Amy Lee, EA
The IRS has announced filing and payment extensions for those affected by Hurricane Matthew. This is currently mainly in effect for Residents of North Carolina, but is expected to extend to other affected areas soon. At this time, North Carolina storm victims that have filed extensions, or have payments that would have been due after October 4, 2016, will have until March 15, 2017 to file and/or pay anything that was due during this timeframe. Many business tax deposit and filing dates are affected by this ruling as well. Click here to read the full issue of the IRS Newswire explaining the details.
Amy Lee, EA
The IRS has announced its plans to begin utilizing private collection agencies to assist in collecting on overdue federal tax balances. The new program has been authorized by a law enacted by Congress in December of 2015. The IRS states that taxpayer rights will still be protected and accounts being sent to these agencies will receive written notice in advance. The four contractors the IRS has selected are:
These private contractors will identify themselves as being contracted by the IRS to collect the taxes. These companies must still abide by the Fair Debt Collection Practices Act and again, respect taxpayer rights.
A large concern about this is that with rampant phone scams, one may be wary of receiving calls from an agency attempting to collect a tax debt. The IRS has stated that they will do everything possible to help avoid confusion.
Remember that one of the taxpayer rights is your right to a representative. If you are confused about your tax account and/or the representatives contacting you, it may benefit you to hire professional representation. Please call Compass Tax Group for a free consultation to see how we can help at 720-420-7996.
Amy Lee, EA
The IRS has just announced a new scam that involves e-mails with falsified tax bill attachments. These scams should be easy to spot because the IRS will never send you a statement via e-mail. If the IRS does send you a tax bill, it will always be via mail. Taxpayers or tax professionals who receive this scam email should forward it to firstname.lastname@example.org and then delete it from their email account.
IRS Newswire Issue Number IR-2016-123 provides further information on this matter stating:
Anyone looking to hire a tax resolution firm for help is going to be looking at price and fee structure when determining who to hire. I’m hoping to shed some light on the common practices within our industry. You may be talking to multiple people, all who tell you to, “Watch out for…”, but what should you really be looking for?
First, let’s start with the most common practice in the industry: hourly billing against the fee or retainer paid. Before hiring anyone, you will be asked to sign a service agreement. That agreement will most likely outline an hourly billing rate for the team handling your case. They will be asked by the firm to bill against the fee you paid anytime they do any kind of work on your case. This can range from opening mail, leaving messages, sending faxes, etc. If you pay a fee of $1,750, it may take only 10 hours of work to completely use that fee. That may sound like a lot, but it can add up quick when you consider letters to be faxed, phone calls to be made, financial statements to be prepared, and the sheer volume of mail the IRS likes to send. 10 hours can be used within a very short period of time. In this circumstance, if things aren’t resolved very quickly (which, let’s face it, with the IRS is a rare circumstance), you will be asked to replenish your service fee account for the work remaining on your file.
Please know, that I have nothing inherently against hourly billing. Many view this as the fair way to work on a case since no one can know exactly what it will take to resolve a balance until they begin to get involved. A lot of times, it does take a lot more work to resolve an account than anyone can be prepared for. Everyone’s circumstances vary and I believe that the associates who work hard on your case should be compensated for their time and knowledge. However, this can be stressful from a client’s perspective when their finances are already very tight. A surprise bill from the Attorney or EA working your case who says they won’t move forward until your account is replenished can add a lot more stress to an already stressful situation.
That brings me to the second type of practice; a specific and straight forward fee for a certain job. Some call this a “flat fee." However, it is important to understand how this fee structure works. An associate will quote you a fee based on the job you are hiring them for. Many factors go into the fee quote, so it is important to be as honest with the associate you are speaking with as possible. Someone who owes $50,000 and wants an Installment Agreement may be quoted a lesser fee than someone who owes $50,000 and qualifies for an Offer in Compromise. Also, amount of liability can be a factor, so be truthful when advising your associate of the amount that you owe. If you hire a company using a straight forward fee for negotiation of an Installment Agreement on a $50,000 and you pay $3,000 for that service, that company will not bill against your fee, but will instead work until they receive a determination on their Installment Agreement proposal and negotiations, regardless of how long it takes, as long as you continue to work diligently with your firm’s team to help them move the case forward. This means you need to stay in compliance, meet deadlines, and keep in communication with the team working for you.
Please note, though, that even if you hear the term “flat fee”, it does not necessarily mean that circumstances won’t arise that can add work, and thereby require additional funding. A “flat fee” does not mean that you’ve hired them for life, for any matter that may arise for you. You wouldn’t pay a mechanic to fix your transmission and then expect them to change your oil for free. On that same note, if additional work is added for your team, you will be expected to fund them for that work. For example, if your team is working diligently towards a resolution, but you, as a client, continue to grow liability and/or miss multiple deadlines (thereby hindering their ability to resolve the account), this can be considered additional work and you will be asked for additional funds for that. This should be clearly outlined in your agreement. Another example is if you hire your team specifically to handle your IRS case work, but then you ask them to also take on State tax representation. This is added work above and beyond what was in your contact, and you will be asked for additional funding. You may hire a company for business representation, and then add personal representation down the road. That is also considered additional work. However, you will likely be quoted another straight forward service fee for the added job. That being said, as long as you maintain the terms of any agreement you have, no additional funds should be asked for to complete the specific job for which you hired that company.
Compass Tax Group has opted to use the straight forward service fee policy. Our view is that our client, who is doing everything they can to help bring their account to resolution, should not be put in more of a financial hardship by being asked for more funding simply because the job is taking longer than expected. You may have an unresponsive Revenue Officer, or your account may be in queue to be assigned to someone which can take anywhere from 30 days to 1 year. In these circumstances, we won’t ask for additional funding where someone who bills on an hourly basis probably will, simply because of the amount of time it is taking to resolve your case. Some companies who do practice hourly billing may try to sell you their services by stating that companies who sell a straight forward fee policy have hidden agendas, or will come up with ridiculous reasons to ask for additional funding. I can't speak for all companies who practice this policy, but Compass Tax Group will always be clear about what our fee covers and will only discuss additional funding if the subject of additional work has arisen (such as for the reasons outlined above).
Ultimately, it is up to you as the consumer to determine which fee policy you are more comfortable with. Are you someone who truly wants to get the job done and are willing to work hand in hand with your representative to make sure that happens? If so, you should probably opt for the straight forward service fee policy and work with a company who will not bill against that fee. Regardless, I am not saying that there aren’t good companies out there who will do good work for you that bill hourly for their time; I know they are out there. You will just want to diligently research these companies to make sure you will be getting the results you want for the fee(s) you will be paying.
Amy Lee, EA
The IRS will be raising their interest rates starting April 1, 2016. The new interest rates will be:
As always, it's best to pay off your IRS liability as quickly as possible to limit the interest that will continue to accrue. But, if you need help getting into a manageable payment plan, we'd love to go to work for you! Call us at 720-420-7996 for a free consultation!
Victims of the Kentucky storms in July may qualify for certain tax relief. Certain filing deadlines have been postponed and penalty relief may also be granted for failure to deposit taxes timely. You may also be able to request copies of older tax returns without paying the normal fee in case any of your records were lost.
What a great month this has been for Compass Tax Group client resolutions!
The IRS has just announced that their interest rates are remaining the same for the 3rd Quarter of 2015. These interest rates are as follows:
IRS Newswire Issue Number IR-2015-84 also provides the following information:
You can also review the Revenue Ruling here.
I was recently lucky enough to visit some family that I have in Florida. It was beautiful weather the whole time I was there until the last day when it was starting to get rainy - their hurricane season had just started. I had been visiting from here in Colorado where it had also been very rainy for several weeks before I left. Normally I wouldn't worry except for the fact that my hometown had been destroyed by flooding less than 2 years earlier. Since then, getting a lot of rain always makes me a little on edge.
You never know when a disaster can strike, so it's important to remember how to safeguard your documents before it happens. The few states I mentioned are not the only ones that have to worry about natural disasters. This is also the time of year for tornadoes in many states and forest fires can spread to residential areas before you know it. It's important for everyone to worry about making sure their important documents are safeguarded. So, here are a few tips to make sure you are prepared.
First, you should always keep an extra set of electronic records for anything important, such as tax returns and financial statements. There are many options for keeping these records such as USB devices, CD's, or DVD's. Keep these in a safe place, like a waterproof or fireproof box, or even a safety deposit box at your local bank. Many options are also available for cloud based storage which can be a great alternative in case your storage device or computer is also destroyed.
Also, be sure to document your valuables for insurance purposes. Photographs and videotapes are helpful in the event of loss during a disaster. Check out Publication 584 for more information on documenting your valuables for emergency situations.
If you are affected by a natural disaster, you can contact the IRS at 1-866-562-5227 to speak with someone trained to handle those types of issues. The IRS may also be able to provide you with copies of tax related records, but this should not be solely relied upon as your backup source for obtaining your records; the IRS only keeps copies of records for a set amount of time before they are also destroyed. Always keep in mind that you are considered solely responsible for the safekeeping of your own records, and you shouldn't rely on your CPA or bookkeeper to keep backup documents for you.
Last, but not least, always make sure your emergency evacuation and protection plans are up to date and understood well. There's nothing more important than making sure you yourself are safe and protected during a disaster.
This information was obtained from IRS Newswire Issue Number: IR-2015-83.
Business owners, don't forget that your 1st Quarter 2015 941 Return is due at the end of this month. Make sure to have this filed and paid on time in order to avoid getting behind in this new year!