IRS Problem Resolution: Choose carefully who will assist you. American Tax Relief shut down by FTC.
*News from http://www.accountingweb.com
Federal judge shutters American Tax Relief
October 15, 2010 – You’ve probably seen the ads for American Tax Relief. They claim to provide help to beleaguered taxpayers by dramatically reducing tax debt, including penalties and interest. But chances are good you will not be seeing those ads again anytime soon.
Requested by the Federal Trade Commission, a federal judge has suspended operations at American Tax Relief, and seized some of the assets of the owners.
If the FTC is correct, American Tax Relief not only failed to help most customers find tax relief, it made their situations worse by charging them for what amounted to little or no assistance. The FTC says the company collected $60 million in fees, yet few taxpayers got actual relief.
The complaint alleges that the company’s sales pitch was hollow and without substance. Generally, the process started with the offer of a free consultation to determine whether potential customers qualify. The consultants actually were commission-based sales people, who the FTC maintained, often did not collect enough information to make an accurate evaluation. Even so, most American Tax Relief customers were deemed eligible for tax relief.
Fees for these services usually ranged from $3,200 to $25,000. In the majority of cases, customers only qualified for arrangements they could have made themselves, such as tax payment plans – which result in full payment of the original tax due – or offers in compromise.
Some taxpayers were told they qualified to have penalties and interest wiped out. However, the Internal Revenue Service stated that only in limited circumstances can this happen for those with reasonable cause of late payments, such as death or natural disaster.
On September 24, a federal judge in Chicago acted on the FTC complaint, which named American Tax Relief, Alexander Seung Hah, and Joo Hyun Park. Also named are Park’s parents, Young Soon Park and II Kon Park, who are accused of holding funds that were obtained from customers of American Tax Relief.
The judge ordered a temporary restraining order prohibiting deceptive claims, freezing the assets of the defendants, and appointing a receiver to manage the company.
This is not American Tax Relief’s first brush with the law. Federal agents in April executed a criminal search warrant at the company’s operation in Beverly Hills, California. Authorities seized a Ferrari and money from bank accounts, and filed liens on two residences, one of which was a home worth $3.4 million. FTC exhibits show that, at that time, one of the company owners was leasing a Rolls-Royce, a Bentley, two Porsches, and a Mercedes.
The FTC is actively seeking restitution for victims, urging them to call 877-FTC-HELP.
Tax tips for selling your home {Cleburne CPA Firm}
CAN TAXPAYERS HANDLE THEIR OWN CASE?
A taxpayer may always represent themselves before the IRS. However, many taxpayers find dealing with the IRS frustrating, time-consuming, intimidating or all of the above.
The disadvantages of a taxpayer representing themselves are many:
- The taxpayer does not have the professional’s expertise or know what the options are or how to get the lowest settlement allowed by law.
- 4 out of 5 Offers In Compromise (OIC’s) submitted by the taxpayer are rejected by the IRS.
- Many taxpayer-negotiated OICs offer the IRS much more than is required by law.
- The taxpayer may be too frightened, frustrated or intimidated by the IRS to effectively or comfortably negotiate a settlement.
- Most taxpayers are far happier keeping their distance from the IRS and prefer to leave the sparring to their advisors.
- The taxpayer may slip up and inadvertently make statements that can make the problem worse perhaps triggering an audit or even criminal prosecution
- Professionals know where to draw the line. The taxpayer may make statements that can create tax liability for their spouse or business associate
- The taxpayer takes valuable time away from their work and family to wrestle with their own case. Doctors, dentists, lawyers, executives, successful business owners, and other high-income taxpayers will do appreciably better paying a tax professional while they more profitably ply their own occupations.
IRS representation is a complicated field with many different laws to interpret. While any Attorney, CPA or Enrolled Agent may represent clients before the IRS, few are truly qualified to provide the knowledge, experience and negotiating skills needed to successfully represent a taxpayer before the IRS. Let us spare with the IRS on your behalf to solve your tax problem permanently, and settle for the lowest amount allowed by law.
Attorneys, Accountants, CPAs, Enrolled Agents and former IRS employees may provide valuable assistance when it comes to traditional tax accounting work. However, they may not have all of the necessary expertise, experience and negotiating skills to permanently solve your IRS matter. Solving an IRS dispute involves day-to-day administrative dealings and requires the know-how to manage the maze of IRS protocols as well as ‘top notch’ negotiating skills.
IRS Provides Tax Help, Guidance to Gulf Oil Spill Victims; Special Assistance Day Planned for July 17
The IRS is providing a special assistance day to help those tax payers that are struggling due to lost income from the BP oil leak. These tax payers should have a strong argument for financial hardship and should be able to utilize the more lenient IRS installment agreements.
Click here for more: http://www.irs.gov/newsroom/article/0,,id=224757,00.html
Info on the Small Business Health Care Tax Credit
Dear fellow tax payers-
Here are a few things to take note of on the new small business health care tax credit. The credit is ultimately geared towards small businesses that pay their full time employees on average less than $25,000 per year.
Points to remember:
• Employers must have 25 or fewer full time employees in order to be eligible for the credit.
• To qualify for the credit the company must pay for at least 50% of the health care premiums for the full time employees.
• Premiums will only qualify for the credit to the extent of the average premium for the small group market in a state.
• Tax exempt organizations qualify as well.
• Health care insurance coverage must be a group plan.
• The maximum credit is available to small businesses with less than 10 employees with average annual gross wages less than $25,000.
• Maximum credit for 2010 is 35% of the premiums paid by the employer.
Example:
Bob’s Discount Warehouse pays a total of $10,000 of the health care premiums for its 3 employees. The premiums do not exceed the average premium for the small group market in the Bob’s state and are greater than 50% of the total health care premiums for the employees. The employees’ average salary is $23,000. Bob’s Discount Warehouse would receive a business tax credit of $3,500 on its tax return (.35 * $10,000).
Regards,
Scot Jackson, CPA
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
COST vs. BENEFIT of ACCOUNTING
The opinions about the cost/benefit of accounting are as divided as the opinions between Democrats and Republicans. Some people place little to no value on the professional services of an accountant because they believe accounting is something they can do themselves, whereas others place great value on such services and are willing to spare no expense to acquire great financial statements, communication and availability, timely service, and most important monetary savings. How such extreme opposite opinions can exist about a matter as bland as accounting is puzzling.
Being an accountant who owns an accounting firm clearly slants my perspective on the matter. Taking that “into account,” let me share with you my “slant.”
Do what you do best
If you are a cabinet maker, make cabinets, if you are a doctor, heal people, and if you are a lawyer, represent people. I am an accountant; I account for things. I do not craft my own cabinets, I do not set my own broken bones, and if I must stand before a judge and jury I would not represent myself; so why do people believe they would perform any better at accounting than I would perform in their area of expertise?
Do not take the cheap route
There is a strong temptation to do things yourself when you believe it will save you money. I was tempted to create our company webpage myself. Sure… I would have to learn about search engine optimization (SEO) but how hard could it really be – I mean, they have programs that do most of the work for you. Boy, talk about needing to practice what you preach. I am confident I could have made a spectacular webpage, but what good would it do us if no one could find it? I know nothing about SEO, so I am just as confident that no one would have found our company webpage unless they were searching for the name “Lehrmann & Jackson LLC” specifically. And think about all the time I would have spent studying code and designing the page; that time could be put to much better use doing what I do best and making money doing it instead of trying to save a few bucks by doing something I am ignorant about. I am not a webpage designer, I am an accountant, so I left the webpage designing to the professional and now we have the number one spot on Google when you search for “Cleburne CPA” or a host of other phrases. Point being, I am not educated in webpage design. I have a Bachelor degree in Accounting. I have a Master degree in Accountancy. I passed a Certified Public Accountant (CPA) exam requiring 40 hours of continued professional education (CPE) every year to maintain the designation; 16 of which I devote to earning the certification of QuickBooks ProAdvisor. Do what you do best because in the end “the bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin.
Good quality accounting does not necessarily equate to expensive service.
For the same price…
You can hire a minimum wage employee to work 1 day and a half day each week, or…
Engage an entire accounting firm of Certified Public Accountants and certified QuickBooks ProAdvisors to help manage your books, minimize your taxes, and provide unlimited year-round consultation on accounting, tax, and business matters.
… If both cost about the same, which would you prefer to have?
Lessons learned the hard way
The latter group I mentioned at the beginning of this post – the people who are willing to spare no expense – realize something that the “do-it-yourself” group does not understand (yet). Many of the people willing to pay for professional accounting services do so because they were once do-it-yourselfers that learned a lesson the hard way. That lesson is, when it comes to good quality accounting, you either pay now or you pay later. You either pay for it directly because you need an accountant to clean up your books, or you pay for it indirectly in lost tax savings, less money on the sale of your business, higher interest rates on loans, or lost profits from lack of information (i.e. you should have been producing more of product A than B, but because you did not have good accounting information you did not know that, and so you produced equal amounts of A and B – thereby missing out on an increase in profit you could have easily had)
What you can expect
When you hire a Certified Public Accountant to handle your accounting and tax needs you receive a few obvious benefits.
- You do not have to hassle as much with the boring, tedious, and confusing accounting for your business or family finances.
- You have essential information at your fingertips to aid you in making the right financial decisions for your business or family.
- Receive educated advice which should result in dollars saved.
- Minimize your fear of the IRS and audits because you have “insurance” (your CPA has been helping you manage your books and prepare your taxes)
Final thoughts
Accounting is the language of business. In good times and bad times you never stop accounting for things and unless things get really bad, you usually have to pay taxes. Most people speak the language of business about as well as they speak any other foreign language, and when they try to read the language and fully comprehend what the meaning is of what they are reading the parallel continues to hold true (i.e. most people are more or less illiterate when it comes to deciphering financial statements). Rather than spend hours upon hours struggling to understand, straining to communicate, and likely misunderstanding this other language, why not hire a certified “translator” (read: CPA) to help you speak the language of business, understand the story your financial statements are telling, and make informed decisions to minimize expenses and increase profits?
In a nutshell – pay your accountant from day 1.
IRS trends audits towards small businesses
It appears that small businesses may have another woe to add to their list of concerns. Transactional Records Access Clearinghouse (TRAC), a nonpartisan research group affiliated with Syracuse University released a report on the recent audit trends of the Internal Revenue Service (IRS). The report finds that the IRS ” has reduced the number of hours agents spend auditing corporations with assets of $250 million or more by one-third since 2005 and increased the number of hours spent on audits of companies with assets of less than $10 million by 30 percent.”
Feel free to leave any comments.
-Scot Jackson, CPA
Source: http://www.tscpa.org “IRS continues audit trend away from large corporations and toward smaller businesses”
Contest for our Facebook Fans!
Lehrmann & Jackson, LLC is conducting a drawing to show appreciation to its facebook fans. Send Brandon Lehrmann or Scot Jackson a facebook message with the secret discount code “Al Capone” before 11:59 PM on February 19th for a chance to win 10% off your income tax return prep by L&J!
L&J: Giving technology a hug.
Dear fellow tax payers:
At Lehrmann & Jackson LLC, we embrace technology. For example, we have disposed of a traditional phone system and instead use individual Skype accounts, virtual PBX software, and a Google Voice phone number. Also, the majority of our clients’ data is maintained electronically with offsite backup. By using electronic federal filing, we can process federal tax returns for individuals and businesses that are outside of our geographic community. And, by utilizing a File Transfer Protocol (FTP) system and Remote Access, we are able to serve clients across the nation, having overcome the prerequisite of being local to meet their accounting and tax needs.
If you would like to become one of our clients this tax season, please do not hesitate to call.
Tax Tip:
Say “Yes” to the Dress?–A businessperson can deduct the cost of special clothing used to perform the job or needed for safety. But deductions are not permitted if the clothing is suitable for everyday wear. In a new case, a concert pianist purchased gowns, dresses and accessories to wear at her concerts. Although she did not wear any of the items outside of the venues where she performed, others might. Therefore, the district court in New York disallowed deductions for the items.
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
Scot Jackson, CPA
817.506.7679
Lehrmann & Jackson LLC 
