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Brent C., Boulder, CO

As a long time business owner of two real estate businesses, I found myself owing a large amount of money to the IRS.  Through research on reputable firms, I found John.  With John’s help, I was able to move past poor decision making between myself and my previous accountant and work toward a resolution that I could manage.  Because of my positive results so far, I will be working with Mr. McGuire and The McGuire Law Firm to restructure my companies to eliminate costly taxation and get my cash flow back on track.  Thanks John, for the personal attention and for working with my situation.

Brent C.  Boulder, Colorado

Denver IRS Tax Problems

What is an IRS tax problem?  You may have seen or heard commercials regarding IRS tax problems, but what would constitute such a problem?  As a tax attorney I have witnessed many tax problems and the article and video below outlines and discusses these situations.

IRS Tax Audits

An IRS tax audit would certainly be considered an IRS tax problem to most individuals or businesses, especially if they were the taxpayer being audited by the Internal Revenue Service.  The IRS can audit taxpayers at random, or many tax returns that are audited are chosen because an item on the return was flagged.  For example, maybe the taxpayer’s total expenses seemed very high in relation to their total income and number of years in business.  Maybe a specific expense such as travel and/or meals and entertainment appeared high in comparison to the taxpayer’s income and other expense.  Not only is the audit a tax problem by itself, but such audit may lead to other tax problems such as the audit of additional tax periods and/or the taxpayer being assessed additional tax liabilities.

IRS Tax Liability

A tax liability would certainly be considered an IRS tax problem to all taxpayers as well.  The IRS can be a formidable creditor and has the power to file a Federal tax lien, levy bank accounts, garnish wages and even seize assets.  Additionally, the assessment of penalty and interest to the tax liability only makes it harder to repay the debt, and interest and penalty continue to accrue until the debt is paid.  The good news is, you have options to resolve such debt, such as an installment agreement, offer in compromise and other remedies & resolutions.  If you do owe a tax debt, it is recommended you work to resolve the issue as quickly as possible to prevent IRS enforcement action and the assessment of penalty and interest.  Common types of tax liabilities are outlined below.

1040 Individual Income Tax Liability:

This would mean that when you file your individual income tax return you owe an amount and have not paid such amount to the IRS.  Generally individuals accrue income tax liabilities because of the following circumstances: 1) They do not have enough federal income tax withheld.  This can be resolved by changing the number of exemptions on your W-4.  2) When an individual is self employed, they are required to pay all of the self employment tax and make estimated tax payments during the year.  Often a self employed individual is shocked at how much must be paid in self employment taxes, and when they have not made estimated tax payments, the tax bill adds up and thus there is significant tax due come April 15th that the taxpayer cannot afford to pay.  3) The taxpayer has specific transaction or 2 during the tax year and without the proper planning is not ready for the large tax bill.  For example, a taxpayer may have sold or disposed of an asset such as stock or a business interest and must recognize capital gain, or even have sold an asset (or been involved with a business that sold an asset) of which a large amount of depreciation had to be recaptured.  I have seen taxpayers receive a large sum of money through such as sale and then perhaps use the proceeds to satisfy other debts or spend the money elsewhere.  Thus, when the time comes, they have no cash to pay the tax.

941 Employment Tax Liabilities:

941 debts are a common tax liability and a very big tax problem.  Form 941 is the form used to report employment taxes.  If a business pays the net pay check to an employee but then does not pay the taxes over to the IRS, the business will accrue a 941 tax debt.  This creates a problem for the business because the IRS will look to collect the tax from the business and it creates a problem for certain individuals (typically the owners of the business) because they will be held personally responsible for the trust fund portion of the 941 debt (the trust fund portion being the employee’s share of the self employment taxes and federal withholding).  Thus, a 941 tax debt, creates an IRS tax problem for both the business and individuals within the business- kind of like a double whammy because the IRS can and will attempt to collect from the business and the responsible individuals.

IRS Enforcement- Tax Lien, Bank Levies & Wage Garnishments:

When taxes are not paid, the IRS files a Notice of Federal Tax Lien which attaches to all of the taxpayer’s assets.  A tax lien creates a problem because it impacts the taxpayer’s ability to transfer an asset without paying money to the IRS (if there is equity in the asset), and the ability to obtain lending is impacted and the taxpayer’s credit it likely to take a hit.  In addition, because the lien is public record, it is highly likely you will receive annoying solicitations from many tax companies promising to resolve your problem, but quite often, they will only take your money and leave you in a worse position.  Caveat emptor!

A bank levy issued by the IRS would certainly be an IRS tax problem unless of course you enjoy waking up to find no money in your bank account, checks & payments bouncing and your bank assessing fees for processing the levy and bounced checks.  Such a levy also indicates a tax liability, which stated above is a problem, and likely a bigger one at that!  The IRS may release or partially release the bank levy, but I have seen a taxpayer accrue hundreds of dollars in bounced check and payment fees because of a levy, and the bank can charge a levy processing fee.  Upon receipt of the bank levy the bank will hold the funds in your account up and to the levy amount for 21 days.  If the bank does not receive a release or partial release of levy in such 21 day time period, the bank will then release the funds to the IRS.

In addition to levying a bank account, the IRS can garnish wages and a wage garnishment is obviously a big problem because it cuts off your source of income.  Thus, it can be very hard to pay your everyday bills.  Moreover, as opposed to a bank levy, which is typically only a one time act of collection enforcement, a wage garnishment is continuous.  This means that each and every paycheck you receive is garnished until the liability is satisfied!  The IRS will consider releasing a wage garnishment in full or a partially release depending upon the taxpayer’s circumstances.

The above state the most common forms of an IRS tax problem in my opinion.  In general, those problems would be: 1) A tax audit; 2) A tax liability (1040, 941 liabilities or others), and 3) IRS enforcement action (bank levy and/or wage garnishment).  If you are experiencing any of these types of problems, please feel free to contact The McGuire Law Firm for a free consultation.  The video below was prepared by a tax attorney to further discuss IRS tax problems.  Please click on the link to view the video.

Denver IRS Tax Problems

IRS Tax Relief by Denver Tax Attorney

What is IRS tax relief?  Recently, I was meeting with a client and was asked this question.  When I really thought about IRS tax relief, I realized it is used generally, is subjective and thus likely has different meanings depending upon who you ask and the specific circumstances involved.  The article below has been drafted by a Denver tax attorney in an attempt to provide some examples of what a tax attorney thinks constitutes IRS tax relief.

Generally, I think of IRS tax relief as a broad statement used to explain or express the resolution to an IRS tax problem or matter.  Thus, IRS tax relief may be used to explain a situation by which a taxpayer is attempting to resolve a tax debt or has resolved a tax debt with an installment agreement or an offer in compromise.  Thus, the relief if not necessarily provided by the IRS, but allowed by the Internal Revenue Service through resolving the tax problem or issue and thus the taxpayer feeling relief that the tax problem has been resolved or is being resolved.

IRS tax relief may also come in the form of lowering a tax debt.  Maybe the tax debt is lowered because you submitted a request for a penalty abatement and the IRS has agreed to waive or abate the penalty and thus the total tax debt and over tax problem has been “relieved.”  Further, maybe the debt has been lowered because you have settled the tax debt through an offer in compromise, thus you as the taxpayer has been relieved of a portion of the tax liability.

If you are being audited by the IRS, IRS tax relief may come in the form of the IRS issuing a determination that no change will be made to your tax return, or that the IRS will allow a certain expense or agree with a specific tax position you have taken.  Perhaps you have petitioned the United States Tax Court in regards to a Notice of Deficiency or other matter and your relief comes in the form of the tax court agreeing with your position or settling the case with IRS counsel.

Thus, I feel IRS tax relief can occur in different ways and under different circumstances.  The common theme or thread of which I can tie to each case of tax relief is a situation by which a taxpayer resolves an IRS tax problem, an IRS tax debt or other IRS tax matter and thus is relieving themselves from the matter and/or liability.  As a tax attorney, I have assisted and helped many clients resolve their IRS tax problems and matters.  Therefore, I feel I have helped provide tax relief to these individuals and businesses.

If you are experiencing a problem with the IRS or having trouble with tax issues and matters before the IRS, please contact The McGuire Law Firm.  An experienced Denver tax attorney can assist you to resolve your tax problems such as tax debts and tax audits.  The McGuire Law Firm currently has law offices in Denver, Colorado and Golden, Colorado.  Please feel free to contact our law firm to schedule your free consultation.

Denver Tax Attorney IRS Tax Attorney Denver

IRS Tax Problems by Denver Tax Lawyer

Whether it be on television, radio or a billboard, it is common to hear and see advertisements for “tax problems.”  What is a tax problem?  The article below has been drafted by a tax attorney at The McGuire Law Firm to describe common “tax problems” with the Internal Revenue Service or even state taxing authorities.

 

Tax debts are a common tax problem.  These tax debts commonly arise as 1040 individual income tax debts, corporate income tax debts, employment tax liabilities and/or unemployment tax liabilities.  The tax debt alone creates a problem for the individual or the business as an additional liability, but the debts can also bring about other “tax problems” such as IRS tax liens, IRS wage garnishments, IRS bank levies, tax penalties, and interest.  These other matters are discussed below.  If you do owe money to the IRS, you have the option to repay your tax debt through an installment agreement, or you may be able to settle your tax debt with the IRS through an offer in compromise.

 

IRS collection actions can be a big problem for individuals and businesses.  If you owe money to the IRS, the IRS can levy your bank account, garnish wages and even seize assets.  Imagine receiving a letter from the bank that your bank account has been “frozen.”  When the IRS issues a bank levy, the amount of money in your bank account up and to the amount of the bank levy is “frozen” in the sense that the money is held for 21 days.  After the 21 day time period, the money is forwarded to the Internal Revenue Service as a payment towards your tax debt.  During the 21 days the bank is holding the money, you may be able to have the levy partially released or fully released depending upon the circumstances as a whole.  If the IRS does not collect the taxes owed in full, the IRS may issue another bank levy in the future to collect the tax debt.  In addition to bank levies, the IRS can garnish your wages.  Thus, not only does your employer receive a notice of levy/garnishment, which is likely to be quite embarrassing, you will not be receiving your full paychecks until the garnishment is released, reduced or the tax debts paid.  When the IRS issues a wage garnishment, a certain amount of wages are exempt from levy based upon your number of dependents and the remaining amount of your wages is forwarded to the IRS.  Generally, the amount of your wages exempt from the wage garnishment is minimal and thus the amount of wages you will receive from your paycheck is significantly less than what you are use to.  It is possible to have the wage garnishment released or reduced.  In generally, IRS bank levies and wage garnishments can be prevented by taking action.  Formalizing an installment agreement, proposing an installment agreement, submitting an offer in compromise, submitting a collection due process hearing request will act as a hold on enforcement and the IRS will not issue bank levies or wage garnishments.  Thus, by working to resolve the tax debt, generally you can prevent enforcement action by the IRS.

 

The IRS can issue tax liens through a notice of federal tax lien, which are a problem.  The tax lien attaches to all property you own and becomes public knowledge.  Thus, you will receive annoying solicitations from certain companies and even more problematic, if you were to sell property, technically, you cannot transfer proper title with the tax lien unless action is taken.  Furthermore, the IRS may receive a portion or all of the sale price of an asset because of the lien attaching to the asset.  For example, say Jeff owns a house worth $400,000, owes a mortgage of $200,000 to Chase Bank and owes the IRS $150,000.  Further, the IRS has filed a tax lien in the county where the property is located and such lien is attaching to the property.  Jeff is under contract to sell the property, and the title company will see the tax lien attaching to the property.  When the house is sold, the existing mortgage of $200,000 will be paid to Chase Bank, the IRS will be paid $150,000 and Jeff will only receive $50,000, likely less after closing fees.  Additionally, the tax lien is likely to show up on your credit report and negatively impact your credit.  Thus, tax liens are definitely a tax problem!

 

IRS tax audits are a problem for many.  Self employed individuals, those filing a schedule C with their 1040 Individual Income Tax Returns are often audited, and as of now, appear to have a higher probability of being audited by the IRS.  Many small businesses do not maintain proper records and thus may struggle to verify the expenses or other items claimed on their tax return.  If certain expenses cannot be substantiated, the IRS can disallow an expense, which would thus increase the taxpayer’s net income and create additional taxes due.  With the assessment of additional taxes, you are also likely to be assessed additional tax penalties and interest, and certain accuracy related penalties can be assessed.  An additional concern with a tax audit is that the audit of one tax period, often turns into the audit of multiple tax years.  For example, if Jeff were audited for tax year 2011 and the IRS auditor finds that Jeff cannot substantiate his meals & entertainment, travel and office supplies expenses, the auditor may make an information & document request for similar expenses for tax years 2012 and 2013. Thus, Jeff may end up owing additional taxes for three tax periods as opposed to one year.  When the IRS audits your tax return and finds a deficiency, the IRS will issue you a CP2000, also called a Notice of Deficiency.  This notice will outline the changes the IRS is proposing to your tax return or returns, and thus state the additional assessments of tax due to the proposed changes.  You have 90 days from the date the Notice of Deficiency is issued to protest the deficiency and changes before the United States Tax Court.  If you do not protest the changes, the additional taxes, penalty and interest will be assessed after the 90 day period.  If you do not protest the notice of deficiency, you may be able to change the deficiency later through audit reconsideration.  For example, maybe when Jeff was moving out of his house he finds a shoe box of receipts that would have verified his disallowed expenses.  Jeff can request audit reconsideration and may be able to have the additional assessments negated if he can now verify the disallowed expenses.  Generally, if you petition tax court in protest of the notice of deficiency, you do not have the right to request audit reconsideration.

 

Tax penalties and interest can be a big tax problem because they can increase the tax liabilities and compound the debt.  The IRS has many types of penalties that can be assessed to a taxpayer.  If you do not timely pay your taxes, the IRS can assess you the failure to pay penalty.  The failure to timely file your tax return, leads to the failure to file penalty which is assessed at 5% per month the tax return is late and maxes out at 25%.  That means if you owed $10,000 on your tax return, but filed the return 6 months late, you would now owe $12,500.  That is an additional $2,500 you now owe!  If you are required to make estimated tax payments because of your income and do not timely make such deposits, you can be assessed a penalty.  Furthermore, and as eluded to above, if you are audited and your actual income is a certain percentage above the income as stated on your tax return you may be subject to accuracy related penalties.  Of course, there are other applicable penalties, and on top of all the penalties, the IRS assesses interest on the tax debts.  You may be able to have penalties waived through a penalty abatement.  To request a penalty abatement, you must submit Form 843 to the IRS and other documentation depending upon your circumstances.

 

Unfiled tax returns or missing tax returns are a big tax problem!  First and foremost, the IRS can file a tax return for you, known as a substitute return under section 6020(b) of the Internal Revenue Code.  Further, if you owe taxes for certain periods, but have missing returns or unfiled returns for other periods, you cannot formalize an agreement with the IRS until all tax returns that are due have been filed.  The failure to timey file tax returns can also default an agreement with the IRS.  For example, if you are making payments under an installment agreement, but fail to timely file a tax return, this could default your installment agreement and the IRS could move forward with collection action.  As stated above, the penalties for not timely filing a return can amount to 25%.  This failure to file penalty is also very hard to waive or abate.  Thus, missing tax returns or unfiled tax returns create many tax problems and issues when you are trying to resolve an IRS matter.

 

A tax attorney at The McGuire Law Firm can assist you with the tax problems stated above.  From missing tax returns and IRS tax debts to bank levies and tax liens, a tax attorney can assist you in resolving your IRS matters.

 

Contact The McGuire Law Firm to speak with a tax attorney in Denver or Golden Colorado.  The McGuire Law Firm offers a free consultation to all potential clients.

 

720-833-7705  www.jmtaxlaw.com Denver Tax Attorney IRS Tax Attorney Denver

 

 

IRS Action During Government Shutdown

IRS Action During the Government Shutdown Denver Tax Attorney

As we all know, the U.S. federal government “shutdown” on October 1, 2013 due to the house and senate’s inability to pass a short term spending bill that would continue to keep the government funded.  As a Denver tax lawyer, John McGuire has been paying close attention to the impact the shutdown will have on IRS action.

This government shutdown has impacted federal agencies including the IRS.  As tax attorneys, we represent a number of individuals and businesses before the Internal Revenue Service regarding tax audits, tax debts and other federal tax controversies.  Thus, we have received a number of inquiries from our clients regarding what the IRS is doing in terms of collection, enforcement and tax audits during the shutdown.  Additionally, in many circumstances, we have been unable to contact Internal Revenue Service revenue officers, and Internal Revenue Service departments such as the automated collection division and tax practitioner hotline.

In regards to IRS federal tax liens, the IRS announced that federal tax liens are not being issued and filed during the shutdown by revenue officers and nor are they being automatically generated.  Additionally, IRS bank levies are not being issued during the shutdown.  However, certain taxpayers may have received these notices with October 2013 dates, but these federal tax lien and IRS levy notices were issued prior to the shutdown.  Certain notice that a taxpayer may be subject to a federal tax lien or IRS levy may be automatically generated and issued to the taxpayer during the shutdown.

Regarding IRS enforcement action, the only enforcement action currently occurring in non-criminal cases involves cases and situations where action must be taken now to best protect the government’s interest.  For example, if a taxpayer owes a tax debt, and the collection statute on the tax liability is in jeopardy of expiring in the immediate future, the IRS may be taking enforcement action at this time.  Regarding criminal cases, the majority of criminal tax cases continue to be prosecuted by the applicable criminal investigative departments and units.  This corresponds with the fact that most federal law enforcement agencies have continue to operate and function during the government shutdown.

If you have a tax debt with the IRS or an ongoing tax audit and have questions regarding the impact of the government shutdown, it is recommended that you contact a tax attorney to discuss your situation and circumstances.  A tax attorney at The McGuire Law Firm can assist you with  tax matter or tax problem before the Internal Revenue Service.

Contact The McGuire Law Firm and schedule a free consultation with a Denver tax attorney to help resolve your IRS tax matters.  A free consultation is offered to all potential clients.