IRS Tax Tip: Audits by Mail

The IRS conducts many types of audits each year in an effort to verify income and expenses claimed on tax returns, many of which are conducted by mail. IRS.gov lists a number of tips to help taxpayers navigate the appropriate steps to take when in receipt of a letter notifying them of an audit by mail, we have summarized them for you below.

First, always be sure to read the letter carefully and completely. The letter is the best source of information involved and the type of information that the IRS is requesting you to send them. The IRS may request an itemized list of deductions or expenses. If you are unable to verify an amount claimed, respond with an explanation of the issue and your rationale for reporting the amount listed on your tax return. Once you have collected all of the requested information, you should attach copies of your documents to the audit letter and utilize the included envelope to return the information back to the IRS.

Second, it is important not to send original documents and you should always good practice to retain copies of everything you send in your response. You may also fax your information back to the IRS, if you choose utilize this option, you should include your name and social security number on each page to ensure all pages are associated with your case file.

Third, documents must be returned to the IRS within 30-days. If you are unable to meet this deadline you should call the number on the letter to discuss your situation and request additional time.

Fourth, once the IRS receives your information, they will thoroughly review it. Upon completion of their review, you will receive a letter either accepting your information or proposing changes to your tax return. If changes are proposed, 2 forms will be included with the return letter.

  • Form 4549 is the Income Tax Examination Changes form, this form explains the proposed changes to your tax return.
  • Form 886-A is the Explanation of Items form which describes specific changes and the reasoning behind them.

If you agree with the proposed changes, Form 4549 should be signed and dated and returned in the provided envelope along with your payment. If you disagree with the proposed changes, you do have the right to appeal within the IRS and before the courts, an explanation on this appeals process is also included in the letter.

Publication 3498-A The Examination Process (Audits by Mail) is available on the IRS website, this publication tells you what you need to do and explains your responsibilities and rights during and after an audit. The IRS website also contains information with steps on what to do if you owe additional taxes like paying your tax bill or applying for an online payment plan. If you pay your bill in full, you will reduce the amount of interest and penalties you will owe.

You can always contact McCauley Law Offices to discuss any concerns you may have. When the IRS comes knocking, let us answer. Contact us today for a free consultation, we’ll get the IRS off of your back.

Registered Nurse Commits Tax Fraud and Gets Registered for Prison Time

Registered Nurse Jennifer Hansen was sentenced to two years in prison after being found guilty of filing false tax returns.

Hansen was employed by a medical records company to evaluate individuals who applied for life insurance policies. She was responsible for conducting full medical examinations to make sure the applicants did not have any major health issues they had not disclosed. Between 2016 and 2018 she earned hundreds of thousands of dollars from the company and omitted all of it from her personal tax returns.

During the investigation into her tax crimes, it was discovered that a substantial portion of her income was also unearned. Hansen had submitted hundreds of records claiming she had examined a real patient when she had not.

In addition to the prison sentence, Hansen was ordered to pay restitution to the IRS in the amount of $257,830.44, and to her previous employer in the amount of one million dollars.

Are you in a Tax Jam? Contact McCauley Law Offices for a free consultation today, and let us get the IRS off of your back!

IRS Tax Tip 2022-127: Understanding taxpayer rights: Every taxpayer has the right to privacy

The Right to Privacy

According to a new tax tip from from the IRS, the taxpayers of America should rest easy knowing that their privacy is paramount to the IRS. The IRS has a Taxpayer Bill of Rights which lists out 10 fundamental rights all taxpayers should be aware of when dealing with the IRS. The rights include; The Right to Be Informed, The Right to Quality Service, The Right to Pay No More than the Correct Amount of Tax, The Right to Challenge the IRS’s Position and Be Heard, The Right to Appeal an IRS Decision in an Independent Forum. The Right to Finality, The Right to Confidentiality, The Right to Retain Representation, The Right to a Fair and Just Tax System, and The Right to Privacy.

The Right to Privacy ensures that taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary. Taxpayers can also expect that the IRS will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Below are a few more details the IRS provided about what a taxpayer’s right to privacy means:

  • The IRS cannot seize certain personal items, such as schoolbooks, clothing and undelivered mail
  • The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax debt
  • Sometimes, taxpayers submit offers to settle their tax debt that relate only to how much they owe. This is formally known as a Doubt as to Liability Offer in Compromise. Taxpayers who make this offer do not need to submit any financial documentation
  • During an audit, if the IRS finds no reasonable indication that a taxpayer has no unreported income, the agency will not seek intrusive and extraneous information about the taxpayer’s lifestyle
  • A taxpayer can expect that the IRS’s collection actions are no more intrusive than necessary. During a collection due process hearing, the Office of Appeals must balance that expectation with the IRS’s proposed collection action and the overall need for efficient tax collection

McCauley Law Offices is dedicated to resolving tax disputes with the IRS, it’s all we do. We can help you. Contact us today for a free consultation and let us deal with the IRS so you don’t have to!

West Chester, Pennsylvania Man’s $47k Tax Debt Settled for 7.5%

No matter the size of the tax debt, our firm can evaluate whether the IRS would be willing to compromise on your outstanding tax debt.  Call our firm today to schedule a free case evaluation.

That’s exactly what a West Chester, Pennsylvania man did – called our firm to evaluate his options on the outstanding tax liabilities.

After conducting a thorough review of his case, we instructed the client that he qualified for an offer in compromise.  After negotiating with the IRS, we were able to settle his $47,431 tax debt for only $3,587! That’s just 7.5%!

IRS Tax Tip 2022-118: From markers to face masks, classroom supplies may be tax deductible

With Back to School just around the corner, IRS Tax Tip 2022-118 is important for all educators to review.

The IRS knows that teachers go above and beyond, even buying classroom supplies with their own money to ensure successful learning environment. IRS Tax Tip 2022-118 gives some insight into the educator expense deduction which allows eligible educators and administrators to deduct part of the cost of some supplies, training, and technology from their taxes. This is only true of expenses that were not reimbursed by their employers, grants, or another source. Read on below for more on this tax tip, and contact McCauley Law Offices today to settle your Tax Jam and get the IRS off of your back!

 

Visit www.IRS.gov for more information, and check out Topic No. 458 Educator Expense Deduction on the IRS website for additional advice on this topic.

Do You Owe Money to the IRS? Possible Tax Resolution Strategies to Set Your Mind at Ease

The IRS can be extremely frightening, even for honest taxpayers. The IRS is unique from other government agencies because they have unbridled power to attack your wages, freeze your bank account and even confiscate your property. The thought of those possibilities alone are enough to send a chill up the spine of any taxpayer.

If you receive a letter from the IRS saying that you owe additional taxes, it is important not to panic. It may be a frightening situation, but there are things you can do to settle your tax debt and get back on the good side of the IRS.

Taxpayers do have options when resolving tax disputes and paying additional taxes due, and simply knowing what those options are can set your mind at ease.

As an expert Tax Resolution Firm, we encourage all readers facing a tax problem, whether it’s the feds or the state,  to contact us for a free consultation.

Here are three strategies you can use to resolve your tax debt and get on with the rest of your life. Not all of these options will be right for everyone, but it is important to be an informed taxpayer.

Review the Amount Owed And Your Tax Return In Question

If the IRS says you owe money, you should not simply assume they are right. The tax agency does make mistakes (a lot), as do tax preparers and ordinary taxpayers.

Whether you filed your taxes on your own or hired someone else to do it for you, it is important to examine your return and compare what you find with what the IRS is claiming. It pays to seek professional help for this tax review, even if you originally filed your own taxes. A professional with IRS experience may be able to uncover errors and inconsistencies you would have missed on your own, and that could end up saving you money.

There is no guarantee this review will eliminate the extra taxes the IRS says you owe, but it never hurts to be sure. There have been many cases in which taxpayers who thought they owed money to the IRS ended up owing nothing – or even being due a refund from the IRS.

Set Up a Payment Plan

Getting a notice of additional tax due from the IRS is frightening, especially if you cannot afford to pay what the agency says you owe. Keep in mind, however, that you do not necessarily have to pay the bill all at once.

The IRS is often willing to set up payment plans with taxpayers, and those payment plans could make paying what you owe easier and less stressful. Once again, it is a good idea to seek professional help and guidance here – the IRS can drive a hard bargain, and you do not want to end up with a payment plan you cannot afford and wind up defaulting on it.

If you fall behind on the payment plan you agreed to, you could be subject to additional enforcement action, including the tax agency garnering your paycheck or seizing funds from your bank accounts. Getting the help of a tax resolution professional up front can help you avoid these serious consequences.

Explore an Offer in Compromise Settlement

If you are truly unable to pay the money the IRS claims you owe, you may be able to work out a (much) smaller lump sum payment. The IRS may not advertise this program, but they are often willing to work with taxpayers by accepting lesser amounts, especially if those taxpayers have little in the way of equity in assets and a limited income. Sometimes these settlements can be for a fraction of what’s owed, if you qualify.  We offer a free no obligation consultation to find out if you qualify.

If you plan to explore this last option, it is critical that you work with a tax resolution expert. An offer in compromise can be extremely complicated, with legalese and language that can be difficult to understand. You do not want to make a misstep here, and you want to ensure that you are only paying the lowest amount, allowed by law, in settlement of your tax bill.

Few things are as frightening as getting a letter from the IRS. That official-looking letterhead is bad enough, but what the letter says is even worse. If you receive such a letter, you need to take positive steps right away. Ignoring the situation will make it worse and it won’t go away, and the sooner you start exploring your tax resolution options the better off you will be.

If you want the help of an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain all of your options to permanently resolve your tax problem.

Success Story: 13-Year Tax Debt of $56,129.00 Settled for $500.00!

Do you owe the IRS for several years?

We recently settled a $56,129 tax debt for a client who owed the IRS for 13 separate year periods – 2007 through 2019. Our firm negotiated a full settlement on the $56k tax debt for just $500. That’s right, this client settled their tax debts for less than 1% of their total 13-year liability.

It is pretty common for someone to come to our office owing taxes for numerous tax years.  If you owe the IRS for several different years, call our office to see whether you qualify for an IRS Offer in Compromise!