IN THE PRESS: TaxPlus cited on Huffingtonpost.com

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Patricia Handschiegel Serial entrepreneur
Posted: 04/14/11 03:31 PM ET

The light in my Los Angeles bedroom is soft and dreamy as I sit back in bed, Mac on my lap. It’s a very early Saturday morning, less than a week now from “tax day” — the dreaded April 15 deadline that sends businesses and individuals of all kinds and sizes into the same kind of frenzy. I make a note on my daily to-do list in my notebook to comb through expenses and look over everything for filing as I make an email date with my accountant for later this week. The entire effort will be shuffled in with an already hectic life and even more hectic schedule — back-to-back meetings, travel and other demands ranging from business to personal clutter to my calendar.

For entrepreneurs and business owners, taxes become even more demanding and complex — in any given year, that can be earning revenue, paying employees or contractors, selling projects, a range of expenses. It’s not just something you can think about one time a year, like most employees. In some cases, it can feel like a second job to running your business.

“Tax liabilities for entrepreneurs and the self-employed are a year-round concern,” said friend and fellow entrepreneur Tony Navarro of Tax Plus. “They’re not simply for personal tax, but include periodic payments of employee-related and self-employment taxes and mandates — Social Security and Medicare, Worker’s Compensation insurance, etc. Welcome to the rigors of bookkeeping, quarterly estimated income taxes, state sales taxes, business registration, licenses and fees, identification numbers…”

The list goes on and seems both overwhelming and extensive. While larger companies can often rely on myriad accountants and other help to make things easier, a lot of small, growing and startup business owners are on their own — and accounting fees can be a killer. In the year I sold my first startup, my accounting bill exceeded several thousands, if memory serves me.

“That’s like two Jimmy Choo bags,” I tell Tony as we chat. Or two months of PR service from a freelancer, two new Mac computers for your office, or a bunch of other things you could be spending on to bring value to your life or business.
That doesn’t include all the leg work that small and startup companies often have to do on their own. It can take nearly an entire Sunday just to prepare everything you may need to send on to an accountant — expenses, revenue, etc.

Fortunately, paying taxes and other liabilities can be easy — the key is in your planning. And thanks to technology, keeping record of transactions and actions are far more efficient than ever. My bank can zip me PDF files for the entire year versus stowing receipts (though you’ll want to do that as well to be sure that you’re filing is on track).
A great way to find a good accountant is through referrals — ask other business owners you know for recommendations. It doesn’t always require that you work with someone that’s ultra-expensive.

Tony has worked with just as many businesses as he has individuals, as well as freelancers and independent contractors. Like any smart business decision, explore and weigh your options. Like anything, more expensive doesn’t always mean more or better service.
“Accounting for the income and expenses of every aspect of your enterprise and meeting all related tax liabilities is as important as the product/service you provide,” he adds.
“The key is to make sure your business planning includes tax planning. Bookkeeping is the foundation.”

As the morning moves on, I earmark my Sunday for a date with my bookkeeping and expenses, right next to a planned mani/pedi and possibly a massage appointment. After all, if paying taxes is a part of your business life, so is taking care of the founder/CEO who is driving the business.

TaxPlus IRS Enrolled Agents (EA) Case 5

A taxpayer had not filed tax returns in 2005, 06 and 07. He had filed for extensions for late filing and included estimated payments for each year as required, but he never completed and filed the returns. With his extension requests, he sent a total of $20,000. The Statute of Limitations states that estimated payments are subject to forfeiture if the tax returns are not filed when due and three years have lapsed. He had virtually lost the $20,000 when he came to us in early 2011.

Also, the IRS had information about his W2 and 1099 income, so for 2007, a very good year for him, the Service filed a Substitute Filed Return (SFR), which generated a tax liability of over $100,000 for unpaid taxes. While the IRS can know the income a taxpayer has earned, it can only know a taxpayer’s expenses by receipt of a tax return, showing all claimed deductions. Therefore, an SFR reflects the biggest tax levy. Receiving notification of his $100,000-plus 2007 liability got the taxpayer’s attention.

After preparation of the taxpayer’s back tax returns, all years had refunds except 2007, that very profitable year for the taxpayer. The liability for 2007 was $35,000 and with penalties and interest it grew to $56,000.

Through our efforts the Statute of Limitation on years 2005, 06 and 07 were forgiven, and with the refunds due for 2008 and 09, the taxpayer’s final total liability was brought back down to $35,000.

The IRS has adopted programs to aid delinquent taxpayers by providing them opportunities to settle outstanding tax liabilities in accord with their ability to pay and/or their willingness to correct their ways. The primary task of the Service is revenue collection, not punishing members of the taxpaying public. It pays to pay your taxes in a timely manner. But, when and if you cannot, tax problem resolution assistance can help.

TaxPlus
For further information, contact:
Tony Navarro at 310-398-3231

TaxPlus IRS Enrolled Agents (EA) Case 4

A client came into the office with a wage levy notice from the IRS resulting from a prior year tax return. The client was extremely anxious since her employer had been contacted and she was informed that a wage garnishment would be activated shortly.

The client signed the Power of Attorney form and we called the IRS to determine the exact assessment and to discuss the various alternatives for remedying her situation. Fortunately, the client had filed an extension form for her current year’s filing. To be tax compliant, we immediately began to prepare her 2010 taxes. Once we completed the preparation of her returns, the collection agent requested that we fax a copy for her inspection. Upon seeing the documents, she immediately released the wage levy and set up an installment payment agreement for our client.

Rather than obstructing its objective to collect revenue by exacerbating taxpayers’ financial difficulties, the IRS has adopted programs to aid distressed taxpayers by providing them opportunities to settle outstanding tax liabilities in accord with their ability to pay.

TaxPlus
For further information, contact:
Tony Navarro at 310-398-3231

TaxPlus IRS Enrolled Agents (EA) Case 3

For a client who had 8 years of back taxes to file, TaxPlus Enrolled Agents were able to reduce IRS assessed liabilities of over $21,700 down to $8,800 in three business days. This case is notable because the IRS had assessed tax liabilities based on filed Substitute for Returns (SFR)s – returns filed by the IRS with income information only and no consideration of deductions. The IRS had initiated a wage garnishment that reduced the client’s paycheck by $1800, and left the taxpayer with only 3% of his paycheck. The remedy was to file tax returns reflecting comprehensive deductions to mitigate the tax liabilities at both Federal and State levels and to reduce related penalties and interest.

Additionally, the taxpayer had several years of filings that generated refunds, which offset the total liability.  There were several years of tax filings with refunds that the taxpayer will forfeit – a taxpayer has three years from the due date of a return to file and claim a refund. See below for additional information.

With the client’s accounts in compliance, a Release of Levy was issued immediately to stop further garnishments.  The client accepted an installment agreement at the rate of $400 per month that will eliminate his Federal liability within 2 years.   His State of CA filings were submitted in person to expedite processing, making him compliant at the State level with an installment agreement at a nominal rate.

This is measured from the original deadline of the tax return, plus three years. For example, your 2010 tax return is due on April 15th, 2011. Add three years to this filing deadline, and you have until April 15th, 2014, to file your 2010 tax return and still get a tax refund. If you file your 2010 return after April 15th, 2014, then your refund “expires.” It goes away forever because the statute of limitations for claiming a refund has closed.

If you already filed a tax return, you have three years from the date you filed your return to claim any additional refunds by sending in corrections with an amended return. If you filed your return before April 15th, the three-year period begins from April 15th

Filing an extension may extend the period for claiming refunds. Under code section 6511(b)(2)(A), the IRS can issue refunds for a particular year if you requested an extension and subsequently file a tax return within three years from the extended deadline.

TaxPlus
For further information, contact:
Tony Navarro at 310-398-3231

TaxPlus IRS Enrolled Agents (EA) Case 2

For a client who had multiple years of over-due tax filings, TaxPlus Enrolled Agents were able to reduce IRS assessed liabilities of over $50,000 down to $12,000 in less than three business days.  This case is notable because the IRS had assessed tax liabilities based on filed Substitute for Returns (SFR)s – returns filed by the IRS with income information only and no consideration of deductions. The IRS and the California State Franchise Tax Board had initiated wage garnishments. The remedy was to file tax returns reflecting comprehensive deductions to mitigate the tax liabilities at both Federal and State levels and to reduce related penalties and interest. With the client’s accounts in compliance, sizeable reductions of garnishments were made which will stay in place until the recalculated liabilities are met.

Enforced collection action may be taken to collect the amount you owe, including the filing of a Notice of Federal Tax Lien, or garnishment of your wages and/or bank accounts. A lien is a public notice to your creditors that the government has a right to your interests in your current assets and assets you acquire after we file the lien; it can affect your ability to obtain credit.

TaxPlus
For further information, contact:
Tony Navarro at 310-398-3231

TaxPlus IRS Enrolled Agents (EA) Case 1

TaxPlus Internal Revue Service (IRS) Enrolled Agents (EA) assisted a client through an Offer in Compromise process for a tax liability of nearly $15,000 dating back to 2001. The client was able to settle his entire tax bills with the IRS for just under $2,500. This case is notable because the client was in his early 40’s and acceptance of the OIC was unlikely because of future potential earnings. However, TaxPlus proceeded with the case because the client was unemployed at the time of filing and was able to document the client’s income deficiency.

The Internal Revenue Service (IRS) ‘Offer in Compromise’ programs provide financially distressed taxpayers an opportunity to settle all outstanding taxes, interest and penalties for a lump sum less than the total amount owed. State tax collection departments may also accept IRS settlements.

The settlement amount of an Offer in Compromise will vary depending on the ability to pay based on income, assets, liabilities and future income prospects. Guidelines allow for the settlement sum to be paid in several installments over a defined period or in a lump sum.

TaxPlus
For further information, contact:
Tony Navarro at 310-398-3231