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Tax Problems

State Tax IssuesMillions of Americans live with tax problems; however, there are numerous methods to solving your tax problems. The Taxperts can help find the best solution for you.


Unfiled Tax Returns - The first step to settle your IRS and state tax debt is by filing prior year's unfiled tax returns. If you have not filed, the IRS will prepare a substitute for return, "SFR", to determine your tax liability and begin collections against you. In most cases, your tax liability will be higher when the IRS files a "SFR" than if you were to file your own tax return. The Taxperts can obtain copies of all tax documents and prepare all unfiled tax returns. Depending on the your tax situation, your overall tax liability may be reduced drastically when all unfiled returns are prepared and filed. Not filing a tax return is considered illegal and may be punishable for up to 1 year in jail and a $25,000 fine. However, jail time is a rare occurence unless the IRS can prove that the taxpayer deliberately committed fraud. Do not allow scare tactics from salespeople guide your decision to choosing the right tax professional.


Business & Payroll Tax Issues - There are many tax tax responsibilities that come with owning your own business. One of the most important requirement is withholding payroll taxes. When the business owner holds the employee's money in trust until the federal tax deposit is made, the responsible owner risks the 100% payroll penalty, or "trust fund recovery penalty". As a result, the TFRP can cripple or even close down the most successful businesses. The trust fund recovery penalty can create difficult problems for the business owner, but The Taxperts can help before it jeopardizes your property and interferes with your life.


IRS Appeals - When the IRS decides to enforce collections with a lien or levy, you have a right to appeal the decision within a certain time frame. In most cases, the success of an appeal is rare and dependant on whether the IRS employee has followed the proper collection procedures. The Taxperts can determine if your appeal has a high chance of success and represent you during your "collection due process", or CDP hearing before the IRS Appeals division.


Audit Representation & Examination - An audit is when the IRS analyzes the accuracy of your tax return. The IRS will determine if you reported all income and review proper documentation for expenses. There are three types of audits: correspondence audit, office audit, and home/field audit. A correspondence audit is the most common type and is done by mail. This type of audit often happens when there is a discrepancy with third party documentation. An office audit is at a specific time and date and requires the taxpayer to provide documentation for certain items on their tax return. The home/field audit is the most severe type of audit and generally involves high income business owners. It is in the best interest of the taxpayer to consult with The Taxperts to provide the IRS and state auditors proper support for expenses and say the right things. Having The Taxperts will significanly increase the chances of a favorable outcome and save you more money.

Bankruptcy Tax Relief - If bankruptcy is filed, certain income taxes may be discharged; therefore, you may no longer be liable for the taxes owed. However, certain taxes are not discharged in bankruptcy. Many complex rules apply for discharge of income taxes. These rules include the type of tax, the filing date of the tax returns, when the tax liabilty was assessed, and other conditions. It is highly recommended you speak with a tax professional at The Taxperts for more detail. The taxpayer should be aware that a bankruptcy may not discharge a tax lien and will suspend the statute of limitations on collections.


Tax Solutions 1

Tax Solutions - Tax problems effect millions of Americans. Fortunately, there are many options available to settle your tax debt. These options include an offer in compromise, installment agreements, currently not collectible status, innocent spouse relief, or allowing the statute of limitations expire. Don't let your tax problems keep you awake at night. The Taxperts can help analyze your tax situation and determine the best option for you.


Offer in Compromise - An offer in compromise allows you to pay back less than the full amount of your unpaid tax liability. Under certain conditions, the IRS will approve an offer in compromise if they doubt as to whether they will ever collect the full amount. An offer in compromise is not simply "pennies on the dollar" as frequently advertised on television or radio ads. The taxpayer's offer must be based on the full "reasonable collection potential" which is based on your net realizable assets and future income. On average, the IRS has rejected over 70% of applications for offer in compromise. However, The Taxperts will review your tax liability and personal financial situation to determine your eligibility and help your chances of approval.


Installment Agreement - If you are unable to pay your tax debt in full, the IRS and state may allow a monthly payment plan, or installment agreement. This is the most common method for individuals to afford paying their tax debt. Depending on the amount owed and the amount you can afford, a financial disclosure may be required to obtain an installment agreement. The Taxperts will arrange an affordable installment agreement with the IRS and state, dependent on your financial situation, and stop future levies and wage garnishments.


Currently Not Collectible - Paying your tax liability may cause undue hardship, or in other words, prevent you from affording basic living expenses (eg. food, rent, child support, etc.). If you have no ability to pay your back taxes without causing undue hardship, the IRS can declare you currently not collectible, or "CNC". Once you are placed under "CNC" status, all collection activities against you will stop until your financial situation improves. The Taxperts will review your financial situation and submit proof to the IRS showing your inability to pay your back taxes. If you financial situation does not improve within the statute of limitations, you may be resolved of all your tax liabilities. However, there is a cost. In almost all cases, the IRS will file a tax lien against you to protect their interests.


Innocent/Injured Spouse Relief - Many married individuals will file a joint return to decrease their tax liability. However, a joint return will hold both spouses responsbility for any tax liabilities owed, even after a divorce. The IRS understands that in some cases, you may be unaware of tax issues that arose due to your spouse. The Taxperts can determine your eligibility and absolve you from the burden of your former spouse's tax liability.

Statute of Limitation - The statute of limitations (SOL) is the ten year time period allotted for the IRS to collect taxes. It does not begin on the date you filed your tax return. Instead, it begins at the time of "assessment", or when the IRS determines the amount of tax due. After the assessment, the IRS will begin their collection efforts. In most cases, the IRS will assess your taxes within three years of its due date. There are certain events that may delay the statute of limitations such as a bankruptcy or the consideration of an offer in compromise. The IRS will not automatically stop all collections after the ten year period and may even try to have the taxpayer voluntary extend the statute of limitations. The Taxperts can determine if the statute of limitations have expired and prevent any furthur collections.


Trust Fund Penalty

Penalty & Interest - The IRS and state punishes those who file and pay their taxes after the due date by enforcing the tax penalty and interest. There are many penalties including the failure-to-file and failure-to-pay penalty. The penalty for failure-to-file a tax return by April 15th (or the extended due date) is 5% of your tax liability for each month, for a maximum of 25%. The failure-to-pay your taxes by April 15th (an extension to file does not grant an extension to pay) is 0.5% of your tax liability for a maximum of 25%. However, if you have reached the maximum penalty amount of 25% for failure-to-file, you will not incur an additional 25% failure-to-pay penalty. Instead, your maximum penalty for both will be 25% of your tax liability. Even though you cannot afford paying your taxes, you should still consider filing your tax return because the failure-to-file penalty is significantly greater than the failure-to-pay penalty. Also, an installment agreement will reduce any future failure-to-pay penalty from 0.5% to 0.25% of your tax liability.


Penalty Abatement - In some cases you may be able to reduce the amount of taxes owed with a penalty abatement. This action eliminates the penalties applied to the original amount owed. The IRS may approve a penalty abatement due to reasonable cause such as a medical condition, divorce, or casualty. However, the IRS reviews each penalty abatement application case by case and results vary. The Taxperts will review your reasonable cause and prepare a penalty abatement request to the IRS or state with the most optimal success rate for your situation.


Interest Abatement - The IRS views any unpaid taxes as a loan. Therefore, the IRS will add interest to your tax liability based on the applicable federal short-term interest rate. The federal rate is set each quarter, but is typically about 3-4% per year. The abatement of interest is very rare occurence and only accepted if it was incorrectly calculated by the IRS or due to any unnecessary delay by the IRS. A delay by the IRS does not include their vacation time, but unfortunate events such as a lost file. Also, the taxpayer should not assume the interest is calculated correctly. Even though it is computerized, the interest calcuation has been known to be incorrect. However, The Taxperts have many tools at their disposable to determine the correct interest amount to lower your tax liability.


Trust Fund Penalty
- When a business owner holds the employee's money in trust until the federal tax deposit is made, the responsible owner risks the 100% payroll penalty, or "trust fund recovery penalty". As a result, the TFRP can cripple and even close down the most successful businesses. The trust fund recovery penalty can create difficult problems for the owner, but The Taxperts can help before it jeopardizes your business and interferes with your life.


Lien Release

Tax Liens - If you owe the IRS and state unpaid taxes, they may issue a public and legal claim against your property. A tax lien allows the IRS and state first rights to your property against other creditors. This will severely damage your credit score and may prevent any future borrowings for a house, car, or tuition. It is important to respond to a tax lien as soon as possible because a tax lien will be followed by a bank levy or wage garnishment. The Taxperts can help evaluate your options of having the tax lien prevented or removed.


Tax Lien Release - When a taxpayer fully pays off their tax debt, they can request a lien release from the IRS. However, the effects of the tax lien will remain on your credit report for 7 years. It is known that a released tax lien can reduce your credit score by as much as 100 points. The Taxperts can help find better options for you such as a lien withdrawal.


Tax Lien Subordination - Having an IRS tax lien makes it difficult to sell or refinance your assets. Typically, liens are paid to the creditors in the order they have been filed. Therefore, creditors prefer to be first in line. However, the law allows the IRS to be in front of the line to claim your property. A lien subordination will allow a specific creditor to move their position ahead of the IRS's claim on a taxpayer's property. Generally, the IRS will allow a lien subordination if it will allow the taxpayer to sell or refinance their assets to pay their overdue taxes.


Tax Lien Withdrawal - For most taxpayers, a tax lien withdrawal would be a better option than a lien release. The IRS will release a tax lien after a tax liabilty has been fully paid. But recently, the IRS has allowed a withdrawal of a tax lien to help struggle taxpayers during these tough economic times. A withdrawal will expunge the record of the tax lien forever, as if it has never happened. As a result, a withdrawal will greatly improve your credit score and remove any obstacles of obtaining a loan or credit. The Taxperts can determine if you qualify for a tax lien withdrawal even before you have fully paid your tax debt.


Bank Levy

Tax Levies - One of the most common method the IRS and state uses to collect unpaid taxes is a levy, or legal seizure of your property. The IRS may issue a bank levy, forcing your bank to freeze your accounts and send them directly to the IRS. They may also send a notice to your employer and force a portion of your wages to be sent directly to the IRS and state. In some extreme cases, the IRS may levy your assets such as your house and cars. However, a letter will be sent to the taxpayer before a levy occurs, giving you time to react. However, certain states (eg. California) may levy your bank account and not give notice until the levy has already occured.


Wage Garnishment - One aggressive method the IRS and state uses to collect unpaid taxes is a wage garnishments. The employer is forced by the IRS and state to withhold a portion of your paycheck and send it directly to the IRS and state. Besides the loss of your paycheck, it may negatively effect your relationship with your employer. The Taxperts will arrange a payment plan with the IRS and state to release your wage garnishment and stop future levies. In most cases, we can release a wage garnishment before your next paycheck.


Bank Levy - The IRS and state may collect unpaid taxes from unsuspecting taxpayers by issuing a bank levy to their banking institution. A bank levy is a seizure of the money in the taxpayer's bank account. Before a bank levy, the IRS will issue multiple notices to the taxpayer for payment. If no action has been taken by the taxpayer, the IRS will issue the bank levy 30 days after the final notice. Once the bank receives the letter, they must freeze your account and wait 21 days before sending the full amount to the IRS. It is important to call The Taxperts to stop a bank levy before the 21 day holding period.


State Tax Issues - Some lucky Americans live in a state with no income tax. For others, IRS tax problems may lead to state tax problems. One of the first steps to resolving your state tax issues, is by confronting your Federal tax issues. The reason is because most states follow the same tax treatments as Federal. Similar to the IRS, most states offer solutions to resolve your state tax liability. However, state rules vary widely. The Taxperts serves all fifty states in resolving your state tax issues.


Every individuals' financial and tax situation differs. Certain services may or may not be required to reduce or settle your tax debt in the most efficient, affordable, and timely manner. In addition, other services not listed may be optimal. Contact us by phone or email for an initial consultation with a qualified tax attorney, certified public accountant, or enrolled agent.