Colorado Springs: How Can I Get Audit Reconsideration? What is an Audit Reconsideration?

 

Been audited by the IRS and received a notice with bad news.  Are you stuck with the results?  Or, can you take action to get a result that you feel is more accurate?  Anytime we deal with the IRS the process can be daunting.  But if you disagree with the results of an audit, you have the right to request an audit reconsideration. This process allows taxpayers to present new information or evidence that was not previously considered, potentially leading to a revised audit outcome. 

Here’s a step-by-step guide on how to obtain IRS audit reconsideration:

1. Hire a Tax Professional - An Enrolled Agent (EA) can provide guidance, help you understand eligibility, and ensure your request is thorough and accurate.

2. Gather Documentation: Collect all relevant documents that support your position. This may include receipts, bank statements, or any other evidence that was not available or not considered during the initial audit.

3. Prepare a Written Request: An EA will write a detailed letter on your behalf  to the IRS explaining why you disagree with the audit results. The letter will clearly explain how the included information or evidence impacts the audit findings. 

4. Submit Your Request: Your written request and supporting documentation will be sent via certified mail to the IRS office that conducted the original audit. I recommend keeping copies of everything sent for your records.

5. Follow Up: Patience is important.  It will take several months for the IRS to review your case. It is essential to promptly response to any IRS request for additional information.  

By following these steps, you can effectively request an IRS audit reconsideration and possibly achieve a more favorable outcome.

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: Can I Challenge a Bad IRS Tax Assessment?

 

Nothing causes worry and stress more than receiving a piece of mail with the Internal Revenue Service as the sender.  Then, after you open the piece of mail to your surprise the IRS is assessing you tax and penalties on income that you are not even sure is income you earned.  What do you do?

Step one is to contact a tax professional to help you sort through this and determine if the assessment is even correct.  Marcelino Dodge, EA, CTRC will assist you in determining if the assessment is correct

Next, if it is determined the tax bill is wrong, contacting the IRS to discuss the issue will sometimes resolve misunderstandings or errors. If the initial contact does not resolve the issue, a formal challenge the assessment would be next.

Taxpayers have the right to request a review of the penalty before it is assessed. If the penalty has already been assessed, Marcelino Dodge, EA, CTRC  can help you request a penalty abatement either before or after the penalty is paid.

If the abatement request is denied, you can appeal the decision. An appeal is sent in writing to a different IRS office.  This written request for consideration by IRS Appeals is an impartial reconsideration because your request is being seen in an IRS office that did not initially review your case.

Should the appeal not resolve the issue, the next option is to take your case to Tax Court.  Sometimes though after you file the petition to Tax Court, your case may be settled before even going to court.  If you do go to court and the court finds in your favor and determines that the IRS’s position was largely unjustified, you may be eligible to recover some of your administrative and litigation costs.

Navigating any tax dispute can be complex, so it’s helpful and recommended to consult with a tax professional who can provide guidance tailored to your specific situation. Remember, you have rights and options to ensure fair treatment by the IRS.

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: How Can I Get a Penalty Abated Using Reasonable Cause?

 You failed to file your tax return on time and/or did not pay your taxes. Then, after you file and make a payment on your taxes you receive a statement from the IRS charging you penalties for late filing and penalties fo late payment of your taxes.  After some research you find that you may be able to resolve the penalties through reasonable cause.  What is reasonable cause?  Reasonable cause is a provision that allows taxpayers to request the reduction or removal of IRS penalties if they can demonstrate that their failure to comply with tax obligations was due to circumstances beyond their control. According to the IRS Penalty Handbook, reasonable cause is generally granted when a taxpayer exercises ordinary business care and prudence but is still unable to meet their tax responsibilities. Each case is evaluated individually, based on its unique facts and circumstances.

To help you determine if reasonable cause is possible, Marcelino Dodge, EA, CTRC can review your circumstances.  To qualify for reasonable cause relief, you must provide a written statement under penalty of perjury, detailing the reasons for your noncompliance. Marcelino can help you prepare supporting documentation that can strengthen the request.  Some of the more common basis for reasonable cause relief include reliance on incorrect IRS advice and unavailability of records.

The IRS evaluates whether you the taxpayer made a genuine effort to comply with tax laws and whether the noncompliance was due to unforeseen events. The burden of proof lies with you the taxpayer, who must clearly link the reasons for noncompliance to the penalties imposed. By demonstrating reasonable cause, taxpayers can potentially avoid penalties and reduce their financial burden.

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: An IRS Tax Lien? Can I Still Sell My House?

 

Wanting to sell you your home?  But wait, there is an IRS tax lien on your home. Can you still sell your home?  Selling your home with an IRS tax lien can be challenging, but it is possible. An IRS tax lien is a legal claim against your property due to unpaid taxes, and it attaches to all your assets, including real estate. This lien must be addressed before the sale can proceed smoothly.

When selling a property with an IRS tax lien, the lien does not automatically disappear. The IRS has the right to claim proceeds from the sale to satisfy the debt. However, there are several ways to manage this situation.  Begin with contacting a tax professional like Marcelino Dodge, EA, CTRC to discuss your situation and to learn your options. If your are unable to payoff the IRS in full and get the lien released, then you could request subordination, which allows other creditors, such as your mortgage company to take priority over the IRS.

It's important to communicate with the IRS and seek assistance from a tax professional to have a successful sale of your home.  Proper handling of the tax lien can help you to move forward  with the sale of your home without the burden of unresolved tax issues.

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 Does it Mean to be Uncollectible? How Can I Qualify?

 

How Can I Be Considered Uncollectible by the IRS?

If you have a large tax debt that can be daunting. But, understanding how to qualify as "uncollectible" by the IRS can provide some relief. The IRS may classify a taxpayer as uncollectible if they demonstrate an inability to pay their tax debt due to financial hardship. Here’s how you can achieve this status:

1. Assess Your Financial Situation: The IRS will evaluate your income, expenses, and assets. Ensure your financial records accurately reflect your inability to pay. Essential expenses like housing, utilities, food, and transportation are considered.

2. Locate a Tax Professional:  Marcelino Dodge, EA, CTRC can help you to file the proper forms using both actual expenses and national standards to see if you do qualify as uncollectible. If you do not qualify, Marcelino will propose alternatives to assist with with your tax issue.

3. Submit Supporting Documentation: Provide proof of income, expenses, and assets. This includes pay stubs, bank statements, and bills. The IRS uses this information to determine if your financial situation warrants uncollectible status.

4. Stay Informed: Being uncollectible is not permanent. The IRS will periodically review your financial status. Keep your records updated and be prepared for future evaluations.

Achieving uncollectible status can provide temporary relief from tax debt collection, allowing you to focus on regaining financial stability.

Cash TracksFinancial 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 or Am I Not an Innocent Spouse?

 

Are you having to deal with daunting tax liabilities from unexpected issues stemming from a spouse's financial actions? The IRS offers a form of relief known as "Innocent Spouse Relief" to address such situations. This provision is designed to protect individuals from being unfairly held responsible for tax understatements or errors committed by their spouse on a jointly filed tax return.

To qualify for Innocent Spouse Relief, several conditions must be met. First, the understatement of tax must be solely attributable to the other spouse's erroneous items. Second, the innocent spouse must demonstrate that they were unaware of the inaccuracies at the time of signing the return and that it would be inequitable to hold them liable given the circumstances. Factors such as significant benefit from the understatement, desertion, death, or divorce are considered in the evaluation process.

Filing for Innocent Spouse Relief involves submitting Form 8857 to the IRS. It's a crucial step for those seeking to rectify tax issues without bearing the burden of their spouse's financial missteps.

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 am I in IRS Collections?

 

Have you failed to pay your tax liability? The IRS will initiate a series of steps to collect the owed amount. Initially, you are sent a series of notices, starting with a CP14, which informs you of the balance due. If you do not respond or make arrangements to pay, the IRS escalates the matter by sending additional notices, such as the CP501 and CP503, which serve as reminders and warnings of potential collection actions.

If you continue to ignore these notices, the IRS may issue a CP504, which is a final notice of intent to levy and a notice of the taxpayer's right to a hearing. This notice indicates that the IRS is preparing to take more aggressive collection actions, such as garnishing wages, levying bank accounts, or seizing property.

In some cases, the IRS may assign the debt to a private collection agency. This typically happens when the IRS has exhausted its internal collection efforts. The private agency will then attempt to collect the debt on behalf of the IRS, although this approach has been criticized for its inefficiency and the undue stress it places on low-income taxpayers.

Throughout this process, it is crucial for you the taxpayer to respond promptly to IRS notices and seek professional assistance if needed to avoid severe financial repercussions.

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 if the IRS Filed a Tax Return for Me?

 

Failed to file your tax return for a few years? Are you aware that IRS Code Section 6020 allows the IRS to file a tax return for you?  

What is IRS Code Section 6020?

IRS Code Section 6020 grants the IRS the authority to create a substitute tax return (SFR) for individuals or businesses that neglect to file their tax returns. This provision ensures that the IRS can assess and collect taxes even when the taxpayer does not comply with filing requirements. The most common SFR under this section is 6020(b).

6020(b) Substitute Returns

Under 6020(b), the IRS prepares a return based on available information, such as W-2s, 1099s, and other third-party data. This return is often less favorable to the taxpayer, as it does not include deductions or credits the taxpayer might be eligible for. The IRS will then send a notice of deficiency, giving the taxpayer an opportunity to contest the return or provide additional information.

Implications for Taxpayers

Failing to file a tax return can lead to significant consequences, including penalties, interest, and potential legal action. An SFR under 6020(b) can result in a higher tax bill due to the lack of deductions and credits. 

What can the Taxpayer do?

The taxpayer should consult a tax professional for best information on how to proceed forward.  Marcelino Dodge, EA, CTRC will review your circumstances and make a recommendation to either get the correct tax return filed or to let the SFR stay in place.  

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: 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