December 6, 2019 What is a Statutory Installment Agreement and Can I Get One When I Owe Money to the IRS?

There’s a lot of confusion out there about what an installment agreement really is and how does a tax payer get one. Let’s start with the types, first. There are three types of installment agreements: Statutory, Streamlined and Partial Payment Installment Agreements. This blog will only cover the Statutory.

The Statutory Installment Agreement is the least used because this is where the tax payer’s representative proves that the IRS did something wrong while assessing the fines for the taxpayer. Something went amiss and the taxpayer’s rights have been violated. This could be anything from mis-identity to statute of limitations running out.

According the Internal Revenue Code (IRC Sec. 6159(c)) the IRS is required to enter into an installment agreement with the taxpayer if –

a) the tax liability is $10,000 or less. minus penalties and interest;

b) the taxpayer has not failed to file or pay nor entered into another installment agreement under this provision ;

c) the installment agreement provides for full payment of the liability within three years;

d) the taxpayer agrees to comply with the tax laws and the terms of the agreement for the period that the agreement is in place;

e) if requested by the IRS, the taxpayer submits financial statements, and the IRS determines that the taxpayer is unable to pay the tax due in full.

The last point is pretty much mute, however. As a matter of policy, the Service grants guaranteed agreements even if the taxpayer is able to pay it all at once.

There are a couple of things to keep in mind for those taxpayers considering bankruptcy or for those who already in bankruptcy. If you already have a standing installment agreement, a bankruptcy will not make that agreement go away. This is a contract with the government – much like a promissory note, that you are expected to fulfill. Any agreement you make the IRS whether an installment agreement, an offer in compromise or any of the rest, is considered a sworn statement and violation will be punishable to the full extent of the law. Does that mean you could end up in jail, I guess it could, but more than likely it will mean the IRS would start reinforcing liens and levies of your bank accounts, accounts receivables and properties.

If you have any questions about or would like to get more information about a statutory installment agreement please schedule a 15-minute call with us by clicking HERE, or write us a brief note @ services@executivetaxsolution.com. Tell your friends about us and watch out for the video on this lesson, coming soon.

December 6, 2019 How to Protect Your Social Security Number from Theft

With the dramatic increase in identity theft, what can be done to protect your Social Security Number (SSN) from these would-be thieves? Here are some ideas.

Do not carry your Social Security Card with you. Your parents were encouraged to do this, but times have changed. You will need to provide it to a new employer, but that is about it.

Know who NEEDS your Social Security Number. The list of those who need to have your number is limited. It includes:

· Your employer. To issue wages and pay your taxes.

· The IRS. To process your taxes.

· The State Revenue department. To process your state taxes.

· The Social Security Administration. To note your work history and record your benefits.

· Your retirement account provider. To enable annual reporting to the IRS.

· Banks. To enable reporting to the IRS.

· A few others. Those who need to report your activity to the government (example: investment companies.)

Do not use any part of your Social Security number for passwords or account access. Many retirement plans use your Social Security Number to enable you to access their on-line tool. When this happens, reset the login and password as soon as possible.

Do not put your Social Security Number on any form. Unless a business has a legal need for your number, do not provide it. Common requestors of this number are insurance companies and health care providers. Simply write, “not available due to theft risk” in the field that requests your number. If the supplier says they need it, ask them why.

Do not note your full Social Security number on any form. If you are required to give out your number, try marking out the first five numbers. (xxx-xx-1234)

Do not put your Social Security Number on your checks. Certainly not on your pre-printed checks. If requested by the government to place your number on your check to apply your payments, simply put the last four digits on the check.

Never give your number out over the phone or in an email. The only exception is when you make the phone call to a valid source that will need the number to access your account.This list is very limited. It includes calls you make to the IRS, Social Security, your state government, and limited partial numbers to your bank and health care insurance company.

Remember to periodically check your credit with the major agencies to ensure your data has not been stolen. Once stolen, it is often difficult to get a new SSN issued.

May 2, 2019 Baby Boomers Become the Sandwich Generation

Sandwich Generation - Financial Tips

The "baby boomers," Americans born between 1946 and 1966, are moving like a wave into their fifties and sixties. Unfortunately, many of them are facing new financial pressures. Their kids are likely to need help paying for increasingly expensive colleges. Their folks are getting older and living longer. Boomers are digging into their wallets to make up the shortfall in their parents' retirement income, and many are trying to help cover the costs of long-term care. On top of that, they're struggling to save for retirement and pay for the groceries. No wonder they feel squeezed.

If you're part of the "sandwich generation," take heart. Careful planning and a little diligence can help to alleviate some of this pressure.

First, you need to identify your priorities. How important to you are such things as setting aside funds for retirement, paying for your kids' schooling, and helping your parents with the cost of long-term care? Once you've identified your priorities, you can set realistic goals to address them, putting the bulk of your financial resources and energy toward meeting the most important goals first.

Retirement. Many people would like to retire at a relatively young age. But some may have to rethink that goal in light of other financial demands like college tuition and care for elderly parents. Working longer can have distinct benefits. Besides funding an accustomed lifestyle for a few more years, working longer and leaving your retirement accounts intact will give the funds more time to grow.

Education. Many families want to help finance the education of their children. Tuition, books, and other college costs can eat up tens of thousands of dollars. If your child is still young, it's a good idea to start saving early and invest for growth. If your child is ready to start college but isn't financially prepared, you might consider letting him or her finance a portion of the cost by working or obtaining loans. College-age kids have their working lives ahead of them. Their income, including their ability to repay loans, should increase.

Parents. For many in the sandwich generation, helping to pay for the high cost of a parent's long-term care is a priority. For example, a year in a nursing home can cost $30,000 to $50,000. At some point, your parents may need financial help to cope with such high expenses. In the meantime, you may be able to help them manage their finances and consider options such as long-term care insurance. You might want to meet with their banker, lawyer, and accountant to look over your parents' financial status and review legal papers, including such documents as power of attorney, wills, and trusts.

Feeling squeezed? Call if you wish a review of your situation.

If you have more questions about your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525

April 25, 2019 Debt reduction may be your best investment

Debt Reduction - Tax accounting services specializing in small business.

Investors are increasingly uneasy about the ups and downs of the stock market. If you're worried about your investments and want to reduce your debts, you're in luck. Debt reduction gives you a guaranteed rate of return. By paying off a typical credit card, you'll save about 18 percent interest on the amount you retire. Where else can you earn a guaranteed return of 18%?

Debt reduction also buys security. A low-debt family earning $80,000 a year can be financially stronger than many high-debt families earning twice as much. If you lose your job, your level of debt can make the difference between temporary discomfort and financial ruin.

To reduce debt, you should first avoid buying anything you can't pay for in 30 days. Then start working on your existing debts. Each month, pay as much as you can on the debt with the highest nondeductible interest rate, covering only minimum payments on the others. When you've retired the first debt, start on the one with the next highest rate. Continue the process until you've paid off everything but your home mortgage.

Naturally, this is a simplified approach, and individual circumstances vary. A professional can help you set realistic goals and work with you at achieving them.

If you have more questions about how to chip away at your debts or for any help with your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525

April 18, 2019 Don't Be a Victim of "Ghost"​ Tax Return Preparers

WASHINGTON – Today, towards the end of the second full week of the 2019 tax filing season, the Internal Revenue Service warned taxpayers to avoid unethical tax return preparers, known as ghost preparers.

By law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid 2019 Preparer Tax Identification Number, or PTIN. Paid preparers must sign the return and include their PTIN.

But ‘ghost’ preparers do not sign the return. Instead, they print the return and tell the taxpayer to sign and mail it to the IRS. Or, for e-filed returns, they prepare but refuse to digitally sign it as the paid preparer.

According to the IRS, similar to other tax preparation schemes, dishonest and unscrupulous ghost tax return preparers look to make a fast buck by promising a big refund or charging fees based on a percentage of the refund. These scammers hurt honest taxpayers who are simply trying to do the right thing and file a legitimate tax return.

Ghost tax return preparers may also:

Require payment in cash only and not provide a receipt.

Invent income to erroneously qualify their clients for tax credits or claim fake deductions to boost their refunds.

Direct refunds into their own bank account rather than the taxpayer’s account.

The IRS urges taxpayers to review their tax return carefully before signing and ask questions if something is not clear. And for any direct deposit refund, taxpayers should make sure both the routing and bank account number on the completed tax return are correct.

The IRS offers tips to help taxpayers choose a tax return preparer wisely. The Choosing a Tax Professional page has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers can report abusive tax preparers to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

If you have more questions about how to avoid tax fraud tricksters or for any help with your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525

April 11, 2019 Satisfied customers create higher profits

Customer service

In some industries, service has become a quaint memory, and customers are reduced to selecting the provider that costs or annoys them the least. But the golden rule has not been repealed, and pleasing your customers can create a powerful competitive advantage. A few simple changes may well increase your bottom line.

We all hate having our time wasted, and businesses are among the worst offenders. To distinguish your firm from the rest, establish the following customer service policies and procedures.

  • Communicate with your customers. Return calls promptly, update customers about matters in progress, and explain delays as soon as you can.
  • Don't make your customers jump through hoops. Offer discounts at the point of sale, rather than giving out coupons or making buyers apply for mail-in rebates. If you employ an automated phone system, provide a simple method for reaching a live person.
  • Don't worry about trying to save face. If you're even partly wrong, apologize and proceed to a resolution. Train your employees to do the same, and reward them for positive outcomes.

Let customers know you're there for them and that you regard them as more than mere cash cows. Listen to their concerns, and address them promptly. If someone is unhappy with a purchase (whether product or service), fix it, replace it, or refund the payment in full. At worst, the loss won't be compounded by damage to your reputation. At best, the money will come back multiplied by repeat business and referrals.

Quality service is a powerful marketing tool that's surprisingly easy to deploy. Simply imagine how you would want to be treated, and provide that treatment to your customers. As their satisfaction increases, your profits will follow.

Pay attention to your customers' needs. You'll enjoy higher profits as a result.

If you have more questions about how to improve your customer service or for any help with your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525

April 4, 2019 Where to get money for a growing business

Financing Growth

The following sequence of events is common to many new and expanding businesses.

The Short-Term Squeeze

You start your business with a limited amount of capital and an abundance of good ideas and ambition. The sales activity has been adequate to produce a net profit. Your inventory is about twice as large as you intended. Your accounts payable are past due to the point where some creditors want to ship C.O.D. only. To keep your creditors happy, you have been overdrawing your checking account to the dissatisfaction of your banker. You have a short-term note past due at the bank.

These are all symptoms of a very common business ailment - too much short-term debt.

This type of cash squeeze can be avoided if you confine your company's growth to that which can be handled from retained earnings. If the cash retained in the business from last year's profits is $25,000 and inventory grows by twice that amount, somebody (you, your banker, or a new partner) has to fund the expansion that cannot be funded by the retained earnings.

Long-Term Funding

If you can't provide additional capital and you don't want a partner, you need to look for long-term funding from one of the following sources:

  • Funds from Owner - Studies indicate that as much as 60% of all small business funding comes directly from the owner or his/her immediate family. Outside of your immediate family or friends, you may find funding from other private parties or from financial institutions.
  • Private Lenders - There are some problems with outside private lenders. First, they are few and far between. Second, they generally demand a higher rate of interest and/or want to own a percentage of the business.
  • Financial Institutions - The main problem in using financial institutions for small businesses is that banks are not in the "risk" business. Although you may be very optimistic about your company's future and have a glowing cash flow projection, the banker is not likely to rely on it for loan purposes. You may have adequate collateral in terms of inventory, real estate, etc., but if the banker feels that you will not have adequate after-tax net profits to service a loan, he/she is not likely to lend you money. Bankers do not want to liquidate your assets in satisfaction of their loan.
  • Small Business Administration - If financing is not otherwise available on reasonable terms, the Small Business Administration may be available to assist with its various loan programs.
  • Money Brokers - There are "money brokers" who advertise in various newspapers and business publications. Many of these brokers want to be paid in advance to locate possible lenders for you. Be very cautious of any broker and ask for references and credentials. Any proposal by such brokers should be reviewed by both your attorney and your accountant before you sign anything.

If you would like more information on the business funding options available in your situation, please feel free to call.

If you have more questions about how to raise more capital or for any help with your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525

March 28, 2019 Alert! Beware the Telephone Scam

Top IRS dirty dozen tax scam

Each year the IRS announces a dozen tax scams they call the “dirty dozen”. One of them - telephone scams - is on a huge upswing RIGHT NOW. Here is what you need to know.

“The aggressive, threatening phone calls from scam artists continue to be seen on a daily basis in states across the nation. The IRS urged taxpayers not give out money or personal financial information as a result of these phone calls or from emails claiming to be from the IRS.”

Source: IRS.gov

What to do

  • No information. Do not provide information to someone who calls you by phone. This includes your name, social security number, address, or any financial information.
  • No confirmation. These thieves often have stolen information of yours. It might include your name, address and social security number. By providing this information to you, they hope you will think they are legitimate. Do not fall for this trap.
  • Get information. So are they the real deal? Get the name of the person, their id number, and your case number. Have them provide you with a phone number to call them back. Then hang up. Do not call them, but contact the authorities.
  • Do not get bullied. These thieves are aggressive, may have fake caller id’s and may threaten you with asset seizure or jail time. Do not be harassed. Hang up.
  • Report the incident. Contact the IRS via their direct phone number found on irs.gov and tell the representative what happened.

For more information on this scam and on what to do if this happens to you, please read this IRS announcement: IRS sees phone scams as a serious threat.

If you have more questions about how to avoid telephone scams or for any help with your taxes or tax-related payroll or bookkeeping issues give us a call @ (469) 262-6525