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Rogue Valley Tax Tips and Insights: Learning What the IRS Knows!

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Education & Training with First Response Resolution, LLC

Welcome to the Tax Tips and Insights series of First Response Resolution, LLC’s official blog! We are a specialty tax firm practicing right here near Medford in Southern Oregon. The focus of my practice is solving tax problems for individuals and businesses, IRS Representation of taxpayers, and representing taxpayers before their individual State Departments of Revenue. These services are referred to in many ways such as Tax Problem Resolution, Tax Relief Services, Tax Resolution, IRS Resolution, Tax Controversy, etc. Think of our firm as your Financial First Responders who specialize in saving troubled taxpayers. We help people who are struggling with tax problems get their lives back on track so they can focus on what matters most to them.

We wrap up the discussion on the importance of IRS Account Transcripts in this post for now. We covered many of the ways in which IRS Transcripts can be useful as well as the significance of the information contained within them when resolving tax problems with the IRS. There are times when a taxpayer may need to address unfiled returns and their records are either incomplete or simply do not exist. IRS Transcripts can be incredibly helpful in preparing the unfiled tax returns accurately when there may not be substantial documentation available from the taxpayer. Wage and Income Transcripts are a powerful tool that can be obtained from the IRS and are available for the past ten tax years of taxpayer data. These transcripts provide information that was reported to the IRS about income the taxpayer received from third parties. Information returns such as Forms W-2, the Form 1099 and 1098 series, and K-1s from pass through entities such as Partnerships and S-Corporations and even Trusts give the IRS information about the taxpayer’s income and other allocable items. We can prepare unfiled returns based on this information, even if the taxpayer has lost or failed to retain documentation of these items. Additionally, certain expenses and deductions can be taken based on estimates under the Cohan Rule in cases where the expenses must have been incurred and are reasonable under the circumstances.

IRS Transcripts are also critical in determining and calculating the various Statutes of Limitations for each tax year. There are generally three Statutes of Limitations to consider when dealing with the IRS. The Refund Statute Expiration Date (RSED) is the length of time a taxpayer can file a claim with the IRS for a credit or refund of tax paid for each tax year which is within three years from the date the tax return was filed or two years from the date the tax was paid, whichever is later. The Assessment Statute Expiration Date (ASED) is the length of time that the IRS can assess tax for each tax year, such as additional tax assessed based on the results of an audit. The assessment of tax must be made within three years of the date an original tax return was filed or three years from the due date of the return, whichever is later. If, however, a taxpayer omits more than 25% of their gross income from a tax return, the IRS will have six years from the date the return was filed to assess additional tax. The third statute that is critical is the Collection Statute Expiration Date (CSED). The CSED is generally a ten-year period during which the IRS can legally pursue collection of tax owed for that specific tax year. The CSED is suspended by various tolling events such as a bankruptcy proceeding, Collection Due Process hearing, requesting an Installment Agreement or submitting an Offer in Compromise, or submitting an Innocent Spouse Claim. When the IRS is prohibited from collecting tax, the CSED is extended giving the IRS additional time to legally enforce collection.

All of the statutes can be calculated by reviewing the dates reflected on the IRS Transcripts. Knowing these statute expiration dates is essential in determining the options available to taxpayers when attempting to resolve their debts with the IRS. We thoroughly evaluate each taxpayer’s circumstances when developing a strategy to resolve their tax problems utilizing these IRS Transcripts. In addition to these beneficial uses, after a tax problem is resolved, it can be very helpful to monitor a taxpayer’s account with the IRS through Transcript Monitoring services. Taxpayers are required to maintain compliance with the IRS after resolving their tax debts and must file and pay their taxes on time, including withholding and estimated tax payments, for a period of five years after an Offer in Compromise is accepted as well as during the time an Installment Agreement is in effect. IRS Account Monitoring can alert taxpayers when they are in jeopardy of having their payment plans terminated or their tax debt that was compromised reinstated. IRS Account Monitoring can also be beneficial if a taxpayer is concerned about identity theft, or the possibility of fraudulent returns being filed under the Social Security Number. We offer this service as a stand-alone service, even for taxpayers who currently do not have tax problems.

The IRS and taxes in general can be complicated and intimidating. If you have received IRS Notices regarding back taxes owed and are facing potential Tax Liens and Levies, it is well advised to seek competent representation when dealing with the IRS. Most people would not go to court and face litigation without an attorney, and it is in your best interest to engage a qualified representative to deal with the IRS on your behalf. If you or someone you know is in the midst of an IRS issue, contact me at either 541-293-8449, by email at zach@firstresponseirs.com, or through our website. We specialize in solving tax problems! We know how to defend taxpayer rights and will thoroughly investigate and evaluate your specific situation and consider ALL OPTIONS available to you. All discussions are kept strictly confidential, and we offer no obligation initial consultations of up to one hour.

Is your agency interested in having me speak to your team of realtors in person or over Zoom at one of your weekly sales meetings free of charge? I have a presentation developed to address the following:

  1. Taxation and your clients,
  2. Tax tips for saving on your own tax returns, and
  3. Tax Problem Solutions.

 

Contact us today!