Yourself
If you are confident in your tax knowledge abilities, and are involved with a basic return, this method may be your best choice. Be certain you are current with your IRS tax laws, though. Be prepared for any items the IRS may question you on. Be prepared, also, to explain your treatment of any item in question. I would say beware of representing yourself, ANYTHING YOU SAY CAN AND WILL BE USED AGAINST YOU. THE IRS WILL WIN THIS BATTLE.
A Company (RECOMMENDED)
IRS Form 8821 (Tax Information Authorization) names a representative for you. You are only authorizing this person, your representative, to receive information for you. He or she cannot fully represent you at the audit since they cannot take any action on the information they receive. You may still want to have this person along at an audit, though.
Actual representation (RECOMMENDED)
You will fill out and file IRS Form 2848 (Power of Attorney) when you want to have someone else fully represent you at the IRS audit examination. You do not have to be present. Here, you name your rep. The rep is fully authorized to represent you and take any action necessary. This includes signing an agreement for a deficiency or over assessment of tax to conclude the case. An example of individuals having the power of attorney includes CPAs, enrolled agents, and tax attorneys. These individuals must be allowed to practice before the IRS.
You may want to have actual representation when you are too emotionally involved in the audit to provide competent self-presentation, when you are uncertain as to handling other issues that may arise, the tax law is too complicated or you do not fully understand it, and highly technical supporting information may be required.
Also, the IRS will stop and reschedule an audit when you request a consultation with your representation (CPA, attorney, or Enrolled Agent). By hiring actual representation during an IRS audit and giving someone the power of attorney, you can save yourself from a potential IRS problem. This is especially true if the applicable tax laws are beyond your comprehension level.
Tuesday, January 22, 2008
Saturday, January 19, 2008
Pennies On The Dollar...Yeah Right!
What is an Offer in Compromise?
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:
Doubt as to liability - Doubt exists that the assessed tax is correct.
Doubt as to collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax owed.
Effective Tax Administration - There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.
O.K. lets scrap the myth that the IRS will settle your liability for "pennies on the dollar". First of all you should completely evaluate your financial positions past, present, and future before thinking about filing an OIC. Over 100,000 offers were filed in 2007. Only 11,000 were accepted. Do the math.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:
Doubt as to liability - Doubt exists that the assessed tax is correct.
Doubt as to collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax owed.
Effective Tax Administration - There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.
O.K. lets scrap the myth that the IRS will settle your liability for "pennies on the dollar". First of all you should completely evaluate your financial positions past, present, and future before thinking about filing an OIC. Over 100,000 offers were filed in 2007. Only 11,000 were accepted. Do the math.
Friday, January 18, 2008
WAIVE MY PENALTIES...PRETTY PLEASE.
My request to remove a Penalty was rejected.Should I request an appeal?
Before you begin...This tool may be helpful if the following statements apply to you.
You received a letter that a failure to file or failure to pay penalty(s) was assessed to your individual or business tax account.
You sent a written request to the Service Center asking the IRS to remove the penalty
The Service denied your request to remove the penalty (penalty abatement).
You received a Notice of Disallowance, which gives you your appeal rights
Appeals may remove (abate) your penalty(s) for any of the following reasons:
Reasonable Cause: This is relief that is generally granted when a taxpayer exercises ordinary business care and prudence in determining their tax obligation, but is unable to comply with those obligations due to circumstance beyond their control.
Statutory Exceptions: The tax law provides for specific exceptions.
Administrative Waiver: This may occur as result of a formal government directive providing penalty relief because of a natural disaster or catastrophic event.
The two most common penalties (Failure to File and Failure to Pay) considered in Appeals are addressed in this tool. If you want assistance in deciding whether to request an appeal for a penalty, then please proceed.
All in all, myth cleared. The IRS absolutely will not remove penalties unless there is reasonable cause. They will never remove interest so don't bother asking. The breath can be used for something more beneficial.
Before you begin...This tool may be helpful if the following statements apply to you.
You received a letter that a failure to file or failure to pay penalty(s) was assessed to your individual or business tax account.
You sent a written request to the Service Center asking the IRS to remove the penalty
The Service denied your request to remove the penalty (penalty abatement).
You received a Notice of Disallowance, which gives you your appeal rights
Appeals may remove (abate) your penalty(s) for any of the following reasons:
Reasonable Cause: This is relief that is generally granted when a taxpayer exercises ordinary business care and prudence in determining their tax obligation, but is unable to comply with those obligations due to circumstance beyond their control.
Statutory Exceptions: The tax law provides for specific exceptions.
Administrative Waiver: This may occur as result of a formal government directive providing penalty relief because of a natural disaster or catastrophic event.
The two most common penalties (Failure to File and Failure to Pay) considered in Appeals are addressed in this tool. If you want assistance in deciding whether to request an appeal for a penalty, then please proceed.
All in all, myth cleared. The IRS absolutely will not remove penalties unless there is reasonable cause. They will never remove interest so don't bother asking. The breath can be used for something more beneficial.
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