FAQs

The IRS levied my bank account or paycheck.

Release of Levies
If the IRS has already placed a bank account levy or income source levy/garnishment (such as against your paychecks or your receivables from business customers) against you, then immediate representation is needed in order to achieve a release of the levy. This can often times be done within a day or two. In order to secure a release, full tax filing compliance must generally be secured and then approved payment arrangements must be secured from the IRS or evidence must be provided to demonstrate that payment arrangements are not affordable at this time.

If you need an immediate release of a bank account levy, salary levy, or receivables levy, contact our office for help.

A tax lien has been filed against me.

Release of Tax Liens
Tax liens can be filed by the taxing authorities as a means for trapping equity or to publicly announce a claim against assets. After full resolution has been brought to a tax debt, any liens filed on a liability owed should qualify for release. Releases can be obtained regardless of whether a liability expired, was relieved or forgiven, was settled out and paid, was discharged in bankruptcy or was actually paid off in full. Liens can also be discharged or subordinated in cases where real estate needs to be sold or refinanced. In other cases, liens can be withdrawn by the IRS without full payment being remitted. Please call us to discuss your tax situation so we can address the best way to overcome or eliminate liens that may be filed against you or to discuss how best to avoid them.

If the IRS or state taxing authorities have filed a lien against you, please contact us to discuss what can be done to have it released, discharged or subordinated.

If you need help securing the release of tax lien, contact our office for help.

Can I lose my home or assets?

Asset Protection
The IRS and state taxing authorities could legally take action to try and attach to and/or seize your home or other assets. By implementing one of the many options available for permanent resolution to your problems, we can help you avoid this type of enforcement. Even if no permanent solution is immediately available to you, we can still help! Our firm works with lenders, real estate investors, trust and estate attorneys, long-term financial planners and professionals of practically every other variety. When the more typical programs offered by the taxing authorities won't work, we may have the creative solution that you need. Please call us to discuss your unique circumstances.

Contact our office to find out how we may be able to assist you.

I don't understand my tax problems.

Tax Problem Research
Proper research must be done in order to bring a complete understanding to existing tax problems. After years of non-filing or non-payment, it becomes difficult to recall exactly what remains unfiled or unpaid. Effectively communicating with the IRS or a state agency is sometimes difficult to do and can become very confusing. Trying to determine your account status from IRS or state agency mail is not always an easy task. Failure to conduct the proper background research before proceeding to resolve a problem can lead to countless mistakes, including filing tax returns for periods that have already been filed, misinterpreting amounts owed, etc.

Our firm has established contacts within special areas of the IRS and various state taxing authorities so we can quickly secure accurate background information about our clients' accounts. We can even obtain account transcripts in writing, which eliminates the possibility of being misinformed by a government employee. This is typically the first step taken on every case, so that we can be certain of exactly what needs to be done to resolve filing delinquencies or what tax amnesty options may exist for resolving tax, penalty and interest balances owed.

While conducting the background research, we are able to secure annual earnings summaries from the IRS. The annual earnings summaries disclose everything that was reported to the IRS under a person's Social Security Number or a business's Employer Identification Number for each year that is still available. Having this information allows us to be sure to report any income previously reported to the IRS by an employer or business customer. Filing tax returns that omit income is probably the most common cause of an IRS audit. It is very important to have the IRS's earnings information and to reference them while preparing tax returns. This reduces the chance of omissions and of bigger problems down the road.

Account transcripts and information obtained as a result of our research also helps to determine what tax amnesty options may be best to pursue. These transcripts allow us to determine when an existing tax liability may expire, whether or not a separated or divorced spouse may be eligible for certain relief programs, when a tax liability may be eligible for a bankruptcy discharge, how much of a tax balance consists of penalties that could potentially be removed from an account balance, etc. A careful analysis should always be made of the account transcripts before deciding upon which tax amnesty option to pursue to resolve an existing problem.

If you have a tax-filing or tax-payment delinquency, contact our office so that you can perfectly understand your current situation and the options available for resolving it.

I haven't filed tax returns in many years.

Old Years Returns
In addition to current-year returns, all our tax preparation services are available for old years and even decades at a time. It is common for some irregular event in a taxpayer's past to cause a period of non-filing (family death, divorce, medical issues, etc.). Other times, taxpayers that cannot afford to pay their taxes stop filing on purpose to avoid collections enforcement. No matter the reason for the delinquent filings, it is almost always in the best interest of the party involved to immediately get the delinquent tax returns prepared.

Among the biggest concerns to taxpayers that fall out of filing compliance is the potential criminal problems relating to failing to file. Relax. The fact is that so long as a person takes the initiative to get any delinquent tax returns accurately prepared and filed, the chances of a criminal issue existing are pretty much zero. The sooner that a person gets back into full filing compliance under their own will, the less chance that this type of problem will arise.

Intentional non-filing due to a lack of capability to pay is generally illegal and a bad idea. It can delay the taxing authorities from immediate pursuit of a taxpayer for collections, but comes at a stiff price, as a late-filed tax return is typically subjected to very substantial penalties and interest on those penalties. Instead of allowing the debt to be compounded in this manner, one may be better off filing the tax returns, acknowledging the unaffordable tax debt owed and requesting relief under one of the many tax amnesty programs available.

If you need help filing old years returns, contact our office for help.

I don't have the records to file my returns.

Missing Data
Many multiple year non-filers have lost their records from prior years or they have been destroyed. We can help. It is fairly common that we must overcome this while helping clients achieve tax-filing compliance. We can help by reconstructing needed records and/or by using the best information available to get the returns filed.

If you need to file your tax returns, but don't have the underlying data to do it, contact our office for help.

My tax liabilities are overstated.

Correcting Overstated Tax Debts and/or Filing Amended Tax Returns
Correcting Overstated Assessments:
It is not only sloppy preparers that miscalculate tax balances owed. Sadly, amounts calculated by the federal and state taxing authorities are often times overstated.

In cases where a taxpayer doesn't file a tax return, the federal and state governments will sometimes make estimated calculations. These calculations generally do not consider any exemptions, deductions, adjustments, credits or sometimes even tax payments on account that may benefit the taxpayer and so they commonly overstate the true tax, penalty and interest balances owed. Our firm can get these government overstatements down to the proper amounts after preparing and filing your original tax returns for the periods in question.

Amended Tax Returns:
Our firm takes the necessary steps to be sure that your tax returns are as complete and accurate as possible. In addition to carefully reviewing the tax information that you bring to us, we also take several other steps to help you avoid potential problems and to maximize tax savings. Among those common extras are the following:

·         Annual income summaries are obtained and referenced (when available) through the taxing authorities so we know what W-2s, 1099s, etc. have been reported under your identification numbers;

·         An extensive interview is conducted to be sure that business bookkeeping or expense summaries do not omit valid deductions, such as amounts paid by cash or amounts that can be substantiated with alternative forms of documentation instead of receipts; and

·         A careful checklist is followed to confirm that we have asked you all of the reasonable questions about possible exemptions, downward adjustments to income, itemized deductions, non-refundable credits and refundable credits.

Unfortunately, many other tax preparers do not follow these same important steps. We commonly encounter errors made by careless or uninformed preparers and in many instances the opportunity to correct them is still available. When errors are discovered by our firm we generally do the work to get them corrected, so long as the benefit to our client is large enough to make the correction worthwhile and the assessment and/or refund statutes are still open. Generally, a tax return can be amended within three years of its original filing date and a refund can be claimed within two years of the date of an overpayment (certain restrictions do apply to these general criteria).

If you need help getting an IRS overstatement reduced, contact our office for help.

I've been notified that I'm being audited.

Audit Representation, Appeals & Reconsideration
Audit Representation:
A federal or state tax audit typically begins with a letter stating that a return or group of returns have been selected for an examination. Receiving a letter of this nature can be very disheartening, especially if you are not well advised of how your return was prepared or if you suspect that you may not have the documentation needed to support all the amounts reported.

Just because a return is audited doesn't mean that it may not be correct. An income tax return is usually selected for examination because of one of the following:

·         Income items that were reported to the taxing authorities are mistakenly omitted from the tax return filed, thus making the omissions apparent;

·         Certain relationships of some items to others within the same return suggest the likelihood of irregularities (based on a numerically calculated DIF score); or

·         Other information comes to the attention of the taxing authorities that indicates that a return may have substantially incorrect amounts reported.

Sometimes returns that are perfectly prepared will still be selected for audit.

Not only can an audit be a lot of work to handle, but an uninformed taxpayer can do a great disservice to their own case by trying to represent themselves. Self-representation is generally not something that would be recommended for a taxpayer to attempt. Even if you've been absolutely honest and all of your documents are in good order, meeting with the IRS yourself can be intimidating and can lead to additional tax assessments that might possibly have been avoided with proper professional representation.

Fortunately, our firm can manage all aspects of your audit so that you don't even have to meet with the taxing authorities. We can help you reconstruct lost or missing documents and support items using alternative sources of documentation, such as third-party affidavits, etc. when typical records are not available.

In addition to income tax audits, we can also handle your payroll, sales or other business tax audits of practically any kind. Our representatives have dealt with a number of cases wherein good business records have not been maintained, yet we have found alternative ways to get favorable end results.

Examination Appeals:
In the event that disagreements arise on a tax audit, appeal rights generally exist wherein the issues of dispute can be heard by appellate officers. Our firm is accustomed to dealing with government and state representatives and can often times help find an amicable resolution with the appeals officers. It is somewhat rare that a case cannot be resolved amicably at this level, but in the event that it can't, a US Tax Court Petition can be filed to preserve appeal rights and to request a trial.

Audit Reconsideration:
Sometimes taxpayers learn the hard way and suffer the bad results that can accompany self-representation. If you or your business has been the victim of poor representation or bad organization, it may not be too late to get the audit resolved in your favor, even if it has already concluded once. A program known as audit reconsideration exists wherein cases can be re-opened for corrections, even if legal appeal rights have already expired. This is very common for audits concerning denied dependents and/or denied qualifying children for purposes of earned income credit.

If you have been notified that you will be audited, have an ongoing audit or believe that a previously concluded audit did not ultimately treat you fairly, contact our office to understand what can be done to resolve your case and/or the existing liabilities.

I can't afford to pay the taxes I owe.

Tax Amnesty Options
After all the delinquent tax returns are prepared, erroneous assessments are corrected and pending audits are resolved, the approximate balances that will be owed for federal and state tax debts can be understood. Sometimes this balance is too high for a taxpayer to affordably pay off.

If the balance can be paid with a long-term payment plan, then our firm can represent and defend you before the taxing authorities to allow you the time you need to resolve the debt.

Other times, even with all the time in the world, the tax debts owed cannot be paid. In these circumstances, pursuing one of the tax amnesty programs below is the only hope. We can develop an understanding of your unique facts and your financial situation, to recommend the proper tax amnesty resolution to be pursued.

Information about Tax Amnesty Options:

·         Collection Statute Expiration Date (CSED)

·         Innocent Spouse Relief Programs

·         Offer-in-Compromise (OIC) Tax Settlements

·         Penalty and Interest Abatement

·         Bankruptcy Discharge Analysis

·         IRS and State Tax Defense

Do tax liabilities expire?

Collection Statute Expiration Date (CSED)
The taxing authorities have a limited period of time to collect all different types of tax balances owed. If taxes become old enough they may legally expire. Before implementing any other type of tax amnesty program, it is our first objective to understand when the taxes will expire all by themselves.

The IRS only has 10 years to collect a delinquent tax liability. The statutory period initiates the date the tax is assessed and therefore the CSED is typically 10 years after this date. The 10-year period for collection can, however, be extended (aka "tolled") in several instances; including by a pending, rejected or returned offer in compromise, by a tax court proceeding, by a bankruptcy filing, by a taxpayer's waiver, or by numerous other instances. If this collection statute date expires, a taxpayer can become free and clear of the IRS tax obligations.

During the research phase of our work, we will obtain the information needed to calculate these dates on each of the various tax liabilities owed. If the CSED has already passed or is about to, then we will pursue it as the tax resolution program of choice.

It may be necessary to represent/defend the taxpayer in the short-term until this date arrives. After the CSED has passed, we will confront the IRS with this information and demand that any Federal Tax Liens previously filed be released.

If your tax debts are fairly old and you believe that the CSED on your liabilities may be approaching or already past, contact our office to discuss your case and to start the research process for making this determination.

My spouse or ex caused my tax problems.

Collection Statute Expiration Date (CSED)
The taxing authorities have a limited period of time to collect all different types of tax balances owed. If taxes become old enough they may legally expire. Before implementing any other type of tax amnesty program, it is our first objective to understand when the taxes will expire all by themselves.

The IRS only has 10 years to collect a delinquent tax liability. The statutory period initiates the date the tax is assessed and therefore the CSED is typically 10 years after this date. The 10-year period for collection can, however, be extended (aka "tolled") in several instances; including by a pending, rejected or returned offer in compromise, by a tax court proceeding, by a bankruptcy filing, by a taxpayer's waiver, or by numerous other instances. If this collection statute date expires, a taxpayer can become free and clear of the IRS tax obligations.

During the research phase of our work, we will obtain the information needed to calculate these dates on each of the various tax liabilities owed. If the CSED has already passed or is about to, then we will pursue it as the tax resolution program of choice.

It may be necessary to represent/defend the taxpayer in the short-term until this date arrives. After the CSED has passed, we will confront the IRS with this information and demand that any Federal Tax Liens previously filed be released.

If your tax debts are fairly old and you believe that the CSED on your liabilities may be approaching or already past,contact our office to discuss your case and to start the research process for making this determination.

Can I settle my tax liabilities for less?

Offer-in-Compromise (OIC) Tax Settlements
An Offer in Compromise is an agreement between the IRS and the taxpayer that settles a tax liability for payment of less than the full amount owed. This is a great tool for resolving debts that are not affordable to pay off.

Before an OIC can be submitted, a taxpayer must:

·         be in full tax-filing compliance for all tax types;

·         be current with estimated tax payments for the current year; and

·         have been current with federal payroll tax deposits for the past six months.

The IRS will return any taxpayer's OIC that doesn't meet these criteria without consideration of the settlement in any way.

There are three different types of settlements that can be proposed under the OIC program:

·         Doubt as to Liability - This means that doubt exists that the tax amount assessed is correct or is assessed against the proper taxpayer(s).

·         Doubt as to Collectibility- Doubt exists that the taxpayer has the means to ever pay off the full amount owed. The IRS considers current equities in all types of assets, current and/or future monthly cash flow above and beyond basic necessities and equities from assets that were sold and used for purposes other than payment of taxes in the past (dissipated assets).

·         Effective Tax Administration- The taxpayer owes the taxes and could pay, but payment may create a unique hardship to the taxpayer or to someone else, such as employees, relatives, etc.

The most common type of OIC is the doubt as to collectibility version. Typically, the formula used by IRS to determine the acceptable amount of an OIC is as follows:

ACCEPTABLE OIC AMOUNT = REALIZABLE VALUE OF ASSETS + (MO. CASH FLOW AFTER EXPENSES x 48 TO 120 MONTHS)

If accepted, payment terms for an Offer-in-Compromise can be in one of three methods: cash (typically within 90 days of acceptance), short-term deferred payment (paid within 24 months of acceptance), or a long-term deferred payment plan (payment plans extending up to 10 years in length).

There are other indirect benefits of submitting an offer-in-compromise. While an OIC is being considered, the IRS must stop their collection action, including levying (garnishing) any assets or wages. This can be a useful tool for a taxpayer who is being pursued by IRS so long as the OIC is reasonable to propose.

BE CAREFUL, DON'T PAY A LARGE FEE IN ADVANCE BASED ON FALSE PROMISES! In recently published statistics, only 16% of OICs submitted are actually accepted when filed. The remainder are either returned, withdrawn or rejected. So, it is important to be sure that a taxpayer truly qualifies for the OIC program before spending all the time and effort to submit one. We have witnessed other companies misrepresenting the chances or likelihood of a successful OIC on purpose in order to trick a person into paying a large up front retainer for an OIC filing. At Burkhart, Peterson & Company, we'll only submit an OIC if it is likely to be accepted and if there are no other obvious solutions to a problem that are quicker and/or more efficient. This approach to the OIC program creates a significantly increased historical acceptance rate for our firm above what is typical.

If you don't really owe your taxes, owe more than you can afford to pay or have the capability to pay, but would suffer a hardship if you remitted payment, then you may be a good candidate for an OIC. If so, contact our office to discuss your case and to start the process of resolving your tax problems.

I'm being charged outrageous penalties.

Penalty Abatement
Taxing authorities propose penalties for all types of late-filing, late-payment and other failures. However, most types of penalties can be contested and abated if reasonable cause, statutory exceptions or other criteria exist to explain the prior failures.

The most common reason for IRS abating penalties is the taxpayer demonstrating that reasonable cause existed in their situation. This means that the taxpayer can demonstrate that despite an effort to remain in compliance with the filing and/or payment obligations, they were unable to do so because of some event or condition. Acceptable causes that have warranted penalty abatement in the past include:

·         reliance on a tax professional;

·         ignorance of tax law;

·         medical illness to one's self or to a family member;

·         unforeseen events;

·         unavoidable absence;

·         natural disasters;

·         substantial financial hardships;

·         death in the family, etc.

The burden of proof typically resides with the taxpayer to prove reasonable cause existed to create the tax failures, though it is common of the IRS not to request substantiation of the reasonable cause identified by the taxpayer.

If penalties are abated, they are removed retroactively, as if they were never assessed. This means that any interest that resulted from the existence of the penalties can also be retroactively removed. Penalty abatement can often result in very large savings if significant failures existed in old tax liabilities.

If you believe that you may have reasonable explanations to excuse penalties and interest on penalties that are included in your tax liabilities, then contact our office to get the process of reducing your tax debts underway.

Can bankruptcy resolve my tax problems?

Bankruptcy Discharge Analysis
Generally, bankruptcy is a last resort process that affords relief to taxpayers who are unable to resolve their liability through any other method. However, sometimes it is the right answer.

Certain tax liabilities can be discharged if all the criteria are met for a particular period.

Generally, income taxes are available to be discharged in bankruptcy if they meet certain criteria. In order for an income tax liability to be eligible for discharge in a bankruptcy, it must meet each of the following rules:

·         The tax is for a year for which a tax return was due more than 3 years prior to the bankruptcy filing;

·         The tax is from a return that was filed more than 2 years prior to the bankruptcy filing; and

·         The tax liability was assessed more than 240 days prior to filing of the bankruptcy petition.

The "trust fund" portion of payroll tax liabilities are not dischargeable even if the above rules are met.

Income taxes can be non-dischargeable for a variety of other reasons even if the three rules above are met, including equity in assets, taxes secured by existing assets, taxes being created by a fraudulent event, etc. Issues outside of those defined above are the responsibility of a bankruptcy attorney to determine.

Our office can determine if a bankruptcy may be a good option compared to all those other options available and we can write a report outlining the date we'd recommend waiting for the petition to be filed if in fact bankruptcy is the best option.

DON'T FILE A BANKRUPTCY TO RESOLVE TAXES WITHOUT CONSULTING WITH US FIRST! NOT ONLY CAN WE HELP YOU TARGET THE RIGHT DATE TO FILE, BUT WE MAY HAVE A BETTER METHOD OF RESOLVING THE TAXES THAT COULD ALLOW YOU TO AVOID BANKRUPTCY ALTOGETHER!

If you are considering a bankruptcy to resolve your taxes, contact our office so we can determine if that's your best option available.

Can you solve my state tax problems too?

State Tax Problem Resolution
Most state tax liabilities can be resolved in the same manner as the federal tax liabilities can be, although particular details about resolution programs available will vary from state to state. Our tax professionals have dealt with taxing authorities across the nation. We are proud of our ability to comprehensively resolve all of your federal and state tax problems for all different tax types. It is not uncommon for us to address state tax problems of all different varieties and to bring them to resolution. If you have a state tax issue that needs to be resolved, please contact us to discuss the problem so we can identify the proper steps to take to bring closure to your issues.

If you need help with your state tax issues, contact our office.

The IRS levied money from my customers.

Release of Levies
If the IRS has already placed a bank account levy or income source levy/garnishment (such as against your paychecks or your receivables from business customers) against you, then immediate representation is needed in order to achieve a release of the levy. This can often be done within a day or two. In order to secure a release, full tax filing compliance must generally be achieved and then payment arrangements must be negotiated or evidence must be provided to demonstrate that payment arrangements are not affordable at this time.

If you need an immediate release of a bank account levy, salary levy, or receivables levy, contact our office for help.

The IRS is seizing assets/closing my business.

IRS Seizures & Business Closure
The most serious stage of the IRS collection process is at the local Revenue Officer level. If the IRS has assigned your tax case to a Revenue Officer, immediate representation may be needed in order to avoid continued or future enforcement. Generally, an IRS Revenue Officer will have the following objectives:

·         To immediately establish payment compliance for current periods;

·         To immediately establish full tax-filing compliance for any delinquent tax returns; and

·         To acquire complete and accurate collection information statement(s) so a determination can be made about what can be paid toward the back tax debts owed.

If payment compliance for current periods and/or full tax-filing compliance is not immediately established, the IRS may use enforcement measures such as bank account, receivables and/or property levies to try and inspire compliance. If the IRS makes a determination that future ongoing compliance is not possible, they may try to discontinue what may be a failed business to eliminate the possibility of increased tax liabilities.

Our firm regularly represents taxpayers and businesses before local Revenue Officers to satisfy the IRS's demands and to preserve the capability of businesses to continue well into the future. If you or your business are being pursued by an IRS Revenue Officer, please contact us to discuss the assistance that we can provide.

Contact our office to find out how we may be able to assist you.

My business is behind on payroll taxes.

Payroll Tax Debts & Trust Fund Recovery Penalties
Every business that has employees becomes obligated to withhold various taxes from those employees (aka trust fund taxes) and to remit them to the taxing authorities along with certain other employer taxes (such as the matching portions of Social Security and Medicare taxes). The taxing authorities view each employer as a trustee of the employees' funds. Because of this view, the taxing authorities are very aggressive when it comes to collecting delinquent payroll taxes. It is common for the IRS and/or state taxing authorities to take all forms of enforcement action available to them to prevent unpaid trust fund and/or other payroll tax liabilities from growing. This enforcement action includes levies, liens and sometimes even shutting down failing businesses.

Not only is your business at risk, but you may have personal liability as well. Typically, a sole proprietor and usually a general partner in a partnership are personally liable for all amounts of unpaid payroll taxes (both the "trust fund" and employer matching portions, as well as all penalties and interest assessed and accrued). When a business has previously organized into some other ownership structure (such as a corporation or limited liability company), then the "responsible parties" of those entities are generally personally pursued for only the unpaid "trust fund" taxes. This is one reason why it can be a great idea to form a business entity for your existing business that is separate and apart from yourself individually. The IRS will attempt to conduct a responsible party interview with all of the individuals associated with a business entity for purposes of determining which persons are responsible and which are not. Those deemed responsible will be assessed a civil penalty (aka trust fund recovery penalty or 100% penalty) for the unpaid trust fund taxes to date.

We are available to assist your business to satisfy the demands of the taxing authorities and to remain in business in doing so. We are also available to represent you individually before the IRS through the trust fund recovery penalty process, which could dramatically reduce the chance that a penalty will be assessed against you.

If you need help resolving business tax debt, contact our office for help.

Burkhart,Peterson & Company

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