Resolve Your Back Taxes This Tax Season With the Help of a Tax Attorney or CPA

Don’t let another year go by without resolving your back taxes. Consult an accountant, tax attorney, or other tax professional for help this tax season to start the coming year with a fresh slate.

Back tax issues don’t just happen to people trying to cheat the system. You might have made an error on your 1040 form, neglected to report a source of income you didn’t realize was important, or simply missed the deadline. Unfortunately, if you don’t resolve back taxes quickly, the penalties can really start piling up-and these penalties can have a devastating impact on your financial well-being. If you’re in danger of being crushed under snowballing tax debts, make this the year you break free. Contact an accountant or tax attorney to learn about your tax resolution options.

Offer in Compromise

If you owe more in back taxes than you’re feasibly able to pay based upon your current income and assets, a tax attorney or CPA can help you negotiate an offer in compromise. This settlement reduces the overall debt balance, making the payment threshold more attainable. In this situation, the Internal Revenue Service decides that it’s better to collect a portion of your debt than none at all. Keep in mind that in order to receive an offer in compromise, your tax attorney must be able to prove that paying back the full debt would constitute a hardship.

Penalty Abatement

One of the most frustrating things about back taxes is how quickly the total amount can balloon, thanks to interest rates and penalty fees. Your tax advocate can get some of these penalties lifted by proving that you’re suffering from extenuating circumstances that have made you unable to meet your tax requirements. These circumstances might include having experienced a death in the family, prolonged illness or unemployment, or a devastating natural disaster, such as a fire or flood. After penalty abatement, you will still owe the initial back tax amount plus interest, but you may no longer be subject to additional fees.

Installment Agreement

The larger your tax debt is, the less likely you are to be able to pay it back in one lump sum. That’s where an installment agreement comes in. Your CPA firm or tax resolution specialist can work with the IRS to develop a payment plan wherein you make smaller back tax payments over an extended period of time. This method of back tax resolution can help you avoid further penalties, as you’re showing good faith in paying what you owe.

Innocent Spouse Relief

If you and your spouse file a joint tax return, you’re both liable for back taxes accrued in that year-even if you later go on to separate or divorce. The IRS may even bring the entire debt and related penalties against one spouse if the other spouse is not responding to payment notices. Contact a tax lawyer if you’re in this situation. Your attorney will endeavor to prove that you’re not solely responsible for the tax debt, keeping you from paying for your spouse’s error or wrongdoing.

In each of these scenarios, the goal is to make it easier for you to pay back taxes-not to remove the tax debt entirely. You may still have a few tight years as you recover from tax penalties and back taxes. However, the longer you put off dealing with tax issues, the bigger the problem will become. Let this be the year that you resolve your tax debt situation. Take the first step by finding a tax attorney or accountant in your area to learn more about the tax resolution plan that might be right for you.

How to Prepare for an IRS Audit With the Help of a Tax Resolution Professional

Have you received notice of an impending tax audit for you or your business? Take steps to prepare, to minimize the stress and anxiety of the audit process.

If you find out that the IRS has chosen your tax return to be audited, your first instinct might be to panic. However, with careful preparation and the help of an experienced tax resolution professional, you can emerge from your IRS audit with the best possible results. In general, it’s not a great idea to handle audit proceedings yourself because you might not be aware of everything the IRS needs to examine-and you might give away more information than is necessary, opening yourself up to further scrutiny. Once you’ve brought in an expert to guide you through the process, you’ll have the confidence that each step you take is leading toward the possibility of a better audit result.

Determine the Reason for the Audit

One of the first things your tax consultant will do upon accepting you as a client is attempt to determine why your return is being audited. It is possible that you were selected at random, but there’s also a good chance that something in your return raised a red flag with the IRS. Your tax consultant will go through your return with a fine-toothed comb looking for bookkeeping errors, filing mistakes, and other issues. Other red flags include questionable deductions, excessive deductions, and large business expenses. Once your tax professional has located potential causes for the audit, he can more accurately and efficiently prepare you for the proceedings.

Gather Backup Materials

If your return is being audited, you’ll need to gather every bit of paperwork you have related to your taxes, particularly income, expenses, and deductions. For instance, if charitable deductions are the culprit, you’ll need receipts from all of the charities to which you donated to prove that you gave as much as you’re claiming. Your tax pro will be able to advise you on what paperwork is needed-as well as what, if anything, not to show.

Meet All IRS Deadlines

The IRS is serious about its deadlines, so if you’re given dates in your notice, make sure you comply. You may need to confirm response of the IRS audit notice, schedule your audit proceedings by a certain date, and file related paperwork. Note important dates in your calendar, and as you gather materials, find the most timely items first. While your tax resolution expert can help you with this step, it’s also up to you to know when deadlines are looming and to be prepared for them.

Learn About Tax Penalties and Settlements

After he’s spent some time with your case, your tax advocate will probably have an idea of whether the audit is likely to go your way. At this point, it’s a good idea to ask about the various tax penalties to which you might be subjected. You may be hit with fees related to underpayment, especially if the auditor finds that you willfully committed fraud. You may also have interest charged on the balance you underpaid. Knowing beforehand what tax penalties might apply to your situation can help you prepare financially. You can also research tax settlements related to the penalties you’ll incur to speed up the settlement negotiation process.

The best way to be prepared for a tax audit is to be organized-and in best-case scenarios, that starts long before you receive the audit notice. Keep detailed records related to each year’s tax return, so that materials are easily accessible when you need them. If you already use tax consultants for tax preparation service, ask about potential audit red flags when you file. Meanwhile, if the audit is your first sign that you need to improve your tax organization and record keeping, make changes going forward to avoid future issues. After all, one IRS audit is more than enough for anyone.

Tax Attorney, CPA, or Enrolled Agent: Who’s the Right Tax Professional for You?

Depending on your specific tax filing or resolution needs, you’ll need a pro with a certain skill set. Learn the differences between the various experts to ensure that you hire the right person.

Federal, state, and local tax codes are complicated, and can be overwhelming even if you’re filing a fairly basic tax return. Because the Internal Revenue Service takes its regulations and deadlines seriously, it’s always a good idea to seek professional help if you’re in doubt about any portion of your tax return, or if you’re dealing with back taxes. But with all of the experts advertising their services, how do you know who’s right for your needs?

Tax attorneys, accountants, and enrolled agents are all knowledgeable and skilled in dealing with IRS matters. However, they differ in terms of how they’re trained and, in some instances, in what services they can offer a client. Before you begin shopping around for a tax advocate, consider what type of assistance you require. Then, look for a pro who offers those services.

Tax Attorneys

A tax attorney is a bar-certified lawyer who specializes in tax law. That means that if you need advice about specific legal points-especially related to business tax laws or international tax issues-hiring a tax attorney might be the way to go. Tax attorneys are trained in negotiation strategies that can help you secure a tax settlement with the IRS, if you’re dealing with back debt. They can also represent you in a court of law if you’re filing a suit against the IRS or if you’re facing criminal charges. Finally, hiring a lawyer gives you the benefit of attorney-client privilege.

Certified Public Accountants

CPAs are trained and licensed in financial matters, including tax codes. If you need someone to dig through your financial records with a fine-toothed comb to find an error or to figure out how to maximize your deductions, an accountant may be right for the job. Unlike many tax attorneys, CPAs will also help you file tax returns and can help you plan for the future, from estimated tax payments to investments and savings. While an accountant cannot represent you in a court of law, he can represent you in tax settlement negotiations with the IRS, and in the event of a tax audit. Overall, CPAs are a great resource for financial advice and assistance that’s not specifically tied to legal issues.

Enrolled Agents

An enrolled agent is a tax professional who has been licensed by the IRS. Many enrolled agents are former IRS employees, but some may have taken a separate licensing examination covering all aspects of the tax code. Enrolled agents can offer tax help including tax return filing, audit representation, tax settlement negotiation, and other tax resolution strategies. Unlike CPAs, they don’t offer general financial advice, and unlike tax attorneys, they cannot assist you once your tax problems become legal problems, as well. However, enrolled agents are highly knowledgeable about tax matters, and in some cases, that’s the only expertise you need.

If you’re in doubt about how much help you need, consider calling a tax firm to inquire about an initial consultation to discuss your tax issues. You may encounter problems you hadn’t considered, or you may realize that your situation is not as serious as you’d feared. Keep in mind that of the three options, tax attorneys will generally be the most expensive, because they offer the most specialized legal and IRS assistance. If you’re working with a tight budget, choose someone who is licensed to give you only the help you need to ensure that you aren’t paying for services you don’t require. Above all, try to seek professional help as soon as you have concerns or realize that you have a problem. The longer you wait to bring in an expert, the worse-and more expensive-your tax problems will become.