3 Tips for Dealing with Unfiled Tax Returns

business woman biting her nailsTax season comes around every year whether you are ready or not.  Most people prepare and file their returns on time every year.  Maybe you are one of those people who, for any number of reasons, never got around to filing your return.  Once you missed one return, the prospect of later filing two or more returns became overwhelming.  Before you knew it, you were several years behind and not sure how to remedy the situation.  Letters and notices from the IRS started to stack up on your desk, but you were too overwhelmed to open them.  Now is the time to change things.

Below are three steps to take NOW:

1) Stop avoiding the issue

The IRS is not going anywhere.  Prolonging the inevitable is only hurting yourself.  The longer you wait to deal with this issue, the more interest and penalties will compound.  It’s definitely to your advantage to deal with things on your terms, before the IRS forces your hand with collection action and/or audits.

Although uncommon, in a worst case scenario the IRS can pursue criminal charges against non-filers.  They can also file a return for you and then assess the tax and start collection activity.  The filing of a substitute for return (called an “SFR”) often results in a significantly higher tax liability because the IRS normally won’t give you the benefit of all of the tax breaks that you would get if you filed the return yourself.

If there is a possibility that you will be a due a refund for a past year, you have three years to file and claim that refund.  However, if you owe money and don’t file a return, the time frame for assessment never starts.  While the IRS will usually only request six years of unfiled returns when dealing with non-filers, not filing a return technically leaves the IRS with an open-ended time frame for assessment and collection.

2) Gather your information

Go through your old papers, folders, and file drawers and gather anything that might be tax related.  Err on the side of including too much.  You can always thin things out later.  If you don’t have copies of old records, you can request past statements from your bank or credit card companies.  You can also request copies of information from the IRS that various entities (employers, investment companies, mortgage lenders, etc.) would have submitted to the IRS under your Social Security number.  While records created at the time of an expense are preferred, some records can be recreated, if necessary.  Include all records related to major purchases, such as homes, cars, or investments.

Once you have everything gathered, go through and sort it by year, and then by month.  You can sometimes back into information for a particular tax year based on only a few monthly statements.  Create a separate folder for each year, or even each month within the year if the records are voluminous.

If you also happen to have a stack of unopened correspondence from the IRS, now is the time to deal with it.  You want to make sure that you don’t miss any important information or any response deadlines that may be helpful.  Open and sort these notices in date order as well and put them in their own folder.

3) Find a qualified professional

If you haven’t filed a tax return in several years, odds are that you aren’t going to be able to catch up and file all of your back returns on your own.  The best advice is to find a qualified professional to prepare the returns and walk you through the process.  In addition to preparing the returns, a good tax professional can also help you navigate the IRS collection process and a possible installment agreement or offer in compromise.  If you have a good reason for failing to file your returns, a qualified professional can also help you request abatement of some IRS penalties.

TaxLane® (www.taxlane.com), regularly assists taxpayers with Unfiled Returns, Offers in Compromise, Installment Agreements, and the removal of IRS liens and levies.  Steve Photopoulos, JD, MST, a tax professional with over fifteen years of experience, is the owner and founder of TaxLane®, and creator of the blog, Life in the Tax Lane (www.lifeinthetaxlane.com).

To find out what options are available to you, contact our offices at (844) 479-9977.  We will talk openly and honestly about your tax situation and provide you with the best possible strategy for dealing with your IRS issues.

IRS Testing Streamlined Processing of Installment Agreements

Tax HelpThe IRS has announced that it is currently experimenting with expanded criteria for streamlined processing of taxpayer requests for installment agreements.  Among the expanded criteria for streamlined processing are individual taxpayers with an outstanding tax balance between $50,000 and $100,000 that request an installment agreement that will pay off their balance in 84 months or less.

The IRS will provide information regarding additional expanded criteria in the coming weeks.  The test program is scheduled to run through September 30, 2017.

TaxLane®, regularly assists taxpayers with Offers in Compromise, Installment Agreements, and the removal of IRS liens and levies.

To find out what options are available to you, contact our offices.  We will talk openly and honestly about your financial situation and provide you with the best possible strategy for dealing with your tax debt.

The IRS’s has proposed a fee increase for installment agreements…are there exceptions?

Internal Revenue ServiceYES, there are.

The Internal Revenue Service has proposed changing its fees for people who pay taxes in installments starting on January 1, 2017. Currently, the fee is a maximum of $120, and it will go up to $225. TaxLane regularly helps people work though all types of tax issues.  If you are in a situation that may be impacted by this change, you can save some money by speaking with someone now regarding the resolution of any tax issue you may have.

We have found that there will still be a number of exceptions made for lower-income families. For example, the $43 fee for families of four with an income with around $60,000 or less will remain the same. Other savings will be offered to taxpayers who take advantage of such options as the direct debit program. The IRS has offered many of its services at a rate that is under the actual cost for the services, you just have to know where to look and…qualify.

Navigating the options can be a bit daunting.  Getting help from someone or a firm that understands the IRS’s language and requirements will ensure the best outcome.

The actual proposed fees are as follows. Even if a person initially qualifies for one of the higher fee rates, they can reduce that by using one of the payment options that lowers the fee.

  • A regular installment agreement will be $225 if it is made on the phone, in person, by filing Form 9465 or by mail.
  • If the person then sets up a direct debit, the fee drops to $107.
  • Making an online payment agreement reduces the fee to $149.
  • Choosing direct debit when making an online payment agreement brings the fee down to $31.
  • A restructured or reinstated installment agreement costs $89.
  • The low-income rate remains $43.

Call a trusted professional to help you or take a look at (REG-108792-16), now available in the Federal Register to get more details about the coming IRS fee changes.

Uber, Airbnb and Turo. The new “sharing” economy business model makes for complications with the IRS.

Handshake barter cellphone for paint brush

The new “sharing” economy

Pooling resources among citizens is quickly becoming an effective way to reduce cost, and make ends meet during trying financial times. Households are discovering that sharing capabilities such as transportation and lodging can relieve financial pressures of day to day living. This model allows everyday people an opportunity to capitalize on owned assets to produce incremental revenue.  Both seller and consumer are winning as these services are increasing choice at generally more attractive prices.  Car rental, vacation housing and urban transportation, to name a few, are leading the way.

The IRS has launched new and supportive guidelines on these businesses designed to assist the sharing community in maintaining these efficient, easy and effective services. The idea is to inspire other sharing programs that support the needs of communities and cities throughout the United States.

If you are one of these providers, it is important to know that money received from providing services is taxable, even if a Form 1099 or W-2 is not issued. There are various deduction options for people who either rent a room in their home, share business space or use their vehicle to taxi people from one location to another.

It is important to get familiar with the new guidelines or get help from a tax professional that you trust. Payment options vary depending on the needs of the taxpayer and there are benefits provided by the IRS…if you know where to look.

As this complicated network expands, the IRS Sharing Economy Resource Center will be forced to evolve and tax implications will follow. As always, TaxLane assists taxpayers in understanding and meeting their tax responsibilities.  A lot of people fall behind and need help getting caught up or dealing directly with the IRS.  When it comes to tax debt, knowing what to do when makes all the difference.  We are here to help if you need it.

IRS Issues Warning About “Back To School” Scams

Keyboard scam

Scam Warning!

With students and parents preparing to face the start of the new school year, there’s already a lot of running around and taking care of last minute details. The start of the new school year also brings tax scams.

The IRS recently announced that a new scam is making the rounds. They warned of phone calls from fake agents, claiming to represent the agency and demanding a “federal student tax”.

While IRS scams have become a year round thing, this particular one targets parents and students. These bogus impersonators threaten with fines and jail time, demanding payment to stop any legal proceedings.

The IRS urges parents and schools to communicate to each other, students and staff that these scams are happening and to be on the look out.

Some of the tactics these scammer use to pay money or give up personal information include:

  • Altering Caller ID information;
  • Demanding payments using gift cards;
  • “Verifying” tax return information;
  • Pretending to be professional tax preparers;

If you receive a call from someone purporting to be an IRS representative, keep the following in mind:

  • The IRS will never demand immediate payment over the phone.  You will often get a letter in the mail first;
  • Threaten to alert or use local police or law enforcement agencies;
  • Demand payment of taxes without benefit of an appeal;
  • Ask for card payment information over the phone;

If you get a call you feel may be a scam, the IRS urges you to do the following:

  • Don’t provide any personal information and hang up immediately;
  • Search the number appearing on the caller ID.  They are often already listed as scam phone numbers;
  • If you think you might owe the IRS, call them directly: 1-800-829-1040;

Staying vigilant and alert will help keep crooks from separating you from your hard earned money.

Do you need a Fresh Start?

Tax Lane Fresh Start

You’ve no doubt heard the words “fresh start” a lot recently.  Many of our competitors hype it as the silver bullet that will solve all of your tax problems.  But, what do they mean by fresh start?  Will it really bring you the solutions you need?

Can the IRS’s Fresh Start Initiative help you? 

The short answer is YES.

But the amount it can help you is directly related to the level of experience and knowledge of the person or firm you have hired to help you manage through your tax related issues.  I’m not saying that my company, TaxLane®, is the only one capable of navigating the in’s and out’s of this program to help you.  I am saying, however, that you should do your homework when seeking assistance.  There are tax firms that know how to use it and there are companies that are just using it to land your business.

What is the Fresh Start Initiative?

The Fresh Start Initiative was introduced by the IRS to expand the options eligible taxpayers have to pay back taxes and avoid tax liens.   Some of the areas that the Fresh Start program impacts:

  • Tax Liens.

The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. However, in some cases, the IRS may still file a lien notice on amounts less than $10,000.

GET HELP:  There are parameters and certain qualifications that a skilled firm can help you with.

  • Installment Agreements.

The Fresh Start program expanded access to streamlined installment agreements. Now, individual taxpayers who owe up to $50,000 COULD QUALIFY to pay through monthly direct debit payments for up to 72 months (six years).

GET HELP:  Installment agreements may require financial statements and other supporting documentation, historical tax information and applicable completion of IRS forms such as a Collection Information Statement, Form 433-A or Form 433-F.

  • Offers in Compromise.

An Offer in Compromise is an agreement that MAY allow taxpayers to settle their tax debt for less than the full amount. Fresh Start expanded and streamlined the OIC program.

GET HELP:  For eligible taxpayers, an Offer in Compromise can significantly reduce the amount that they owe the IRS.  Not all taxpayers will qualify for an Offer in Compromise and the difference between those that qualify and those that don’t is often the quality of the offer that they submit.  The IRS has voluminous rules regarding the requirements of an acceptable offer.  If you don’t meet these requirements, your offer will be summarily rejected.

Accurately completing the offer paperwork and correctly reporting your assets and income can have a dramatic effect on the likelihood that your offer will be accepted. The right help in this situation can be a game changer.

Can we help you?

YES.

TaxLane®, regularly assists taxpayers with Offers in Compromise, Installment Agreements and the removal of IRS liens and levies.

To find out if the Fresh Start Initiative is for you, contact our offices.  We will talk openly and honestly about your financial situation and provide you with the best possible strategy for dealing with your tax debt.

Take a breath.  It’s going to be Ok.

IRS Taxpayer Bill of Rights Now Available in 6 Languages

Biology Book Shows Education And LearningOn August 12, 2014, the IRS announced that the “Taxpayer Bill of Rights” is now available in six languages.  The current version of Publication 1, Your Rights as a Taxpayer, is now posted on www.IRS.gov.  The available languages include: English, Spanish, Chinese, Russian, Korean and Vietnamese.  By making this important publication available in multiple languages, the hope of the IRS is to increase the number of Americans who know and understand their rights under the tax law.

Not only is the Taxpayer Bill of Rights now available in multiple languages, but the newest revision also takes the multiple existing rights embedded in the tax law and groups them into ten broad categories.  This makes them easier to find and understand.

The Taxpayer Bill of Rights contains the following 10 provisions:

  1. The Right to be Informed;
  2. The Right to Quality Service;
  3. The Right to Pay No More Than the Correct Amount of Tax;
  4. The Right to Challenge the IRS’s Position and to Be Heard;
  5. The Right to Appeal an IRS Decision in an Independent Forum;
  6. The Right to Finality;
  7. The Right to Privacy;
  8. The Right to Confidentiality;
  9. The Right to Retain Representation;
  10. The Right to a Fair and Just Tax System.

The IRS has created a special section within the website, www.IRS.gov, to highlight these 10 rights.  Similarly, the website will be continuously updated as more information becomes available.

This blog brought to you by TaxLane, LLC, providing tax preparation and consulting services to individuals and small businesses.

Pittsburgh, Allison Park, Hampton, Shaler, Glenshaw.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.

IRS Repeats Warning About Phone Scams

fraud, scam, theftThe Internal Revenue Service and Treasury Inspector General for Tax Administration (“TIGTA”) are still receiving complaints from taxpayers about unsolicited calls from people claiming to be from the IRS and demanding payment.  The TIGTA has identified approximately 1,100 victims who have lost a total of $5 million from these scammers.

Here are a few things taxpayers should know about the IRS that can help you recognize a scam:

  • The IRS will NEVER ask for credit, debit or prepaid card information over the phone;
  • The IRS will NEVER insist that you use a specific type of repayment to pay tax obligations;
  • The IRS will NEVER request immediate payment over the phone and will not take enforcement action immediately after a phone conversation.

Taxpayers who receive these calls may be told that they owe money that must be paid immediately or that they are entitled to a large refund.  If unsuccessful the first time, scammers may call back and try a different method.

Here are some other typical characteristics of a scam:

  • Scammers will use fake names and IRS badge numbers. The names are usually common;
  • Scammers may know the last four digits of you social security number;
  • Scammers are able to make the caller ID appear as if the IRS toll free number is calling;
  • Scammers occasionally send bogus IRS emails to support their bogus phone calls;
  • Scammers will add background noise to simulate the sound of a call center;
  • Scammers will threaten the potential victim with jail time or suspending their driver’s license. Similarly, another scammer will call back shortly after hanging up and pose as the DMV or local police; and the caller ID may be masked to support their claims.

If you receive a phone call from someone claiming to be from the IRS, here are some simple steps you can take:

  • If you know you owe taxes, or you think you might, call the IRS at 1-800-829-1040. The IRS employees at that line can help you with a payment issue if there is one;
  • If you know you don’t owe taxes, or you have no reason to think that you owe any taxes, then call and report the incident to the TIGTA at 1-800-366-4484;
  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of the complaint.

Taxpayers should also be aware that there are other types of telephone scams and solicitations that claim to be from the IRS, such as debt relief or lottery sweepstakes.

The IRS encourages taxpayers to be vigilant against email and telephone scams.  The IRS does not initiate contact with taxpayers via electronic media, including email, text messages or any social media source.  The IRS will always contact taxpayers with official correspondence sent through the mail.  People who receive such emails should not open any links contained in the message.  Instead, forward the email to phishing@irs.gov.

This blog brought to you by TaxLane, LLC, providing tax preparation and consulting services to individuals and small businesses.

Pittsburgh, Allison Park, Hampton, Shaler, Glenshaw.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.

Tax Season Opens Today!

time for taxesThe Internal Revenue Service will begin accepting electronically filed individual tax returns today (Jan. 31, 2014) to officially open the 2014 filing season.  The IRS encourages taxpayers to use e-file as one of the fastest way to receive refunds.

The delay in the opening date for individuals was required to allow the IRS adequate time to program and test its tax processing systems.  The annual process for updating IRS systems saw significant delays in October following the 16-day federal government shutdown.

“Our teams have been working hard throughout the fall to prepare for the upcoming tax season,” then IRS Acting Commissioner Danny Werfel said on December 18, 2013.  “The late January opening gives us enough time to get things right with our programming, testing and systems validation.  It’s a complex process, and our bottom-line goal is to provide a smooth filing and refund process for the nation’s taxpayers.”

The April 15 tax deadline is set by statute and will remain in place.  However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return.

This blog brought to you by TaxLane, LLC, providing tax preparation and consulting services to individuals and small businesses.

Pittsburgh, Allison Park, Hampton, Shaler, Glenshaw.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.

Numbers for use in 2013 Returns

New 1040 Return imageEvery year, the IRS adjusts many of the common tax deductions for inflation.  Among these are the standard deduction for each filing status, the personal exemption allowance, and the maximum allowable Earned Income Credit for qualifying families.  For the tax year 2013, the agency has also added a new tax rate for those who earn $400,000 or more in a single year.

Deduction limits for 2014

The most common deductions and credits used by taxpayers include the personal exemption, the standard deduction, and the Earned Income Credit.  For 2013, the updated amounts for these deductions and credits are as follows:

  • The personal exemption allowance will go up to $3,900 per person.  This is an increase of $100 over the previous tax year.
  • The maximum amount of Earned Income Credit available to families with three qualifying children will be $6,044.  This amount is available to couples who file a joint return and whose income falls within the middle of the income threshold for the credit.
  • The standard deduction for the 2013 tax year will also go up.  Married couples filing a joint return will be eligible for a standard deduction of $12,200, while single filers will be eligible for a standard deduction of $6,100.

2013 Tax Table Rates

Most of the tax rates are unchanged for 2013, but the IRS has added a higher rate for those who earn more than $400,000 each year.  The tax rates are as follows:

  • 10 % – for income of up to $17,850 for married couples filing jointly; $8,925 for single filers; $12,750 for head of household filers
  • 15% – for income of up to $72,500 for married couples filing jointly; $36,250 for single filers; $48,600 for head of household filers
  • 25% – for income of up to $146,400 for married couples filing jointly; $87,850 for single filers; $125,450 for head of household filers
  • 28% – for income of up to $223,050 for married couples filing jointly;  $183,250 for single filers; $203,150 for head of household filers
  • 33% – for income of up to $398,350 for married couples filing jointly; $398,350 for single filers; $398,350 for head of household filers
  • 35% – for income of up to $450,000 for married couples filing jointly; $400,000 for single filers; $425,000 for head of household filers
  • 39.6% – for income of $450,000 and over for married couples filing jointly; $400,000 and over for single filers; $425,000 and over for head of household filers

This blog brought to you by TaxLane, LLC, providing tax preparation and consulting services to individuals and small businesses.

Pittsburgh, Allison Park, Hampton, Shaler, Glenshaw.

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.