With more than $400 billion owed to the U.S. Treasury in back taxes, the Internal Revenue Service (IRS) is set to hire up to 700 new employees for tax enforcement with a push towards audits and collections.
But there’s more to the story—there’s going to be a big focus on business owners.
This can mean problems for those who have yet to resolve issues from prior years. If you have been purposely neglecting those IRS notices, then you are definitely going to want to make sure to take the proper steps to resolve things.
Failure to do so can mean a seizing of assets or more.
At Gonzalez & Arrambide, Inc., we have the knowledge and skills to help you through a tax audit—whether business or individual.
Nobody likes to deal with the emotional and financial stresses that come with the IRS breathing down their necks, so take the following steps to ensure that you are prepared for this new wave of IRS probing:
1. Be aware of your situation.
In order to understand what’s coming, you’ll need to have a good grasp on where you stand. This means reviewing all of your IRS letters, notices, and tax returns from previous years. This can help you put your financial statements in order so you aren’t blindsided by any of the agency’s requests. You might also find that there were some mistakes made by the IRS, which can help to reduce some of your debt. It’s usually a good idea to get assistance from a tax professional during these times.
2. Request a payment plan.
After you understand your situation and how much you owe, you’re going to need to put a plan together. Because paying thousands of dollars out of pocket may not be feasible for every business owner, the best approach is usually to request an installment agreement.
Depending on your agreement, the duration of the payment plan can be stretched out to as long as six years, with payments occurring on a monthly basis and interest/penalties accruing throughout the process. It should also be noted that this type of arrangement stops liens and levies.
The process should be relatively straightforward, and can be done online, if you owe less than $50,000. Just make sure to be in compliance with the agreement at all times. Violating the terms will make things worse, so be aware of the conditions set in place.
3. Act swiftly to negotiate penalties.
Failing to effectively manage your IRS debt can lead to a severe amount of penalties. Acting promptly to the notifications of the IRS can help ease the situation.
By acting swiftly, you leave yourself room for negotiating penalties, which can either lower or even eliminate them—if you can show reasonable cause. Harsh financial circumstances or the destruction of your home or business could qualify you for deductions.
There’s also a program provided by the IRS, which provides some alleviation to those who are in trouble with agency for the first time. Even if you are rejected at first, you can still appeal.
4. Other options.
The IRS has another option known as an Offer in Compromise (OIC), which releases you from some of the debt. Because the process requires disclosing an extensive amount of financial information utilizing forms 656 and 433, it’s best that you get the assistance of tax professionals like Gonzalez & Arrambide, Inc. to help you fill out the required paperwork.
The IRS does reject quite a bit of the submissions so you’ll need assistance in navigating the IRS bureaucracy.
Gonzalez & Arrambide, Inc. are your audit experts.
While it can be a nerve-racking ordeal to deal with the IRS, the accounting and tax audit experts at Gonzalez & Arrambide, Inc. know just what to do to help you get through the process with minimal headaches.
Whether during tax season, or for any other financial purpose, our CPAs can offer you quality support and protection.
Give us a call today at 956-447-9009 and let Gonzalez & Arrambide, Inc. serve you.