Sometimes, you just cannot pay everything you owe when it is due. There are several options available for past due taxes amounts with both the IRS and the State of California. Not all options are available for all types of taxes. The remedies available to you (detailed as applicable for IRS; CA rules vary) include:

Installment Agreements (IA)

• Automatic (not an application process) if you owe $25,000 or less
  • Use form 9465
  • Can be completed during preparation of the tax return
  • Must pay entire debt in 5 years
  • IRS charges a fee, and interest and penalties continue to accrue
  • Generally, minimum payment is the amount you owe divided by 48
• Regular Installment Agreement
  • For amounts owed greater than $25,000
  • Must submit detailed financial statements on the appropriate forms (433 series)
  • Payments are for the remainder of the statute of limitations on the tax or 5 years, whichever comes first
• Short Pay Installment agreement
  • If you cannot make the payment calculated on the other two options
  • Follow procedure for Regular Installment Agreement
  • Monthly payment amount is the MAXIMUM they can squeeze out of you following special rules
  • We are particularly helpful and skilled at strategizing with you to understand and control the monthly payment amounts

Offer In Compromise (OIC)

• Use when an installment agreement is deemed not feasible
• Submit detailed financial statements on the appropriate forms (433 series)
• Calculate assets minus secured debts
• Calculate installment payment amount over a period of times (varies with types of OIC filed)
• Add the two calculations together to determine amount to pay
• Requires comprehensive understanding of the rules regarding the calculation process to minimize the total amount due
• We are particularly helpful and skilled at strategizing with you to arrive at the lowest possible offer amount
  • Understanding the rules
  • Understanding variances to the rules that can be negotiated
  • Fighting the IRS in regard to “phantom” assets they claim to discover
  • Rapid response to their “clarification issues”
• Beware of the large chains advertising this service
  • This is the “pennies on the dollar” concept, but remember, 99 pennies on the dollar is still pennies on the dollar
  • Not every situation qualifies for an OIC – wwill not take your money and agree to submit an OIC unless you are a strong candidate for an OIC
  • We will keep you informed of our process every step of the way
• IN TODAY'S POOR ECONOMY, NOW IS THE BEST TIME TO CONSIDER AN OIC!

Currently Not Collectible (CNC)

• Uses a special internal IRS form not available to the public (53)
• Allows for no payment in times when none of the above options can be considered
• Updated and reviewed annually until the statute of limitations expires
• Not necessarily a permanent solution

Federal Statute of Limitations

• Federal only
• 10 years from date of tax assessment (this is an internal IRS date we can get)
• Proper investigation may substantially reduce the amount you will pay
• MUST HAVE ACTUALLY FILED THE RETURNS!

Bankruptcy

• We are not bankruptcy attorneys, but we can work with you and your attorney to determine whether or not your tax liability may be all or partially discharged in bankruptcy
• You CANNOT file bankruptcy and an OIC at the same time

The IRS is increasing the rate of examination of returns at an alarming rate. Why? They have figured out that for every dollar the IRS gets in funding, they return nine to the treasury. The treasury needs money! There are many kinds of audits, and each requires a specific type of response.

Whenever you receive a notice or letter from the IRS, you should get us a copy immediately. We will help you determine the accuracy of the notice and fight for your return to remain as filed. Inefficient or inappropriate handling of audits results in increased taxes – do not try to handle this alone! We are prepared to assist you with representation for all types of audits. We even have a former IRS auditor on our team!

Several types of audits include:

What to do when you get a notice from IRS:

1. DO NOT PANIC – unless you have intentionally defrauded the government, the worst that can happen is that they will want you to pay more money – not ideal, but not that scary either
2. Call All About Numbers to advise us you received correspondence from the IRS
3. Fax, mail, email (using a scanner), or drop off a COPY of the notice
   1. If we did not prepare the return, please bring us a COPY of the return as well
   2. DO THIS ASAP! There are time limits that need to be followed
4. The correspondence will be reviewed by a preparer (yours if we prepared the return)
5. You will be contacted regarding the findings of the notice within 5 business days
   1. This does not mean the issue is resolved in 5 days
   2. This first contact MAY be just to let you know we are still reviewing your file (some cases require additional research for which time needs to be properly allocated)
   3. We will outline with you a plan of response and inform you of the fees (if any) required to handle your case
   4. We will ask you for additional supporting documentation if necessary
   5. We will ask you to sign documents allowing us to represent you
      1. Power of Attorney
      2. Engagement Letter
      3. Fee Agreement (work will not begin without a retainer)

How to organize records for presentation to the IRS

• Documents should be sorted by category first
  • These categories are determined by those listed on the IRS forms
  • Sub categories can be used to help organize large files
  • Documents include both the itemized expense (bill) and proof of payment (credit card receipt, cancelled check, line item on a statement that corresponds to the receipt)
    • Notation on the bill for how this relates to your business is helpful
    • Meal documents require the names of the persons present and reason for the meal in addition to the usual date, amount, vendor, and method of payment/proof of payment
• Within each category
  • Organize by month
  • Then by vendor
  • Use the same order for each month
• Total the category items using a calculator tape and or Excel (we prefer use of both)
• Attach the total to the front of the documents
  • IF THE TOTAL DOES NOT MATCH what you claimed it should
    • Look for more receipts
    • Verify how you arrived at your figure originally
  • Make sure the totals list is in the same order as the documents beneath
• MAKE COPIES OF EVERYTHING