CLIENTS SAVES $700K IN TAXES

A client had tax liabilities for 2 prior tax years totalling nearly $700k. After analyzing his situation with IRS transcript software, I decided it was best to do NOTHING! That's right--NOTHING! I saw that the statute of limitations for collection was running out within a year and I knew it was unlikely that the IRS had enough time to take any action--so we layed low.  The result was that the statute expired without a peep from the IRS.  Had I "poked the bear" with IRS contact (as the client suggested), we would have certainly come onto the IRS radar.  A careful analysis of the client's transcripts was crutial in this big win.

Transcript Monitoring Program

A client learned the hard way that transcript monitoring is essential to a good tax plan.  A client had two employers for a particular tax year; he had changed jobs during the year.  Unfortunately, he neglected to provide the tax preparer with one of his W-2's.  The tax return was submitted and about a year later, the IRS sent the client a CP2000 letter, along with a bill for almost $22,000.  The sad part was, the client ended up paying almost $4,000 in penalties and interest on the tax that was due.  Had the client enrolled in my Transcript Monitoring Program, I would have seen the missing W-2 almost a year before the IRS contacted him and fixed the issue---saving him nearly the entire $4,000 in penalties and interest.  It is easy to forget tax forms during the crush of tax season--and good to have someone looking at your IRS tax account to make sure there are no red flags!

ERRONEOUS 1099 LEADS TO A BIG TAX BILL FROM THE IRS

The taxpayer was audited by the IRS for failing to properly report over $30,000 in independent contractor (1099-NEC) income for the tax year.  The taxpayer was confused because he made nowhere near that amount of income as a contractor.  The bill from the IRS was nearly $15,000, which included $2400 in penalties and $500 in interest.  After examining the client's transcripts, I was able to determine that his "employer" accidently added a "0" to the end of his contractor income, taking it from $3,000 to $30,000.  We were able to properly address the error, get a corrected 1099-NEC issued and ended up owing $0.00 to the IRS.  The client remarked how he would not have know WHAT TO DO if he had not had my help.

$20k BILL RECEIVED IN AN IRS AUDIT--WENT TO $0

A client received an audit challenging an indirect transfer of his retirement plan assets.  The IRS alleged that the indirect transfer did not take place in a timely manner and thus sent the client a bill for $19,942; including a $3,100 penalty and $1,130 in interest.  We were able to establish a paper trail and successfully refute the IRS's position.  The result was the client owed $0.00 and the IRS completely closed the matter in my client's favor.

common mistake leads to a big tax bill

The client was audited after failing to properly file his tax return showing sales of stock he made during the year.  The IRS mailed him a bill for the FULL AMOUNT that he received from the sale of the stocks.  He ended up with a big bill and was just going to pay it since he felt he made the error and the "IRS MUST BE RIGHT?"  Luckily, the client contacted me and I was able to pull IRS transcripts and use his brokerage statement to reconstruct the stock sales for the year.  I was able to offset the capital gains with the client's basis in stock---leading to a tax bill that was several thousand dollars to a tax bill under $1,000.  Failing to properly account for the basis of an asset and feeling that the IRS MUST BE RIGHT are common mistakes made by taxpayers.

$60,000 tax bill to a refund!

In another stock sale audit, the IRS used a "gross proceeds" analysis to arrive at a capital gain of $116,545 for the client.  The client had no idea what to do as he never saw anything close to this--imagine the stress when he saw the tax bill for just under $60,000 including $9,000 in penalties and $5,000 in interest.  I was able to reconstruct the stock transactions, properly present the actual results which included some missing cost basis figures, and turned the $116,545 capital gain into a $462 capital loss.  Instead of a $60k bill, in the end, my client received a $195 refund check from the IRS.

ca ftb WRONGFULLY sends  A TAX BILL

My client was a disabled veteran who received non-taxable disability income from the federal government for his service-related injuries.  He was not required to file a federal or state tax return based on his income.  The CA Franchise Tax Board runs a program where they attempt to find "non-filers" using third party reporting documents, in this case a mortgage interest statement issued by a lender.  Believing that if the taxpayer pays a mortgage, he must have income that is not being reported.  The FTB used a statistical analysis to conclude that my client had an annual taxable income of $125,000 in order to afford his mortgage.  They send him a bill for just under $10,000, including $2200 in penalties and interest.  The client tried to reason with the FTB, even providing information from the Veteran's Administration--no luck.  I was able to properly respond to the FTB's incorrect assessment of tax (called a Notice of Proposed Assessment) and completely eliminate his tax bill.  He owed nothing to the state.  Do not let aggressive tax agencies bully you into thinking you did something wrong!

KNOWING WHO TO CALL MAKES ALL THE DIFFERENCE

A client came to me after getting behind on her federal taxes to the tune of about $80,000.  She tried to call the IRS SEVERAL TIMES and get an answer on how she could resolve the matter.  She found that most of the time she was unable to get through to anyone on the phone.  And when she did, the representative was not helpful at all.   She had pretty much given up after months of trying to resolve the matter.  Finally, the threatening letters got too much and she sought my assistance in her case.  In the matter of a phone call, I was able to get my client into an installment agreement that included a monthly payment which was realistic for the client and acceptable to the IRS.  The threatening letters stopped and the client is back on track, in tax compliance, and making payments to lessen her tax liability.  Sometimes it takes the experience of knowing who to call and what to ask for to resolve the matter successfully.

Installment agreement strategy

Clients came to me owing a little over $400,000 in federal taxes from a few years ago.  The monthly payments were astronomical.  The clients had recently purchase a house and had some equity in the home.  The clients were very worried that the IRS would take the equity and their retirement accounts.  We were able to strategize our position using a short-term loan from a family member to get the balance below the IRS threshhold requiring a full financial disclosure of all assets.  This kept the equity and retirement amounts safe from the "prying eyes" of the IRS, while getting the IRS some "good faith" money and a montly payment that my clients could afford.  Knowing how the system works and how to apply strategy to your unique circumstances is hugely important.  Calling the IRS and asking for their help will NOT get you personalized service that puts you in the best position you can be in.  I can't make promises, but I can certainly provide alternatives for your consideration.