Tax Secrets Site Index

 

 

 

Your entire tax return must look reasonable. This includes filing status, dependents and expenses in relation to income. Avoid adding errors, deductions on the wrong lines, wrong form, missing forms and messy hand written forms.


–Howard Choder

 

Five Tax Secrets to Avoid IRS Difficulties

 

1. File All IRS Required Tax Returns On Time

Most people don’t realize that the IRS charges a penalty of up to 25% just for filing your tax return late. That’s right, 25% of what you owe. This includes individual tax returns, payroll tax returns and corporate tax returns.

The fact is you can file ANY tax return on time and avoid the 25% penalty even if you don’t send in the money that is owed on the tax return. You’ll still hear from the IRS for not sending the money owed, but you will avoid a 25% penalty.

 

2. Don't Pay IRS Penalties

The IRS has more than 148 types of penalties. These can add up because the IRS also charges interest and additional penalties on the original penalty.

You can request the IRS to "abate your penalties." Before you pay the bill, you ask to get the penalties reduced or completely abated to zero. I can help determine when and where to make your request depending on the type of penalty assessed.

 

3. Pay Your Payroll Taxes On Time

Sometimes businesses get behind on payroll taxes due to cash flow problems. The IRS takes a very serious approach to collecting delinquent payroll taxes and may levy or seize company assets very quickly. In addition, the penalties and interest assessed by the IRS are excessive for this type of delinquency.

Each of the check signers listed on the bank signature card may be held personally responsible for the payroll taxes. Before the company gets into the danger zone, all non-essential check signers should be deleted from the bank signature card.

If you are a check signer on the company checking account, it is your responsibility to make sure all payroll taxes are paid at least monthly to the IRS.

 

2010 tax rates

 

4. Avoid IRS Audits And if you get audited, end it quickly.

You can avoid IRS tax audits by following these simple guidelines:

  • File your tax return on time
  • Report all income for which you received 1099 or W-2 forms
  • Avoid Schedule C
  • Set up some type of record keeping
  • Don’t make your tax return look absurd

Most of the people who get audited are self-employed and use Schedule C to report income and losses from their business. These forms often cause all sorts of red flags at the IRS.

Your entire tax return must look reasonable. This includes filing status, dependents and expenses in relation to income. Avoid adding errors, deductions on the wrong lines, wrong form, missing forms and messy hand written forms.

If you receive an IRS audit letter, listen up. You don’t have to go. You don’t even have to talk to the auditor. The Taxpayers Bill of Rights allows you to be represented by a CPA who can answer questions for you and provide documentation to the IRS. I strongly recommend this approach. The best way to end an IRS audit with a great outcome is to end it at the first meeting.

 

5. Don't Pay IRS; Cut A Deal

The IRS may cut a deal on taxes owing, including all penalties and interest if you qualify. The requirements are rigid; however, it is in their best interest to get you back in the system as a current taxpayer and to collect on old taxes owing.

The fine print requires you to file your tax returns and pay on time for the next five years. If you don’t, the IRS then revokes the deal and bills you for the original amount, plus interest and penalties.

Many of my "offers in compromise" presented to the IRS on your behalf are accepted. Let Howard Choder, Enrolled Agent, assist you. You owe it to yourself to take action and rid yourself of all IRS problems.

 

 


 

 

 

© Howard Choder–All Rights Reserved