After engaging our services, the first goal is to get the taxpayer compliant. Compliance involves, filing the correct forms, it does not mean that the taxpayer has paid anything yet. The taxpayer must be compliant or the IRS has no reason to work with you. If you are not willing to file the forms, why should the IRS work with you? My job is to get every client compliant. Depending on how many employees the company has, the number of years that need fixed, and the organization of the accounting records will determine how much must be spent on professional fees.

I have many clients that have paid me in excess of $50,000 to get them compliant and resolve the matter. Resolution is a different topic. I doubt any taxpayer has resolution, without compliance. But compliance does not equal resolution.

If you want to know how to resolve a very complicated payroll tax case, give my office a call. We will help you resolve your tax case, for the lowest amount allowed by the law.

This is an extremely complicated process. Do not undertake this on your own. You will need the help of a trained professional. This is not for the weak of heart.

If you fail to make all of the required payroll tax deposits, you may personally owe a Trust Fund Recovery Penalty. This penalty is assessed under IRC 6672. This penalty transfers the payroll taxes from a company debt, to a personal and a company debt.

If you have made deposits, the IRS may have posted the payment in their best interest. By requesting that the IRS allocate your payments, you can potentially lower the Trust Fund Recovery Penalty. What you are doing, is building a case so that the IRS will lower the amount of Civil Penalty IRC 6672 Penalty Trust Fund Recovery Penalty.

Tax Matters Solutions, has handled several of these cases with outstanding results. If you owe back payroll taxes, and the IRS Revenue Officer wants to conduct an interview, call me immediately. We can defend you, and protect your assets.

I have settled a very very large case. I have settled a case that started in 2007. The client had not filed an income tax return, or for that matter, any tax returns in a number of years. The client owns a small business that had not filed any payroll tax forms, nor sales tax forms in a number of years. The business writes thousands of checks per year. This is the worst case scenario.

We dug into the project. The project started with a “coming to Jesus” meeting. This is the meeting where I explain to the client that there is going to be a substantial investment in accounting costs. Furthermore, there is going to be a bunch of representation hours, and that I don’t think the small business has any chance of surviving. The client owed about $1.2 million in total debt. The debt included credit cards, sales tax, payroll taxes, income taxes, penalties and interest.

The State of Indiana requires every small business to renew their retail merchant’s certificate every two years. We had to start the project by getting a trial balance for every year that the business had been open. Then we had to file the sales tax and Indiana withholding taxes. The client established an Installment Agreement with the State of Indiana, and over the course of 3+ years, he fully repaid the State of Indiana.

The client still had an IRS problem. While he may have satisfied his obligation to the State of Indiana, he had not dealt with the IRS. He was making a voluntary payment, until the IRS levied his wages. A little over a year ago, the IRS assigned his case to a local Revenue Officer. She requested financial information sufficient to complete a Form 433A. After providing the information, the IRS has granted a monthly payment of $326.

I think I take my licensing and education very serious. I want to be the best professional that I can be. I want to help the greatest number of people that I can help. If you haven’t filed a tax return, or you owe back taxes, you should contact my office. We can help, taxes and your tax problem do not need to be overwhelming. The sooner you contact my office, the sooner we can get to work for you.

Every week she went online and completed the information the IDWD needed to pay her benefits. She was working and in school while receiving her benefits. She has now completed her degree in nursing and is attempting to find a job as an RN.

June 2011, the client was contacted by an IDWD employee. This government official needed to meet with the taxpayer to go over some issues. The meeting occurred in July 2011. For the meeting the IDWD employee had prepared a spreadsheet. The spreadsheet represented wages that the client had claimed, and wages the employer had reported. The IDWD official claimed that the client’s reported wages do not match the employer’s wages, and the client was asked to make a statement. The IDWD official “coached” the client. The IDWD official told the client what to say in the written statement. The client was told to write a statement that supported the position that a calculation discrepancy existed. The taxpayer submitted information weekly, but the employer’s wages were reported every two weeks. The taxpayer’s statement affirmed what she thought the IDWD official had told her to say. November of 2011, the IDWD issued multiple rulings.

The IDWD issued a ruling for every quarter the client received benefits. At first the penalty started at 25%, then it increased to 50%, the penalties maxed out at 100% of benefits paid. The IDWD has ruled and found the client in violation of Indiana statute and has charged the client nearly $20,000 in penalties. She is also supposed to repay all the benefits that were paid to her. She now owes the Indiana Department of Workforce Development, nearly $39,000.

She cannot discharge this debt in bankruptcy. She is essentially an indentured servant to the State of Indiana. More as this case developes.

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The report and the data are from 2006. The IRS says this is the most recent data they have. That information is going on 5-6 years old. How do you manage a company that does cannot analyze current data? You cannot, plain and simple. The IRS and Congress are now upset that the underpayment trend is increasing. Don’t you think they should have know that in 2007, at least by 2008?

How can anyone make any reasonable assumptions about the collections pattern at the IRS with 5 year old data? Does anyone remember 2006? I remember 2006, that was the year that I resolved to never take on any more debt, and the debt I had I resolved to pay it off. Thank goodness that I took those fiscal actions, I had about 18 months before the economy collapsed. In those short 18 months, I was able to right my household budget and reduce the monthly overhead by consolidating, reducing interest rates and paying off principle balance.

Back to the IRS article….

Tax rates and the complexity of the tax law, are significant factors in compliance and payment. Many of my clients are just plain scared. They don’t understand the tax law, and they figure the government is out to get them, so the stop filing. Many of my clients do not understand the myriad of tax deductions, credits and rates, so they think they owe so much money, why file?

This is not a political rant, my opinion is just based on experience. If you want to increase both compliance and collections:
1 The IRS must have better processing technology. It takes the IRS 16 weeks to process anything. The IRS employees that I work with, they still access software that was implemented 25 years ago. I am pretty sure that Wal-Mart does not use 25 year old technology. If Wells Fargo, Chase and Bank of America can process several billion transactions daily, the IRS should be able to process transactions in a similar fashion.
2 Get welfare out of the tax code. No more child tax credits and no more Earned Income Credit and no more education credits. No more ideas like the Homebuyer’s credit or the electric car credit, or the energy credits. That stuff is just crony taxation.
3 50%+ of the US taxpayers do not pay any Federal Income Tax. I understand they pay Social Security and Medicare, State and Local taxes, but they have no Federal Tax obligation. If everyone benefits from the government programs and such, shouldn’t everyone have some skin in the game.
4 Corporations like GE, they have to pay more. This is not about the small to mid size companies, this is about huge multi national corporations that hide their profits overseas and employ the best accountants, lawyers and lobbyiers to reduce their tax burden.

You cannot say to a family of 5 who are working everyday to afford the mortgage and send the kids to school, you cannot say to them, “you need to pay more”. You also cannot say, “tax the rich”. Until we get past the large multi national corporations not paying their fair share and the 50% of Americans not paying any Federal Income Tax, until we correct these two inequities, compliance and collections will suffer.

The organizer helps the client know what to look for, and organize your income tax preparation. However, the tax law is complicated and many client organizers are 20+ pages long. The larger clients with many more tax issues, their organizer will be 50+ pages long.

Initially, many clients react with profound confusion and some anger. “Why should I pay you to do my tax return, when you sent me this big organizer?” I have heard that question many times. The truth is, you should be excited that your tax preparer can send you such detail regarding your tax filings. An accurate tax return starts with accurate information. The goal of the organizer is to get accurate information back from the client.

Further, because the tax law is so complicated, in order to assist the client, the firm must send out an organizer that captures as much detail as possible. If you are a client, look for your organizer in the mail next week.

First, you have to determine the amount paid for Officer’s Health Insurance. There is a law about the Subchapter S Corporation needing to gross up the officer’s payroll check to account for the cost of the health insurance. I have never understood this law, but it is the law. We as a society believe in group insurance, shouldn’t the tax law promote that as well. Why does an S Corp officer have to gross up his payroll to account for the cost.

Second, you have to determine the amount to recapture for the officer’s use of a company provided vehicle. There are tables and calculations involved in this process. But the essentially what you are attempting to do is reclassify the commuting mileage for a company provided vehicle. The travel to and from work is not deductible; therefore the officer must gross up his W-2 for that income. The firm’s employees are all covered under accountable plans, so their W-2’s do not need altered. Our employees submit their reimbursable expenses to the office manager and she reimburses them under the accountable plan.

All changes must be made, by today. If you are a semi weekly depositor, your payroll deposit needs to be made today, so that the payment will post tomorrow.

Next, do all the changes work. Are the pay items, deduction items and the withholding items all set up and do the numbers report correctly. Do the items and deductions present on the 941, 940, UC-1, WH-1, W-3 & WH-3? Nope, nope, Yep, Yep, nope & nope, looks like I have some work to do. I got all the numbers right and they all present just fine, except the W-3 & WH-3 are screwed up. I will get that fixed, but I thought it was time to write a blog article.

Based on the last couple of days, you should have hired my firm to process your live payroll, why would any small business owner want to put themselves thru this tribulation. Have a Happy New Year, remember, W-2’s and year end processing must be out by January 31, 2012

If you continue to process your company’s live payroll, I bet you are in store for some trouble. Errors on the taxpayer, errors on the government, and just plain math errors, even when your payroll is nearly perfect, it is very complicated.

We pay bi-weekly. 26 payrolls per year.

For the 26 payrolls for tax year 2011, processing of the firm’s payroll required 186 checks. We print our paychecks. I think it is important for a professional in a small business to print paper checks. I don’t always believe in direct deposit. I think that employees should receive an actual paycheck signed by the owner of the company. I guess I am just old fashioned that way.

186 checks does not count the 26 EFTPS 941 deposits, or the 4 940 deposits. The 186 checks does not include the check for the health insurance, we pay for the health insurance monthly.

The 186 check count does include, the monthly tax checks and coupons to the Indiana Department of Revenue, and the quarterly UC-1 filings and checks for the Indiana Department of Workforce Development. Don’t forget to pay the SIMPLE retirement plan, but the 186 checks includes these payments.

186 checks and all of those forms, why would any small business owner do that to himself/herself? I cannot conceive of a business owner that willingly puts himself/herself thru that, outsource payroll. Hire someone outside of your office to handle that administrative function. Hire an outside company to handle your payroll processing. You should eliminate penalties, errors in filings and the removal of a huge administrative burden. The rate for my firm to use my firm to process payroll would have cost me about $1500 per year. That price is a fantastic deal, one you should consider.