Beware Of The Trust Fund Recovery Penalty

Posted on January 22, 2017 by jwoodcpa

If you are a person responsible for withholding, accounting for, or depositing or paying specified taxes including NRA withholding and employment taxes, and willfully fail to do so, you can be held personally liable for a penalty equal to the full amount of the unpaid trust fund tax, plus interest. A responsible person for this purpose can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. A trustee or agent with authority over the funds of the business can also be held responsible for the penalty.
“Willfully” in this case means voluntarily, consciously, and intentionally. You are acting willfully if you pay other expenses of the business instead of the withholding taxes.

Owe payroll taxes and can’t pay? Call me today at 813-514-2920.

You May Be Eligible For Innocent Spouse

Posted on January 22, 2017 by jwoodcpa

You may be an injured spouse if you file a joint tax return and all or part of your portion of a refund was, or is expected to be, applied to your spouse’s legally enforceable past due financial obligations.Here are seven facts about claiming injured spouse relief:

1. To be considered an injured spouse; you must have paid federal income tax or claimed a refundable tax credit, such as the Earned Income Credit or Additional Child Tax Credit on the joint return, and not be legally obligated to pay the past-due debt.

2. Special rules apply in community property states. For more information about the factors used to determine whether you are subject to community property laws, see IRS Publication 555, Community Property.

3. If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation.

4. You may file form 8379 along with your original tax return or your may file it by itself after you receive an IRS notice about the offset.

5. You can file Form 8379 electronically. If you file a paper tax return you can include Form 8379 with your return, write “INJURED SPOUSE” at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs.

6. If you are filing Form 8379 by itself, it must show both spouses’ Social Security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form.

7. Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief. This relief from a joint liability applies only in certain limited circumstances. However, in 2011 the IRS eliminated the two-year time limit that applies to certain relief requests. IRS Publication 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.

Federal IRS Tax Liens

Posted on January 15, 2017 by jwoodcpa

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:

Puts your balance due on the books (assesses your liability);
Sends you a bill that explains how much you owe (Notice and Demand for Payment); and

You:

Neglect or refuse to fully pay the debt in time.

The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property.

How to Get Rid of a Lien

Paying your tax debt – in full – is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt.

When conditions are in the best interest of both the government and the taxpayer, other options for reducing the impact of a lien exist.

Discharge of property – A “discharge” removes the lien from specific property. There are several Internal Revenue Code (IRC) provisions that determine eligibility..

Subordination – “Subordination” does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage..

Withdrawal – A “withdrawal” removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property; however, you are still liable for the amount due.

How a Lien Affects You

Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.

Avoiding an IRS Tax Lien

You can avoid a federal tax lien by simply filing and paying all your taxes in full and on time. If you can’t file or pay on time, don’t ignore the letters or correspondence you get from the IRS. If you can’t pay the full amount you owe, payment options are available to help you settle your tax debt over time.

Lien vs. Levy

A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.

Pay Your Tax Bill In Installments

Posted on January 14, 2017 by jwoodcpa

If you cannot pay the full amount you owe shown on your tax return or on a notice sent to you by the IRS, you can make monthly payments through an installment agreement. Before you apply for any type of payment agreement, you must file all required tax returns. You may be eligible for a guaranteed installment agreement.

To qualify for a guaranteed installment agreement with the IRS, the taxpayer must meet the following conditions:

Owe less than $10,000, (not including interest and penalties);
In the previous five years, the taxpayer has filed tax returns, paid taxes owed, and has not entered into an installment agreement;
The taxpayer is unable to pay the tax liability when due;
The tax liability will be paid off within three years, and
The taxpayer must pay at least the minimum monthly payment (tax liability, interest and penalties divided by 30)

John S. Wood, C.P.A., P.A.

A Tampa Bay Area CPA Firm With Offices in Tampa, St. Petersburg and Sarasota

Monthly Archives: January 2017

Beware Of The Trust Fund Recovery Penalty

You May Be Eligible For Innocent Spouse

Federal IRS Tax Liens

Pay Your Tax Bill In Installments

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