1 - I have a trust fund penalty filed against me?

A trust fund penalty is generally filed against the president of a company that neglected to pay his/her payroll taxes for their company.

2 - I own a company, but never paid payroll taxes?

If you are an employer, you are required to file a form (941) each quarter that list the amount of wages paid for per quarter during any given year. At the end of each year, you should file a form (940). If you fail file these forms will result in penalties.

If your company goes out of business and you neglect to pay, this will initiate a trust penalty against you.

3 - The government filed my tax returns and billed me?

Most tax payers that neglect to file their tax returns do so for a number of reasons:

- If there is a balance and the tax payer can’t pay the government, the tax payer thinks the best solution would be not to file their tax returns.

- If there is no refund to receive, the tax payer will just wait to file their tax returns. Waiting is not the answer

4 - Injured Spouse Claim?

Injured Spouse Clause:

If a tax payer is married and he or she has any outstanding child support bills or tax bills pending prior to marriage and the tax payer or spouse has been injured because of this, they have a right to file an injured spouse claim.

5 - Wages garnished by the Internal Revenue Service?

Most tax payers that receive a garnishment from the government on their pay check is due several reasons.

If you never filed your tax return and the government filed it for you and initiated a levy on your wages. You may have moved since your last tax filing, so all the bills were mailed to last address they have on file. Your spouse owes taxes and you were not informed. You were receiving bills and nothing was done.

6 - Are you a tax payer who recently got married?

Most newlywed female tax payer’s will change their new name with their employer, but will forget to change it with Social Security Administration to record a name change. Therefore, causing an unmatched name on the W-2 form.

If you recently got married you need to contact Social Security Administration as soon as possible to record this change. They will request a copy of your marriage license.

Keep in mind that if you recently filed your federal tax return, you will not receive your tax refund until this change has been made.

7 - What should I do if I am being audited?

You can decide if you are going to handle your tax issue yourself or retain Tax Consultants LLC as your advisor.

8 - How do I know if I am being audited?

If you receive this notice you are being audited. Here is an example of an audit notice:

Sample of an Audit Notice (click here)

9 - Are you being audited?

Most tax payers that are subject to an audit wonder why they are being audit. Here are a few examples why this may happen.

Examples:

- If your (AGI) means adjusted gross income is ($30,000.00) and your expenses are ($40,000.00) on your schedule (A) this may initiate an audit.

- If you have rental property and you deduct more than ($25,000.00) in losses on your tax return this may initiate an audit.

- If your rental income is less than the fair market value of rentals in your area, this will initiate an audit, because it does not look as if you are renting for profit.

- If you deduct an amount on your tax return for mortgage interest or property taxes, which are not the same as your 1099 this will too initiate an audit. Why? Because information has been submitted to the Internal Revenue Service and the tax payer.

Tax professionals are to look at these issues before placing expenses on tax payers’ tax returns that will initiate an audit.

Our experience in the tax preparation field for more than 25 years, the quickest way to an audit is to file a schedule (C). A schedule (C) is used for filing a sole proprietorship; profit or loss in a business. Most tax payers whom used this form have been unadvised. Why? If you take a lost on your tax return from a business this will initiate an audit. If you are being audit due to the filing of a schedule (C) take note on line 31 on the schedule (C) if there is a lost there, you would have to fault the accountant or tax preparer. Why? As a client of the accountant or tax preparer the advice should have been for the tax payer to form an entity, instead of filing a schedule (C).

There are other ways of being audit, but these are the most common.

10 - Tax payer never filed their tax returns?

Here are a few situations why the tax payer never files their tax returns:

- Aware they owe money

- Have a balance from prior year tax returns

- If there is no refund, tax payer feels no need to pay a tax preparer to file their taxes

The average tax payer is not aware of the government filing their taxes for them.

11 - What is the offset program?

The offset program is a program that allows governmental agencies to collect a debt from any refunds you may receive.

Example:

If you owe on a student loan, your federal tax refund will be taken via the offset program in order to pay the debt.

The same would apply in regards to state tax of child support. Generally, you will receive a notice stating that you are in the offset program.

Keep in mind, the address you used to file your federal tax return will be the address the notice will be mailed to.

If you are an injured spouse (please see the injured spouse scenario)

12 - Offer in Compromise?

Offer in Compromise is used to make an offer to the Internal Revenue Service for individual taxes, corporate and payroll tax debts.

There are several ways of making an offer to the Internal Revenue Service.

- 1040

The 1040 debt maybe from your personal taxes that were filed over the years, but were never paid.

- 1120

The 1120 debt is from your corporations profits.

- 941

The 941 tax debts are liabilities from quarterly reports that you may have filed, but were never paid.

- 940

The 940 tax debts are liabilities from yearly federal unemployment reports that you have filed, but were never paid.

- Trust Fund Recovery Penalty

A penalty assessment against the owner/president/vice president or anyone that was a responsible party with check signing authority. This penalty is a result of the company’s failure to pay payroll taxes for several quarters or years. Such as the 941 quarterly or the 940 debt from these forms and the failure to pay, is transferred as a penalty to you the tax payer.

13 - Bank Levy/Pay Garnishment?

Most tax payers, who have a bank levy or garnishment against their pay, this happens due to money they owe to the Internal Revenue Service. There are several ways of handling this matter. One way would be:

If your liability is less than $25,000.00 you can simply call the Internal Revenue Service collection department at (800) 829-8374 and request an installment agreement without them filing a tax lien against you.

14 - Do you have a tax lien again you?

In most circumstances whenever a tax payer has a tax lien filed against them, it will remain on their credit report for 7 years. Our advice to the tax payer would be, if there is a balance due call the Internal Revenue Service at (800) 829-8374 and request an installment agreement if your tax liability is less than $25,000.00. If it is above $25,000.00, the Internal Revenue Service will then require a complete financial statement and a tax lien will be filed.

15 - Are you receiving bills from Internal Revenue Service?

We recommend you call our office to speak with one of our representatives to advise you. There will be a fee, if you would like to utilize our services to further handle your tax problem.