It is no wonder so many Americans dread the tax filing deadline. The U.S. tax code already contains more words than the Bible, and hundreds of pages of new rules and regulations are often added.

With so much complexity, it is no wonder so many of us put off filing our taxes until the last possible minute, but taking that approach introduces its own stresses and can potentially land you in hot water with the IRS. What if you do not get it done on time? You can file for an extension, but you are still required to pay the taxes you owe plus penalties and interest. How do you know you didn’t make a mistake with your last minute tax filing? Something as simple as a mathematical error could increase the odds of an audit and put you in the crosshairs of the IRS.

We specialize in helping people who owe $10,000 or more to the IRS or have years of unfiled tax returns, so we’ve seen our fair share of mistakes made by innocent taxpayers. If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief.

That said, we recommend taking a methodical and step-by-step approach to preparing and filing your taxes and avoid burying your head in the sand. As with any unpleasant and complicated task, breaking your taxes down into smaller and more manageable chunks can make things easier. This year, vow to take a step-by-step approach to your tax return. If you follow these simple steps, you could be done with your taxes before you know it.

Step 1 – Set Up a Command Center

Chances are you will start receiving tax documents in early January, and you may still be receiving those documents in March. That means you need a convenient place to keep all those documents. Setting up a command center in your home makes it easier to store those documents and keep them at hand.

If you have a home scanner, take a few minutes to image each document as it arrives. Set up a special folder on your computer or cloud storage service to hold all those documents. Those electronic copies can be invaluable if the originals are damaged or destroyed.

Step 2 – Choose A Good Tax Preparation Service (But Use A Tax Resolution Service For More Complicated IRS Issues)

While they cannot make the task totally painless, tax preparation professionals do make the process a great deal easier.

Keep in mind, if you owe multiple years of taxes and have multiple years of unfiled returns, we recommend reaching out to a tax resolution firm that will understand your unique situation and find the tax relief you need. Most tax preparers aren’t trained in complex tax resolution, so find the right firm to help you with your case.

Step 3 – Enter Your Tax Documents As You Get Them

One of the great things about technology is that you organize and file each tax document as you get it, often you can download all your tax documents from various online services. For example, your direct deposit payroll service will give you your W2 and different vendors provide statements and 1099’s online.  If the mailman brings you a 1099-INT or a W-2, you can simply scan things as they come in.

Just open each document, scan it to create an electronic backup and log on to your favorite secure cloud storage to file your documents. Whether you get five tax documents a day or just one, entering the information now can save you time later on.

Step 4 – Review Your Documents and Final Tax Return

After you think you have all your documents organized and your tax return is ready to file, the next step is to review everything and make sure there aren’t any obvious issues. Go through the paper and electronic copies and check each one off on your tax return. If any of those documents are missing or anything is wrong, go back and enter them right away.

Step 5 – Bring It All Together

Now that the final review is complete and all the documents have been entered, it is time to bring it all together and actually file your return. Your tax prep professional should include a series of checks designed to catch common errors and point out audit flags. Be sure to ask questions and correct any problems you might find. Be sure to print off a copy of your tax return and save an electronic version to your computer.

Nothing can make filing taxes fun, and this annual chore will never be a pleasant one. Even so, you can make the task less taxing by breaking tax filing down into its component parts. Following the steps outlined above can help you deal more effectively with your tax bill and all the complexities of the tax code.

OWE BACK TAXES?

Our firm specializes in tax resolution and helping people who owe the IRS or state $10,000 or more. We’ve seen taxpayers get blindsided every year by a huge tax bill and often falling behind on their taxes for years on end. If that’s you, we can help. Contact our firm today to discuss your tax debt settlement options.

Third time’s the charm for Michael Dexter Little, who was convicted of tax fraud in 1999, 2003 and again in 2022. This time, Little also added conspiracy to commit wire fraud, money laundering and identity theft to his already extensive record.

From 2019 to 2021, Little filed a number of false tax returns claiming large, bogus fuel tax credits. The returns were filed in his name, those of co-conspirators and identity theft victims.

Little and his co-conspirators received 12.3 million dollars in false refunds and were attempting to collect another 27 million dollars when they were caught. Little laundered a large portion of the money, paid for almost everything in cash, and used a significant amount to purchase real estate and other assets.

In addition to the $12.3 million plus, he has to pay back in restitution, Little was sentenced to 19 years and six months in federal prison.

Question: I haven’t filed my tax returns for several years and the IRS keeps sending me notices that I owe them 39,000. How can that be? What should I do?

Answer:  When a legally required income tax return isn’t filed on time, the IRS can file an income tax return on your behalf.  It’s called a “substitute for return” or “SFR”.  Most of the time the ensuing tax liability is much greater than if you filed your own return. This is because the IRS doesn’t give you credit for proper exemptions, credits nor (business) deductions. In addition, it’s a misdemeanor, punishable by up to one year in prison and a $10,000 fine, for each year not filed.

The good news: Your Tax Resolution Specialist can prevent this from happening, but you must act fast. Once retained we can replace all “SFRs” with originally filed returns, reducing in most cases, what you owe.  Once these returns have been filed, the next step is to negotiate a resolution with the IRS on the remaining amount owed.  You will most likely be looking at one of two options – the Offer in Compromise or a properly structured Installment Agreement.

The Offer in Compromise (OIC) was created for people who owe the IRS but who, for whatever reason, are unable to pay their tax debt off, even over time. The Offer in Compromise allows taxpayers to negotiate a settlement amount that will take care of the entire tax debt once and for all. This settlement agreement can lower the tax debt by a significant amount, however there are strict eligibility requirements.

If you do not qualify for the OIC then you may consider the Installment Agreement, which if properly structured, allows you to pay off your debt over time by making manageable monthly payments, much like a commercial installment loan.

Rosalba Meza, the controller for two plumbing companies, was arrested for embezzling more than 3 million dollars.

From 2017 through 2019, Meza made unauthorized transfers from company bank accounts into personal bank accounts totaling $3,071,880. In February 2019 Meza told company executives they did not have funds to meet payroll, but failed to disclose that her embezzlement was the cause of the shortfall. Later that same year, when the companies were facing enforcement action from the IRS due to the unpaid payroll taxes, she told the executives that she did not pay the payroll taxes because she had used the funds to pay employees.

Meza used the stolen funds to make $292,137 in cash withdrawals at bank branches, and more than a million dollars at ATMs in the United States and Mexico. She also wired $870,209 to bank accounts in Mexico owned by family members and another $250,000 in transfers to other family members and friends. She failed to report any of the stolen funds on her income tax returns.

Meza faces restitution, fines and a maximum prison sentence of up to 30 years

Alfredo Loya, a commercial fisherman from Virginia, was sentenced to 15 months in prison for failing to pay his federal income taxes for nearly a decade.

Loya was employed by a number of companies as an independent contractor from 2006 to 2014. From 2006 to 2008 and from 2014 to 2016 he filed no tax returns. He filed returns from 2011 to 2013 but did not pay any of the taxes he owed during that time.

In order to avoid paying taxes and in an effort to hide his income, Loya rarely used a credit card and paid for almost everything in cash. From 2012 to 2016 he cashed 71 paychecks made payable to him from fishing companies, for a total of $840,400.

The overall tax loss to the IRS was determined to be $238,967.

The owner of two compounding pharmacies, Matthew Hogan Peters, was sentenced to prison for evading payment of nearly 5.5 million dollars in personal income taxes and for submitting false reimbursement claims to CVS Caremark.

Peters devised a scheme to incentivize healthcare providers to write prescriptions for custom mixed medications that generated large reimbursements for his pharmacies. During an audit conducted by CVS, dozens of claims lacked records that proved customers received the medications. When questioned, Peters submitted proof of customer signatures that were eventually all tracked back to DocuSign files on his personal computer.

To further complicate his criminal liability, Peters generated nearly 14 million dollars in gross income between 2014 and 2017 but hid millions from the IRS. He spent 3.3 million dollars for property and construction in Belize, more than five million dollars for personal residences in Laguna Beach and San Carlos, California, and millions in cash transfers to straw entities and trust accounts in the names of others for his personal use. Between 2014 and 2017 Peters underreported his income by more than 5.4 million dollars.

Peters was sentenced to three years in prison and ordered to pay $3,441,263 in restitution to the IRS.

The owner of a roofing company, Ronald McPhail, was sentenced to one year and one day in prison for failing to report income from 2014 to 2019. During that time McPhail’s business generated more than 7.1 million dollars in revenue and approximately 2.43 million dollars in income. To conceal the income McPhail cashed customer checks without first depositing them, and asked his customers for payments in sequentially numbered checks in amounts less than $10,000. He then cashed the checks at different bank branches on different days.

In addition to the prison sentence he was ordered to pay a fine of $10,000 and restitution to the IRS in the amount of $798,494.

Sang Bum Noh, the owner of a wholesale garment company in the fashion district of downtown Los Angeles, was sentenced to 12 months and one day in prison for undervaluing imported garments to avoid paying millions of dollars in import duties, failing to report millions of dollars in income, and failing to report large cash transactions.

Over the course of four years Noh undervalued imports from China by approximately 82.6 million dollars, which reduced the amount he owed in tariffs by 17.1 million dollars.

At his retail store Noh recorded cash transactions and credit card sales separately. He did not report any of the cash sales on his tax returns and underreported the credit card sales. He also received 365 cash payments at the store for more than $10,000 over a two-year period, totaling 11.1 million dollars, and did not report any of the transactions.

Authorities found $35 million dollars in cash in shoeboxes and garbage bags when they searched Noh’s Bel Air home, which was used to pay back $16,806,412 to the IRS and $18,421,443 to Customs and Border Protections. There is a forfeiture money judgment on the case of $81,564,856, and an additional forfeiture of $1,104,997 from seized funds.

Question: I’m currently separated from my spouse, who owns his own business, and we are in the process of getting a divorce.  I have always filed jointly with my husband and now the IRS is sending me notices stating I owe $77,000.  I have no idea how they are coming up with this amount as my spouse was always responsible for making payments to the IRS.

Answer:  You may be able to avoid this liability entirely under the IRS’s Innocent Spouse Relief rules.  Under federal law if an income tax return is signed by both husband and wife, both spouses are 100% responsible for the taxes owed.  However, the law permits special consideration where a spouse cannot be held responsible for actions that are attributable to the other spouse.

If you meet certain criteria you may be able to apply for innocent spouse relief 3 different ways. One example is, your spouse didn’t report all their income; and you were not aware of it and no reason to know about it when you signed the tax return; and it would be unfair to hold you liable for the taxes owed due to your spouse’s error. If you feel you were deceived by your spouse or tricked into signing a return you thought was correct this will help your case too.  There are many other ways you may be eligible for relief under the IRS’s innocent spouse rules and we can help sort this out and determine the proper path for resolution.

We  are experts in IRS tax problem resolution and help taxpayers with their IRS Problems every day.  We know the “ins and outs” and know how to navigate the IRS maze. There is a solution to EVERY problem. Call us today for a FREE, no-obligation confidential consultation!

Angelia Brown, of Knoxville, Tennessee, was convicted of wire fraud and filing a false tax return after embezzling more than two million dollars from her employer, a  nonprofit that works with abused children.

From 2012 through June 2020 Brown, a staff accountant for the organization, forged company checks and deposited them into her personal bank account. She hid her actions by altering the checks after she had deposited them. Brown forged 885 checks, causing a loss to her employer of $2,064,464.99.

Brown failed to report the embezzled funds as income on her tax returns for tax years 2012 to 2019, resulting in a tax loss to the IRS of $552,224. She was sentenced to three years in prison and ordered to pay restitution of $2,616,688.99 to her former employer and the IRS.