Category Archives: Dealing With The IRS

Tax Assessment Appeal – Paul Gaulkin CPA

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Generally, different assessments can be appealed at different times. Below we will list these assessments and when they can be appealed by a taxpayer. Pre-Assessment Appeal The following penalties can be appealed by a taxpayer prior to assessment by the IRS: 1. Penalties asserted by the IRS in the course of examining a taxpayer’s return. This is generally considered the accuracy related penalties subject to the deficiency assessment procedures. 2. Trust fund recovery penalties and preparer penalties. 3. Intentional disregard … Read more

Failure to File Penalty Exceptions – Paul Gaulkin CPA

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When a taxpayer does not file a return with the IRS, they will be subject to a failure to file penalty unless of the following exceptions pertains to their situation: 1. Death, Serious Illness, or Unavoidable Absence – If any of these situations involve an individual, the circumstances cover both the taxpayer and their immediate family. In terms of a corporation, estate, or trust, the death, serious illness, or unavoidable absence has to happen to the person that has sole … Read more

Form 656 Instructions (Offer in Compromise) – Paul Gaulkin CPA

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Once the amount of the offer has been determined, Form 656 (Offer in Compromise) should be completed. It is important to remember that the IRS will only process applications that have been filed out on the most current Form 656. It is extremely crucial that the form be filled out as carefully as possible. The IRS will not process any application for an Offer in Compromise that has errors within it. It is important for any taxpayer to read the … Read more

IRS Operating Divisions – Paul Gaulkin CPA

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The IRS is composed of many different operating divisions that oversee different management functions. Below we will list the main divisions that a taxpayer or business would deal with. Wage & Investment Income Division The wage & investment income division deals with individual taxpayers who only receive wage and/or investment income. In most cases, a taxpayer will only deal with this division once a year when they are filing their tax return. 88 million taxpayers file their tax return annually … Read more

Innocent Spouse Relief Abuse Defense – Paul Gaulkin CPA

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In some cases, a spouse may have been forced to sign a return through physical or mental abuse. The courts have ruled in the past that this is a reasonable defense when claiming innocent spouse relief assuming that there is proof that the abuse actually took place. Records of any police report filed with the proper authorities or medical treatment records should be obtained as proof in the event a taxpayer wishes to seek relief under the innocent spouse abuse … Read more

Substantial Understatement Penalty – Paul Gaulkin CPA

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In the case that a substantial understatement of income tax is evident on a tax return, a 20% penalty will be imposed according to IRC Sec. 6662(b)(2). There are however, a few defenses that can be used against the 20% penalty, these defenses include: 1. Insubstantial understatement defense 2. Substantial authority defense 3. Adequate disclosure defense 4. Reasonable cause/good faith defense In most cases, the best defense in the disclosure defense. In order to use the disclosure defense, the disclosure … Read more

Withdrawal of Federal Tax Lien – Paul Gaulkin CPA

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In certain situations, the IRS may withdraw a public notice of tax lien prior to the taxpayer paying the liability in full. Some of these situations include: 1. The filing of the notice was premature or otherwise not in accordance with the administrative procedures of the IRS. 2. The taxpayer has entered into an installment agreement with the IRS to pay off the liability. 3. The withdrawal will allow the taxpayer to pay the liability. 4. The taxpayer or the … Read more

Levy on Intangible Property Form 668 – Paul Gaulkin CPA

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When it comes to levying intangible property from a third party of the taxpayer, the IRS will generally use one of two forms: 1. Form 668-W (Notice of Levy on Wages, Salary, and Other Income) – This form is used to levy on wages or salaries for personal services, or in some cases for accounts receivable for personal services performed in a work relationship. 2. Form 668-A (Notice of Levy) – This form is used to levy on all other … Read more

Changing an Accepted Offer in Compromise – Paul Gaulkin CPA

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Sometimes, a taxpayer may wish to change or add additional years to their already accepted Offer in Compromise. This can arise from many different situations, one being a taxpayer’s inability to pay the balance on a subsequent filed tax return when something unforeseen happens. Submitting Changes In order to submit a change to an accepted Offer in Compromise, the taxpayer must send their request to the IRS in writing but another Form 656 is not required and the taxpayer does … Read more

Calculating Income for Delinquent Tax Returns – Paul Gaulkin CPA

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In the case of delinquent tax returns, the taxpayer may need to use unconventional methods to calculate the income they had earned in prior years. There are many different methods available to the taxpayer depending on factors such as the availability and adequacy of the taxpayer’s books and records. Methods for Calculating Income The primary methods for the taxpayer to calculate their income in regard to filing their delinquent tax returns include: 1. Indirect bank deposit method 2. Indirect expenditure … Read more