Monthly Archives: December 2016

Get Caught Up With Unfiled Tax Returns

If you haven’t filed taxes for a few years, it’s not the end of the world. Business & Financial Solutions can customize a plan of action for your particular circumstances. We can get all your unfiled tax returns prepared relatively easily.

There are approximately 6 million non-filers in the U.S every year. There are many reasons people do not file, with IRS research showing that often people do not file in years that they have status changes, like the death of a spouse or a divorce. Emotional and financial hardships are also cited as reasons that people do not file their tax returns on time. There are also people who have simply procrastinated. No matter what the reason, you need to know that the only way to deal with the back taxes is to get compliant and file your taxes.

Avoidance in filing your tax return may not have immediate and obvious consequences; it will eventually catch up with you. The IRS can make life difficult for you, but the good news is that our firm help you get caught up on back taxes. We can help determine if you need to file. If you know you need to file and are avoiding it but are avoiding it because you cannot pay the amount due on the return, the IRS offers assistance.

However, there are other options as well. You may want to find tax experts with the knowledge to advise you on all your options. They may able to provide options beyond what the IRS may give you. Options may consist of Offer In Compromise, Abatement of Penalties or setting up a payment plan with the IRS if you aren’t in a position to pay the amount due. But, the solution for your situation may not be that simple and other options may be explored. There are many problems that can arise when you don’t file your tax returns for years, including penalties and interest assessments, an IRS Tax Lien, or an IRS Tax Levy.

Regardless of your reason for not filing, file your tax return as soon as possible. You can contact a tax professional or the IRS for help with filing delinquent returns. Keep in mind that the IRS does not represent the best interest of the taxpayer, but of the Internal Revenue Service.

Unfiled returns, or back taxes is a serious matter. It can quickly get out of control. An experienced tax professional can help you resolve these issues. These include those with the IRS, and your state. This may help you avoid increased penalties and interest.

A typical case, is where a young couple, just starting life. They were off to a bad financial start. This self-employed couple had unfiled tax returns and had even accumulated several thousand dollars in IRS debt. The IRS had begun to levy funds from their bank accounts. They tried to solve the problem on their own. They tried calling one of the companies they’d heard about on late night TV commercials. But, they got nowhere. The clients were ready to give up when they called us. We were able to stop the financial bleeding and get them on the right track.

If you have already tried to resolve your issues with the IRS with little success, it may be time to try something different. Just the headaches dealing with the IRS is enough of a reason to speak with our tax experts, You may learn more about your options. Business & Financial Solutions offers help to individuals and businesses. This applies even if you are unable to fully pay their taxes. That applies to either back taxes, or those due to current or late filing. If you cannot pay your taxes, do not let this prevent you from filing because tax settlement options may be available.

Business & Financial Solutions

You can get compliant with the IRS and your state with our help. For more details contact us as quick as possible. Email us at info@bfswebsite.com, or call (855) 557-2222. We have office locations in Frederick MD, Rockville MD and Vienna VA.

Internal Revenue Service Cracking Down on Payroll Services

Employers that retain payroll services should be advised of IRS regulations, and changes, as they relate to payroll service companies. The Treasury Inspector General for Tax Administration (TIGTA) recently sent a report to the IRS, citing improvements needed to safeguard and protect employers that use payroll providers.

A TIGTA Audit Report No. 2015-40-023 states, Processes Are Needed to Link Third-Party Payers and Employers to Reduce Risks Related to Employment Tax Fraud.

The audit has triggers Internal Revenue Service’s Cracking Down on Payroll Service Providers. This crackdown may effect you as an employer, and you should know your rights. Learn about the responsibility of payroll companies, and their tax reporting obligations, and your payroll tax obligations.

The TIGTA noted that several payroll providers have not been compliant with payments and filing requirements. In simplest terms, this means that several payroll companies have impounded taxes on behalf of their client and then did not remit them to the Internal Revenue Service. The audit report also stated that processes are needed to link third party payers to employers, to reduce risks related to employment tax fraud.

TIGTA has classified four types of third party providers:

Payroll Service Providers (PSP), which have two types:

Basic PSPs that prepare signature-ready paper returns for employers to sign and file.

PSPs that also impound and pays taxes.

Reporting agents are common payroll service companies that are a type of PSP, but also file an 8655 with the IRS, process tax returns, sign as reporting agents, and impound and pay taxes.

Section 3504 agents, which file a 2678 with the IRS, report an aggregate return, and withhold and remit taxes.

Professional Employer Organizations (PEO) file a return with the PEO Federal Employer Identification Number (FEIN), and impound and pay taxes with the PEO FEIN.

The TIGTA report found that processes have not been established to link employers to third parties. Only the Section 3504 agents can be crosschecked. Also, as many PSPs know, the 8655 process is not completely accurate – and sometimes the IRS does not receive the 8655, and thus the connection is not established between the PSP and the employer. Many PSPs find this out when trying to resolve a notice and the IRS representative will not talk to the PSP since the 8655 has not been recorded by the IRS.

5 recommendations for improvement made by TIGTA

The IRS can partner with the Bureau of the Fiscal Service to develop a plan to use the Electronic Federal Tax Payment System (EFTPS) to link the PSP with an employer. IRS officials agrees with this recommendation.

The IRS can establish a program whereby employers can inform the IRS of their PEO relationship and establish a certified PEO system. The IRS partially agrees with this recommendation, but does not have a budget to enforce this program.

PEOs can attach a Schedule R (details of the individual clients) to the 941 filed each quarter. The IRS stated that they do not have the authority to require this with non-certified PEOs.

IRS Commissioner, Wage and Investment Division, can develop a process to ensure 8655s are captured in the IRS system accurately. The IRS agrees with this recommendation (PSPs, rejoice!).

A process can be developed to ensure Section 3504 agents’ indicators are accurate. The IRS also agrees with this recommendation.

Rev Procedure 2012-32 is in effect, and PSPs are required to clearly state the IRS rules for impounding and remitting taxes in writing every quarter. Employers are also encouraged to check the deposits by enrolling in EFTPS. The language must be exact or similar to the following:

Please be aware that you are responsible for the timely filing of employment tax returns and the timely payment of employment taxes for your employees, even if you have authorized a third party to file the returns and make the payments. Therefore, the Internal Revenue Service recommends that you enroll in the U.S. Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to monitor your account and ensure that timely tax payments are being made for you. You may enroll in the EFTPS online at www.eftps.gov, or call (800) 555- 4477 for an enrollment form. State tax authorities generally offer similar means to verify tax payments. Contact the appropriate state offices directly for details.

State governments, or at least some, have followed suit with the Internal Revenue Service.

Business & Financial Solutions

For additional concerns or clarity, you may feel free to schedule an appointment with our tax experts at Business & Financial Solutions. We can help you with options, best practices and consultation for the best course of action with your payroll services. Call us at (855) 557-2222, or email info@bfswebsite.com. We can schedule a teleconference, or schedule an in-person meeting at one of our convenient locations in Rockville or Frederick MD, or Vienna VA.

Form SS-8 May Help Solve Problems with IRS

You can face serious consequences if you do not know the difference between an employee and independent contractor . It could cause you to unknowingly misclassify your workers. Business & Financial Solutions has educated companies and employees on the issues affecting both sides of the working relationship. We have helped prevent and/or solve problems with IRS. Form SS-8 is used by individuals and firms. The purpose is to request a determination of the status of a worker under the common law rules for purposes of federal employment taxes and income tax withholding.

Many businesses have workers who may be classified incorrectly. Some of these workers have filed for SS-8. Some are in the in the form of a complaint. This complaint is against the employer in order to resolve self-employment tax issues. They believe that they qualify for misclassification of work status. Usually this misclassification happens when workers are classified as independent contractors, but the workers may be employees instead. It is important to know whether a worker is an employee or an independent contractor, mainly because of payroll taxes.

Some employers prefer to classify workers as independent contractors to lower costs, even if it means less control over a worker’s day-to-day activities. But the government is cracking down on businesses that classify workers as independent contractors to reduce taxes or avoid their health insurance obligations under the Affordable Care Act (ACA). The IRS believes that millions of workers have been misclassified as independent contractors. In doing so, instead of hiring then as employees, the government has been denied substantial payment of employment-related taxes.

Here are seven things every business owner should know about hiring people as independent contractors. This may or may not be preferred versus hiring them as employees.

The IRS uses three characteristics to determine the relationship between businesses and workers:

Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.

Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

Workers can avoid higher tax bills

Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding,with the IRS.

You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov. Select the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, Publication 1779,Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website. You can also call the IRS at 800-829-3676 (800-TAX-FORM).

If you find yourself stilled confused, please feel free to call Business & Financial Solutions. We answer your questions if you uncertain about the SS-8. Schedule an appointment with one of our tax experts and can help you sort through your specific issues. Our services are provided to help taxpayers and companies problems with the IRS and state entities. If you have already fallen subject to IRS problems, call us. We can help you resolve those issues. Our firm has locations in Vienna, Virginia, Frederick and Rockville Maryland. Our services are provided throughout the United States.

Costly Tax Mistakes That Individuals Make

Business & Financial Solutions is a professional firm and our goal is to simplify your life. To assist in our goals we have comprised a list of common assumptions that lead too costly tax mistakes when filing income taxes. Tax mistakes can mean much more than just a computation error. The tax code is long and complex, so it’s not surprising that wrong assumptions about preparing and filing taxes made. Correcting these assumptions or erroneous thoughts could save you money. Here are a few commonly misconstrued facts that can lead to tax mistakes, and the real story.

I CAN PAY WHAT I OWE, WAIT TO FILE MY TAX RETURN

This is not true. Whether or not you can send a payment, tax returns need to be filed by the tax deadline each year to avoid the penalty for failure to file, which is greater than the failure-to-pay penalty.

The IRS offers arrangements for installment agreements and short-term extensions if you can’t pay everything on time. The agency may waive penalties in some cases, but not interest charges on unpaid taxes. If you’re concerned that you can’t pay at all, call the IRS at 800-829-1040, or check out IRS Tax Topic 202, for more information.

IT’S ALWAYS BETTER FOR MARRIED COUPLES TO FILE JOINTLY

This is not necessarily true. Each case is different. Couples who recently lost tax breaks when they bid their dependent children goodbye may now benefit from filing separately. So might a married couple whose income is much higher or lower than last year. In some cases, the savings may be in state, not federal, taxes. So to avoid this tax mistake, ask your tax professional about the cost of comparing the options of filing your return separately and jointly.

I CAN’T CLAIM MY PARENTS AS DEPENDENTS UNLESS THEY LIVE WITH ME

No, this is a common mistake. Your parents can live anywhere. What matters is that you and your siblings pay for more than 50 percent of their living expenses. Adult children can share equally or unequally in that support, but only one child can claim the dependent-care exemption each year. Often the children give the exemption to the sibling who deals most with day-to-day issues, even if she or he doesn’t provide the most financial support. (That child must provide at least 10 percent of total support.) For more guidelines, consult IRS Publication 501.

CPAS CHARGE THE MOST TO PREPARE TAXES

Not necessarily. Certified public accountants, with their extensive training, may be considered the most costly tax professionals. But a national survey of members by the National Society of Accountants, including CPAs, tax experts known as enrolled agents, and other credentialed tax professionals, found that tax-prep fees may have less to do with the preparer’s professional designation than with the size of the firm.

A CANCELLED CHECK IS THE ONLY PROOF NEEDED FOR A CHARITABLE DEDUCTION

This is another mistake. To be eligible for a deduction, any donation of $250 or more requires a donor acknowledgement letter that specifies the amount of cash given and describes any property that was donated. The letter should also state whether the donor received any goods or services from the organization in exchange for the gift. If the letter doesn’t mention the date of the donation, a bank record or receipt will suffice.

Business & Financial Solutions

Avoid costly mistakes this tax year and consult with our tax specialists at Business & Financial Solutions. Call (855) 557-2222, or email info@bfswebsite.com.

We have convenient locations Rockville MD, Frederick MD and Vienna VA, and serve areas throughout the United States.

Get Caught Up With Unfiled Tax Returns

Business & Financial Solutions

Internal Revenue Service Cracking Down on Payroll Services

Payroll Service Providers (PSP), which have two types:

5 recommendations for improvement made by TIGTA

Business & Financial Solutions

Form SS-8 May Help Solve Problems with IRS

The IRS uses three characteristics to determine the relationship between businesses and workers:

Workers can avoid higher tax bills

Costly Tax Mistakes That Individuals Make

Business & Financial Solutions

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