We have noticed many times that when a tax payer is trying to solve a tax problem there is a hidden factor i.e. the tax agency could be in error. It is not widely known but the IRS makes mistakes sometimes. This applies to individual and corporate taxpayers dealing with the IRS for federal income taxes or the Franchise Tax Board for California income taxes. This just adds to the complexity of the IRS debt problem.
Taxpayers have a legal right to arrange their affairs to minimize their tax liability. The following are great tax tips that a taxpayer can use when trying to solve a tax problem:
1. Keep good financial records. This is a good business practice anyway but is vital when dealing with the IRS. If you do not have good financial records or even worse missing records, then it will be difficult to defend your position when trying to solve a tax problem. It is up to the taxpayer to keep good accounting and file tax returnsso the onus is upon the taxpayers. For example, a poorly documented travel trip could result in a legitimate expense being denied.
2. Tax debt Notices from the IRS or Franchise Tax Board. If they do not make sense to you, then the notice could be wrong. However, you must take action quickly as the notices move into collection actions fairly quickly. You can try to write to them pointing out their error if you can figure it out yourself. Unfortunately tax law is quite complicated and the IRS is not likely going to bend over backwards to help you lower your taxes.
3. There is a statute of limitations regarding collections and audit. Generally the IRS has ten years to collect after an assessment has been issued. So if the tax debt is older than ten years, it may not be collectible. The other important statute of limitations is for an audit which is generally three years. However, it is recommended that you keep your financial records for at least six years as the IRS could allege that you omitted income which can extend the audit period. Again, the best defense is precise bookkeeping and accurate tax returns.
John Spurgeon is a tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates, who are both tax attorneys and CPAs, have the proven knowledge and experience to effectively solve tax problems with the IRS or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.
About John Spurgeon & Associates
John Spurgeon & Associates is a professional services firm located in Pasadena, California with a focus on tax law and related accounting services. They have extensive experience with federal and state income taxes, payroll taxes and sales taxes. They represent business, non-profits and individuals against the IRS and the Franchise Tax Board (California State Taxes). As both tax attorneys and Certified Public Accountants they offer a broad range of tax related services.
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April 21, 2015 at 4:50 AM
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