Anthony Sykes & Company

         After considering one of the more well-known (yet difficult to qualify for) plans in Offer-In-Compromise ( OIC ), let’s shift our focus to realistic options. There is a real expectation that more Taxpayers will end up with a tax debt after filing a Tax Return this year. Let’s see why these agreements may prove to be a better choice when it comes to dealing with a surprise debt.           Guaranteed Installment Agreement ( GIA ). This typically is a 3-year payment plan for balances of under $10,000. This is attractive because it does not require management approval or selling off assets to pay the IRS . However, the Taxpayer must not have been involved in any other payment plan in the previous 5 years. They must also have filed all Tax Returns related to the debt.           There are other programs for those who owe around $50,000 and $100,000. The length of time to pay is increased, but there are circumstances in which the payment plan can be shortened. To understand

         Disasters, in one way or another, have become all too common. Sadly, when one occurs, there is a group of people who look to profit from it by stealing the money of well-intentioned people who want to help. Therefore, Fake Charities have made the Internal Revenue Service ( IRS ) “ Dirty Dozen ” list for 2019. This is a list of the 12 most common scams that Taxpayer’s will come across during the year. Here are some basic tips to help keep you from falling prey to a scheme like this.           Be suspicious of any charity that has a name like one that is familiar or nationally known. This is a trick used to make people feel that the bogus organization is truly legitimate. Never give personal information , like passwords or Social Security Numbers to those who are soliciting for donations. They don’t need that information! Confirm that they are from an actual charity before providing any Credit/Debit card numbers. Do not give cash.           These scams often peak

        The Dirty Dozen list is a compilation of the 12 most common Tax scams in the view of the Internal Revenue Service ( IRS ) and is updated every year. One scam that peaks during Tax Season is lying about income and generating false Tax documents .           The IRS is very aware of these schemes and works closely with the Department of Justice to prosecute those who attempt these kinds of activities. Some people try to falsely claim a deduction, expense, or Tax credit that they have not earned. These actions are all illegal and when found out, will cause a repayment of any refund along with penalties and interest . There is also a variation of this scam which uses fraudulent Tax forms issued by institutions that may or may not exist.           Anyone who makes these kinds of claims will be investigated by the IRS Criminal Investigations division and will likely never be able to claim these deductions or credits in the future, even if they qualify. Carefully choos

         In our earlier posts on this subject, we discussed how much work it takes to even begin to qualify for an Offer-In-Compromise (OIC). After proving that you are not in a short-term economic hardship or dealing with a surprise due to the Tax Cuts and Jobs Act ( TCJA ) acceptance may be granted. That is when the really difficult work begins.           The Internal Revenue Service ( IRS ) will conduct a special OIC review, which could last up to 2 years . This in-depth investigation will search the history of the Taxpayer in attempt to see if they truly qualify at the offer amount. Are they hiding assets? What does their credit report show? These are some of the questions that the examiner will seek to answer. As a result, its not unusual for an OIC to be appealed to a higher level after the review. This could be due to a dispute regarding asset levels, non-payment while the review is taking place, or not paying the 20% down payment.           Taxpayers need to under

         In expanding on the 12 most common Tax scams in the view of the Internal Revenue Service ( IRS ) for 2019, the next entry is the artificial inflation of Tax Refunds . This was briefly mentioned in the post about Tax Preparer fraud. In that post we emphasized how you can choose a Qualified Tax Professional with care. You can read the steps here. We are going to look at some situations in which scam artists have been known to strike!           They often use flyers and phony storefronts to lure victims in. If the word of mouth about someone sounds too good to be true, it probably is . Sometimes they file a false Return in their client’s name to get the money, or target those who qualify for a Refund and con them into getting a larger amount by making false claims for credits. Included in the group who make inflated claims, are those who make deflated claims . There are some who make efforts to claim zero wages when they have income for that year. This is a theory which ha

         With the application of the Tax Cuts and Jobs Act ( TCJA ), there has been an increase of Taxpayer’s choosing to have a paid professional prepare their taxes. While the vast majority are honest and provide high quality service to those who need it, there is a small group that operates with the intent to defraud and steal from innocent Taxpayer’s. while the Internal Revenue Service ( IRS ) does work with the Department of Justice to prosecute these individuals, it is the Taxpayer who is ultimately responsible for what is stated in the Tax Return.           There are several ways the average Taxpayer can protect themselves from dishonest tax preparers. Never sign a blank or incomplete Tax Return. This gives your approval to whatever will be filled in later, without your review. Always ask questions about your Tax Return. Make sure that any refund goes directly to you. Ask about any charges and fees in the beginning and avoid anyone who charges their fee based on you

        There has been a drop in Identity Theft cases over the past few years but it is still a crime that Taxpayer’s must be cautious of, especially during tax Season. That is why it still remains on the Dirty Dozen list of tax scams released by the Internal Revenue Service ( IRS ) in 2019. This is a list of the 12 most common scams that Taxpayer’s may encounter at any time of the year. Identity Theft ranks at Number 3 this year, and here are some reasons why.           This type of scam is still a problem for Individuals and Businesses during this time of year because thieves are always changing their tactics . Once they get ahold of a Social Security Number ( SSN ), the con artist will immediately file a fraudulent Tax Return to claim a refund. They will strive to steal the Tax information of a business to file a false Form 1120 . While the criminals may be on the attack, there are ways that we can protect ourselves.           Always use updated security software on your

        Our last post ended with the point that a Taxpayer must qualify in order to receive an Offer-In-Compromise from the IRS. Detailed and accurate records are required in this process. When analyzing the past tax returns and records, along with the help of a Qualified Tax Professional, they may find that the balance in question is lower than they thought. If that is the case, they should challenge the amount owed and may find a better solution.           Apart from needing detailed records, Taxpayers must recognize that this program is not about negotiating with the IRS . There is simple math involved. If the formula works in your favor, you have a good chance of being able to pay the compromise debt amount. With that said, this amount must be paid . There is no ability to lower the debt any further. For those who have hit hard times, this may not be particularly helpful. We will discuss that in our next article.

        Phone Scams continue to be an ever-present threat to Taxpayers, and peak during Tax Season. This kind of attack, also known as vishing (voice phishing), starts with a phone call threatening arrest , deportation , or some other intimidation in order to pay a fake Tax debt. They try to bully the money out of victims. These may be robot-calls or made by an actual person. They can alter their caller ID to make it seem like they are calling from the Internal Revenue Service ( IRS ). Often, they have already stolen some Taxpayer information, such as the last four digits of their Social Security Number, to make themselves seem even more legitimate. However, there are a few ways that we can actively protect ourselves.           If any of these interactions occur when you are dealing with someone who claims to be from the IRS , then know it is a scam . The IRS will never demand an immediate payment with a gift card or a prepaid debit card. Any payment details about a Tax debt

         Every year criminals are relentless in their attacks on Taxpayers to steal their personal information. In a similar way, the Internal Revenue Service ( IRS ) updates the “ Dirty Dozen ” list of the 12 most commonly used frauds and scams that lead to identity theft. This serves as a warning to Taxpayers, Businesses, and Tax Professionals. For 2019, the Number 1 scam to aware of are phishing schemes .           We must be on constant guard against phishing attacks, because they are tricky and cleverly disguised to imitate a real organization, such as the IRS . However, there are some basic protective steps that each of us can take. First, we must be cautious with our personal information and not quick to share it when an unexpected message demands it. The emails and websites may be very convincing. Many people are comfortable on Social Media and may not think twice about sharing information there. Remember that the IRS will start contact with a written letter , not an ema

         Hearing of high-profile lawsuits in the news, and the large judgements that come with them, is not unusual. In these situations, we know that the lawyers get to keep a good amount of the money as a part of their fees. How much do those involved in the legal action get to keep? When we hear of large settlements or decisions in a case, how will taxes impact the amount of money that will be received?           From the point of view of the IRS , there is a difference between money received because of physical symptoms related to emotional distress, and money received because of physical injuries or sickness. Physical injury cases have been, and still are , tax free. However, there is a new potential concern, especially for those who have sexual harassment cases.           Changes in the tax law, brought on by the Tax Cuts and Jobs Act ( TCJA ), will now deny  most tax deductions for legal fees and settlement payments if there is a Nondisclosure Agreement . Most sexual

         Some might think that if they have hit hard times, or if they have an unexpected tax debt, that this will make them an Offer-In-Compromise candidate. This is very unlikely. From the point of view of the IRS, most people will eventually get a new job . At that point, their income will increase, and they will be able to pay their tax debt. This is the same reason why active businesses are rarely granted Offer-In-Compromise status.           If a business is open, the owner expects to make a profit . With that future profit, tax debt can be paid. If the issue deals with payroll taxes, the resolution becomes even clearer. Those who are considered “responsible parties”, such as owners or financial officers, can be held personally responsible for that tax. Even if you can qualify, the work has only just begun.