Colorado Springs: How Can I Resolve an IRS Lien?

 

Dealing with an IRS lien can be daunting, but taking prompt and informed action is crucial. An IRS lien is a legal claim against your property due to unpaid tax debt, affecting your credit and financial flexibility. Here’s how to handle it:

1. Understand the Lien: First, comprehend the lien notice. It indicates the IRS’s claim on your assets until the debt is settled.

2. Verify the Debt: Ensure the lien is accurate. A tax professional can help you determine if the owed amounts are correct. 

3. Communicate with the IRS: Ignoring the lien will worsen the situation. An Enroll Agent, like Marcelino Dodge, EA, CTRC can communicate with the IRS on your behalf.

4. Payment Options: If  the debt is accurate, then if possible pay in full. This is the quickest way to remove the lien. If full payment isn’t feasible, Marcelino Dodge, EA, CTRC, will help you determine the best option for your facts and circumstances, such as an installment agreement or an Offer in Compromise, which allows you to settle for less than the owed amount.

5. Seek Professional Help: Consult a tax resolution professional, Marcelino Dodge, EA, CTRC, he can guide you through the process, negotiate on your behalf, and explore options like lien subordination or withdrawal.

6. Stay Compliant: Ensure you file and pay all future taxes on time to avoid further complications.

Addressing an IRS lien promptly and strategically can mitigate its impact and help you regain financial stability.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA, CTRC
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Why is Reasonable Compensation Important for S-Corporation Officers?

 

Reasonable compensation is a critical concept for S-Corporation owners, ensuring compliance with IRS regulations and maintaining the integrity of the tax system. As S-Corporations are pass-through entities, they do not pay corporate income tax. Instead, income, gains, losses, and deductions are passed through to shareholders' personal tax returns. However, working shareholders must receive reasonable compensation for their services, which is subject to payroll taxes like FICA.

Failing to take reasonable compensation can lead to significant issues. First, it can trigger IRS audits and penalties. The IRS examines S-Corporations to ensure that wages are not being disguised as distributions to avoid payroll taxes. If the IRS determines that compensation is unreasonably low, it can and does reclassify distributions as wages thus requiring the filing of payroll tax forms and payment of  failure to deposit penalties and failure file penalties.

Second, adhering to reasonable compensation standards supports the social security and Medicare programs, as payroll taxes fund these programs.  As an S-Corporation owner, you are also contributing to your own social security, ensuring that you will have a higher than average benefit when it is time for your start drawing your own social security,

How do you know if your S-Corporation salary is reasonable according to IRS standards?  Marcelino Dodge, EA, CTRC works with small business owners to help them determine what a reasonable salary is and then implement the salary according IRS guidelines.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA, CTRC
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Should I File an Offer in Compromise to Resolve my Tax Debt?

Facing a significant tax debt can be overwhelming, but an Internal Revenue Service (IRS) Offer in Compromise (OIC) provides a potential lifeline. This program allows taxpayers to settle their tax liabilities for less than the full amount owed, offering a fresh start for those in financial distress. Here are key reasons to consider filing an OIC:

1. Financial Relief: If you're struggling to pay your tax debt due to financial hardship, an OIC can significantly reduce the amount you owe, making it more manageable.

2. Avoid Bankruptcy: Filing for bankruptcy has long-term consequences. An OIC can be a preferable alternative, allowing you to resolve your tax issues without the severe impact on your credit score.

3. Simplified Process: Although the process can be complex, Cash Tracks Financial walks you through the process to provide tax relief and peace of mind.

4. Peace of Mind: Settling your tax debt can alleviate the constant stress and anxiety associated with owing the IRS, allowing you to focus on rebuilding your financial stability.

5. Future Compliance: Successfully completing an OIC can help you get back on track with your tax obligations, ensuring you remain compliant in the future.

Marcelino Dodge, EA, CTRC will analyze your circumstance to determine if you meet the eligibility criteria, filing an OIC could be a strategic move to regain control of your financial situation and secure a more stable future.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA, CTRC
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: What Is Reasonable Compensation for S-Corporation Owners?

 

Do you have an S-Corporation? Are you on salary or are you just taking distributions?  Did you know that S-Corporation shareholders are on the list of priorities for the Internal Revenue Service (IRS)?

Why would S-Corporation shareholders be on the IRS radar?  The IRS is finding that many S-Corporation shareholders who are active in the business are not taking a salary.  Instead, many of these shareholders are just taking distributions. Why would a shareholder take only distributions?  Perhaps they were told that by taking only distributions they will save on taxes.  This sadly misguided and misleading advice.  I will discuss in another blog why the tax saving advice in this case is bad advice.  The IRS requires that "distributions and other payments by an S-Corporation to a corporate office must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation." -- From the Instructions for the 1120S.

For now think about this: Do you provide substantial services to the business? What would it cost to replace you?  These are good starting points for determining what your reasonable compensation should be.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA, CTRC
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Do I Have to Pay My Deceased Spouse's Overdue Self-employment Tax?

 

For any industry where you or your spouse are self-employed, the self-employment tax is a common issue.  This can especially be true when your spouse is a truck driver.  Often times a low cost tax preparer is used to save money.  Sadly, though this often results in a poorly prepared tax return missing countless deductions.  Sometimes I have encountered cases where a married filing joint tax return was electronically filed without one spouse's consent.  There was a significant amount of self-employment tax and income tax due.  The non-consenting spouse may not have filed jointly if she had known the amount due on the tax return.  Then the spouse who filed the tax return suddenly and unexpectedly dies.  Leaving the surviving spouse with a large tax bill.  Is the surviving spouse required to pay the unpaid taxes?

Under Internal Revenue Code Section 6015 (b), the surviving spouse may qualify for Innocent Spouse Relief after consideration of the the facts and circumstances,  Marcelino Dodge, EA, CTRC has helped taxpayers obtain this relief after a thorough and careful review of their complete situation.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA, CTRC
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Am I Responsible for My Former Spouse's Tax Debts?

 

Did your former spouse prepare joint tax returns, have you sign the returns, and then file the returns? Then months or years later you come to learn that your spouse failed to report all his income.  You learn that when an IRS letter arrives notifying you that the tax return has been adjusted.  The adjustment shows an increase in taxable income from the 1099's your spouse failed to included as income on the original return.  But, that is just the beginning.  In addition to the increased income, there is an increase in not only income tax, but also there is now a large amount of self-employment tax due.  To top it off, you are required to repay some refundable tax credits that were refunded to you on the return.

The amount due can be tens of thousands of dollars of tax.

Are you responsible for these taxes?  Can the IRS require you to pay the amounts due because of the jointly filed tax returns?  Technically, the answer is yes to both questions.

But, with consideration of the the facts and circumstances, you may qualify for relief under Internal Revenue Code Section 6015(b).  This code section has requirements that must be met for you to qualify for Innocent Spouse Relief.

Marcelino Dodge, CTRC, EA of Cash Tracks Financial has helped taxpayers obtain this type of relief.  He can analyze you circumstances and suggest the best course of action to solve your tax problem.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: What Does it Mean to be in Tax Compliance?

Sometimes people call the office stating that they are several years maybe even 20 or more years behind on filing taxes.  They are a panic because they think they have to file all 20 years to be compliant.  Or, they received a tax bill notice for a year that IRS has filed a substitute return.  We listen carefully to their story to figure out how we can help.

After understanding the client's situation we pull the client IRS transcripts to get a clear picture of their situation.  Most of the time getting the client in tax compliance is the place we start.  But, what is tax compliance?  According to the Internal Revenue Manual 1.2.14.1.18, federal tax compliance is the filing the last 6 years of tax returns. Also, included in tax compliance is making estimated tax payments, having proper withholding, and making payroll tax deposits?

Marcelino Dodge of Cash Tracks Financial works to not only get you tax compliant, but also will analyze your situation to determine the best strategy to use to lay your tax issues rest for good.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: How Do I Get Compliant and Resolve IRS Tax Debts?

 

What does it mean to be in tax compliance? How can you resolve your overdue and past tax obligations?  How long has it been since you last filed a tax return?  Did you last file in 1991?  Since you have not file for so long does it mean that you need to file 30 years of tax returns to be compliant?  The simple answer in most cases is "no."  The IRS requires that to be compliant, you must have filed for the last six years.  There are a few exceptions when you have to file farther back, but this does not happen often.

To solve any tax debts, qualify for an installment agreement, or make an Offer in Compromise you must first be compliant by having 6 years of tax returns filed.  For this to be done correctly need to consult with a tax professional such as Marcelino Dodge, EA for a proper analysis.  Once the analysis is complete, then a determination can be made getting the tax returns complete and calculating if you are candidate for an installment agreement or for an Offer in Compromise.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Do I Need a Representative to Help With My Tax Matters? Is It Possible to Do It On My Own?

 

It is possible for a taxpayer to attempt to navigate the complicate IRS system by either preparing their own tax return or speaking with the IRS when behind on their taxes.  Keep in mind though the IRS does not always volunteer information on programs that can help taxpayers.  Sometimes tax professionals and tax representatives have to educate IRS employees on the tax statutes.

With a trained tax professional like Marcelino Dodge, EA you will save time and more importantly you likely save money even after paying fees.  Many time penalties can get reduced and if you qualify you may be able to settle your tax debt for less than you owe.  

These are just a few consideration if you feel like you want to manuever the IRS rapids on your own.

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com

Colorado Springs: Has Your Back Tax Debt Expired?

 

Do you owe taxes from several years ago?  Is the IRS still trying to collect from you?  Are you aware that under the Internal Revenue Code Section 6502 there is a 10 year limit on collections?

This 10 year limit starts on the day when the tax is first assessed, not when your tax return was filed.  There are also several actions that can extend the collection period.

What does this mean for you the taxpayer?  If you are still paying on taxes first assessed over 10 years, your tax debt may be gone and no longer collectable.  With a proper calculation of the collection period Marcelino Dodge, EA can determine if you no longer need to make payments.  Oh, what a relief that would be!

Cash Tracks Financial of Colorado Springs
Marcelino Dodge, EA
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
www.cashtracksfinancial.com
success@cashtracksfinancial.com