do not pay this tax or have it withheld from their pay, the employers must pay the entire FUTA tax from their own funds. Employees who become unemployed can withdraw from this fund according to the amount they paid into the fund. For those who are self-employed with net earnings of $400 or more or for those who work for a church or a qualified church-controlled organization, there is a self-employment tax. This Self-Employment Tax covers Social Security and Medicare benefits for the self-employed. These payments contribute to the individual’s coverage under the social security system, which provides the individual with retirement benefits, survivor benefits, disability benefits and hospital insurance (Medicare) benefits. The collection and payment of taxes may be overwhelming to the newly-initiated business owner; however, it will become easier the more often it is done. Besides, there is always help available from a tax professional, such as Bullseye Tax Relief. Contact us today for any assistance. Coming blogs will explain the consequences of not collecting, filing and depositing these tax monies with the proper tax authorities in a timely manner. The post Introduction to Payroll Taxes appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/introduction-to-payroll-taxes/ According to the IRS Page Paying Yourself, as of February 26th, 2021, the procedures for compensating yourself for your efforts in carrying on a trade or business will depend on the type of business structure you elect. Below are topics that frequently arise when new business owners ask the Internal Revenue Service questions about paying themselves.
Corporate officersAn officer of a corporation is generally an employee, but an officer who performs no services or only minor services, and who neither receives nor is entitled to receive any pay, is not considered an employee. Refer to “Who Are Employees?” in Publication 15-A, Employer’s Supplemental Tax Guide PDF (PDF). PartnersPartners are not employees and should not be issued a Form W-2 in lieu of Form 1065, Schedule K-1, for distributions or guaranteed payments from the partnership. Refer to partnerships for more information. Sources:https://www.irs.gov/businesses/small-businesses-self-employed/paying-yourself The post Business Taxes: Paying Yourself – Corporate Officers & Partners appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-paying-yourself-corporate-officers-partners/ |