Being Audited?
A tax audit or examination is a review of your tax return by the IRS (or state agency) to verify that your income and deductions are accurate. Your records, such as invoices and receipts, are requested to substantiate the information on your tax return.
Have a Tax Problem?
Tax problems can be unfiled tax returns, unpaid taxes, underreporting of income, overstating of expenses, and other disputes with the IRS and state tax agencies. If unresolved, audits and tax problems can result in tax liens, bank levies, wage garnishments and property seizures.
Consult with a TaXstar Tax Professional
Schedule an interactive Video Conference
Use web-based real time audio and video to consult with a tax professional, from any location, to discuss your tax audit or tax problem. Upload your audit and tax letters and tax documents via our website, fax, or use your cell phone to take pictures of your documents and Text them to us. You can also drop off your documents at any Taxstar location or send them by mail. Then connect for a live meeting from a computer or mobile device.
Schedule a Meeting at a Local Office
Meet face-to-face with a Taxstar Tax Professional for assistance with a tax audit or tax problem. You can bring your audit letters and tax documents to the meeting or send them before you meet. Upload your documents via our website, fax, or use your cell phone to take pictures of your documents and Text them to us.
Any way you choose, a Taxstar professional is at your side.
Types of Tax Problems:
- Audit Assistance
- Audit Representation
- Back Taxes
- Garnishments
- Levies
- Property Seizures
- Installment Plans
- OIC - Offer in Compromise
Audit Assistance
- We will explain what you can expect during a tax audit and help you understand notices and letters from the IRS or your state.
- Professional support throughout the entire audit.
- Evaluation and preparation of letters and correspondence on your behalf
- Assistance with communications with the IRS or state during the audit.
- Help organize receipts and deduction records.
Audit Representation
- We will use a power of attorney to become your authorized representative.
- Develop a strategy to defend your position.
- Assist in preparing all documents requested by the taxing authority.
- Handle correspondence on your behalf.
- Attend meetings and audits.
Back Taxes
Taxes that are not paid in the year they are due are considered “back taxes”. They usually accumulate interest and penalties until they are paid or settled. Unfiled taxes are tax returns that are not filed in the year due.
- A federal tax lien is a public notice that someone owes back taxes to the IRS.
- A state tax lien can also be filed for taxes owed to a state.
- A lien gives the IRS or state, the authority to seize any proceeds from sales of real estate owned by a taxpayer owing back taxes.
- Liens can be removed by payment of the tax debt and may be “subordinated” to allow you to refinance or sell the property.
Garnishments
A common type of garnishment is a wage garnishment. It is a legal procedure through which a portion of a person's wages (earnings) is required to be withheld for the payment of a debt. The IRS or state taxing authority can garnish for unpaid taxes and non-tax debts owed the government.
- “Earnings” include wages, salaries, commissions, bonuses, or other compensation – including periodic payments from a pension of retirement program.
- State and federal laws have limits on the amount that can be garnished.
- The IRS must have sent a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the garnishment.
- A Collection Due Process hearing can be requested where you can propose a collection alternative, offer a defense or claim economic hardship.
Levies
A tax levy is the actual seizure of taxpayer assets by the IRS. It is an administrative action that does not need a court order.
- A Notice of Levy is usually sent before the actual levy.
- A levy on wages is called a garnishment. It needs to be sent only once and applies to future wages.
- A levy on a bank account only applies to the money in the account at the time of the levy.
- A levy can be stopped in a number of ways, including: entering into a payment plan; submitting an offer in compromise; proving financial hardship or filing an appeal.
Property Seizures
With this form of levy the taxing authority may seize almost any form of asset in order to sell it to cover tax debts owed.
- Some items subject to seizure: automobile; boat; personal property; jewelry; real estate; wages; accounts receivable; rent from your tenants; money in your bank account; retirement funds; and your business.
- Some items cannot be seized by the IRS: basic clothing; up to $7,700 of personal items; up to $3,860 of educational, trade or professional textbooks and equipment; 85% of Unemployment benefits; undelivered mail; Railroad and Congressional support; Medal of Honor benefits; Worker's Compensation; child support; minimum exemption for salary or other wages to pay basic living expenses; Social Security and welfare.
- A series of IRS notices are required to be sent to you before any property seizure can occur. You have at least a few months to appeal the proposed action in court, to pay off the balance, to request a compromise with a lower total payment, to set up a payment plan or take other action to resolve the issue.
Installment Plans
If you are not able to pay the taxes you owe by the original due date, a payment plan may be helpful. An installment plan (or payment plan) is an agreement with the IRS or state tax authority, to pay the taxes you owe within an extended period of time.
- Interest and some penalty charges continue to be added to the amount you owe until the balance is paid in full.
- A setup or user fee is charged to cover the cost of processing the installment agreements.
- Individual taxpayers with income at or below established poverty guidelines, can apply and be qualified to pay a reduced user fee.
- Businesses can also use an installment agreement to extend the time to pay taxes owed.
OIC
Offer in Compromise – An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service (and some states) that settles a taxpayer’s tax liabilities for less than the full amount owed.
- As part of its Fresh Start initiatives, the IRS lowered the standards that it uses for accepting offers.
- An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement.
- The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s "reasonable collection potential, which is the combined value of the taxpayer’s assets and the value of his or her ability to pay in the future.
- Once an OIC is accepted, the terms and conditions include a requirement that the taxpayer timely file all tax returns and timely pay all taxes for 5 years from the date of acceptance of the OIC.