Author Archives: Carol Coburn

Rhyme or Reason to IRS Penalties for Late Filing?

 

Karla Renée Bennett, MBA                       Kevin H. O’Leary, CPA       Renée A. Green, CPA

 

Rhyme or Reason to IRS Penalties for Late Filing?

 

MY Filing deadline is NOW!  I don’t have all my tax information!    I will wait until I get my other information…

 

This will put you in a late filing status and cost you much more money!  Penalties for late filing of a tax return can be very steep whether you owe more in tax or not. Examples of not owing but still costing high penalties are: Partnerships and Sub-Chapter S Corporations with no tax; the late file penalty is $195 per month per partner or shareholder. (ex. 4 Owners x $195 = $780 ea. mo. late filed)

 

The simple and best thing to do is to file an extension. You don’t need a reason at all if filed on time. You can do it yourself or have a tax professional file your extension at any time up to the filing deadline.  After the extension you may file your return any time before the next deadline! Better not to wait until the last minute before your extended deadline.  File ASAP after extension!

 

I owe but I don’t have the money to pay my taxes due!   I will wait until I have the funds…

 

Again the late filing penalty will jump up to bite you.   In addition you increase the penalties by adding failure to pay penalties.  This means two penalties for late filing!

 

The first failure to pay penalty is applied to failing to have sufficient withholding on wages or failure to make sufficient quarterly payments. If you have a balance due to the IRS of $1,000 or more, this penalty will apply. The second penalty applies if you fail to pay or make appropriate arrangements by the tax filing deadline. Note that if you extend your filing deadline, you do not extend the payment due date.

 

In this case, the best thing to do to avoid problems is to make arrangements to pay the balance due in installments. The IRS makes installment arrangements fairly easy and the terms are actually very reasonable. Note that any balance due will generate interest until paid. You or your tax professional can set up an installment plan and submit it with your tax return.

 

I have a letter from the IRS!   I am too afraid to open it…

 

Don’t take an IRS letter lightly!  Open it and act on it immediately. Do not wait until the deadline date to act on the letter!  Remember that the IRS is looking for the money you owe.  They do not want to put anyone in jail unless they owe an exceptionally high tax debt. Call them or take your letter to a tax professional and you’ll reduce adding to your anxiety through ignoring the problem.  It will not just go away.  The IRS will become more demanding and possibly garnish your income directly from its source!

 

What’s the best approach to dealing with the IRS?  I am unsure…

 

You should always seek to comply with the tax laws. Many people thought they could ‘get away with it’ and we often read about them in the news. If you think you are in a difficult situation, trying to comply with the law, a tax professional like the ones found at our firm will be able to guide you in the best way to work out the tax problem.

FOR HELP WITH YOUR TAX CONCERNS CONTACT US TODAY!

Ten Tips for Choosing a Tax Preparer

Karla Renée Bennett, MBA                   Kevin H. O’Leary, CPA              Renée A. Green, CPA

IRS Tax Tip 2018-02: Ten Tips for Choosing a Tax Preparer

Obtained from IRS.gov

It’s the time of the year when many taxpayers choose a tax preparer to help file a tax return. These taxpayers should choose their tax return preparer wisely.  This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return.

IRS Tips for taxpayers to remember when selecting a preparer:

  1. Check the Preparer’s Qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.
  2. Check the Preparer’s History. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to the verify enrolled agent status page on IRS.gov or check the directory.
  3. Ask about Service Fees. Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information.
  1. Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit.
  1. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 17 due date. Avoid fly-by-night preparers.
  2. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.
  3. Never Sign a Blank Return. Don’t use a tax preparer who asks a taxpayer to sign a blank tax form.
  4. Review Before Signing. Before signing a tax return, review it. Ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. Review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return.
  5. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN.
  6. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.

 

GO TO CPA-ME.COM CLICK ON   IRS  LINK FOR Additional IRS Resources such as:

How to Make a Complaint About a Tax Return Preparer                         How to Report Suspected Tax Fraud Activity