Liberty Financial Solutions, LLC

01/06/2024

Happy New Year! With tax season upon us, always ask your return preparer for proof the IRS received your return. The IRS has been known to lose things, and this will serve as protection in case they try and say your return hasn’t been received.

12/11/2023

IRS to allow e-signatures on certain tax forms indefinitely https://news.bloombergtax.com/daily-tax-report/irs-to-allow-electronic-signatures-on-tax-forms-indefinitely

The IRS will continue to accept electronic signatures on certain tax forms “indefinitely,” the agency announced Monday.

12/05/2023

Business Owners: Owe Back Taxes? Actionable Steps for Facing IRS Debt

Entrepreneurship can be hard. Some years are good, others are not so great. But every year, like clockwork, the IRS comes calling and asks you for what’s theirs.

Small businesses often face unexpected financial challenges. Among the scariest of these challenges is unpaid taxes. Although the IRS may appear patient initially, resting on one's laurels can be a perilous decision. Once the IRS gears into action, they are known for their relentless pursuit and uncompromising measures. They are the most brutal collection agency on the planet.

So, if you find your business in this situation, it's paramount to be proactive. Here's a comprehensive guide to help you correct the course.

1. Don’t Ignore The IRS

The first step is paying attention and taking action. You might not agree with the IRS but you can’t leave them in your pile of unread mail, or worse unopened mail. Recognize the gravity of unpaid taxes and understand that it's a liability that won't just dissipate. The sooner you confront the reality, the better you can strategize a solution.

2. Open Lines of Communication:

Ignoring IRS notices can exacerbate your situation. Instead, get proper representation from a qualified tax relief firm and have them engage with the IRS on your behalf. Firms like ours have dealt with the IRS many times before. Timely responses showcase your commitment to resolve the issue and the right firm will guide you through every step of the process.

Owing 941 payroll taxes is double jeopardy. Not only can the IRS levy and lien your business income and assets, they can pierce the corporate veil, without a court order, and go against you personally.

3. Understand Penalties and Interest:

Unpaid taxes don't just stay static; they accumulate penalties and interest over time. With current IRS interest rates hovering at 8%, compounded daily, Each day you procrastinate is costing you big time. Familiarize yourself with the accruing amounts to grasp the full scope of your liability. The more time you let pass, the higher the penalties and interest will be.

4. Consider Installment Agreements:

The IRS often allows businesses to pay their tax liabilities over a period in monthly installments. If you can demonstrate genuine inability to pay the lump sum, they might consider an installment agreement. This can help in managing cash flows and ensuring business operations aren't severely disrupted.

5. Offer in Compromise (OIC):

In specific circumstances, the IRS might accept a reduced amount to settle the entire debt. Known as an Offer in Compromise, this option is contingent on demonstrating you cannot pay the full tax liability over the remaining 10-year collection statute. The right tax resolution firm will help you explore this option if you’re qualified for the program.

6. Temporarily Delay the Collection:

If your business is in a dire financial situation, the IRS might temporarily delay their collection efforts. While this offers a short-term reprieve, it's essential to use this time wisely and strategize a long-term solution.

7. Seek Professional Assistance:

Engaging with a tax resolution firm can be invaluable. They can guide you through the intricacies of tax laws, help keep your business open, negotiate with the IRS on your behalf, and help formulate a plan tailored to your unique circumstances.

8. Preventative Measures:

While addressing current unpaid taxes is vital, implementing systems to avoid future discrepancies is equally crucial. Regularly review your finances, maintain clear records, and stay updated with tax regulations. Make quarterly estimated payments and be proactive throughout that year by creating a concrete plan with your qualified tax resolution professional.

Unpaid taxes are a looming storm cloud for any small business owner. While the IRS might seem lenient initially, their eventual intervention can be formidable. By acknowledging the debt, communicating promptly, understanding your options, and seeking professional guidance, you can navigate these challenges effectively. Remember, in the realm of taxes, proactive action is always better than reactive measures.

12/01/2023

Reminder - as 2023 draws to a close, take control of your tax situation now. Consider making charitable contributions, increasing your withholding, and increasing your contributions to your retirement account to name a few…

11/20/2023

IRS Is Boosting Its AI Efforts. Lawmakers Cautiously Applaud.

As this article indicates, the IRS is planning to use "AI" to determine audit section. Given the IRS' track record for picking on certain individuals and groups, what could go wrong?

https://news.bloomberglaw.com/ip-law/irs-is-boosting-its-ai-efforts-lawmakers-cautiously-applaud

Lawmakers focusing on the use of artificial intelligence in this Congress say they’re skeptical but optimistic about how the IRS plans to use the technology.

11/16/2023

5 "Fraud" Tips Every Business Leader Should Act On!

https://www.fraudweek.com/-/media/files/fraudweek/pdfs/2023-fw-files/fraud-week---5-fraud-tips.pdf

11/15/2023

What are some of the behavioral indicators and red flag warnings of fraudsters?

https://www.fraudweek.com/-/media/files/fraudweek/pdfs/2022-rttn-behavioral-red-flags-of-fraud.pdf

11/14/2023

How can you create an ethical workplace (or a more ethical workplace)? See below:

https://www.fraudweek.com/-/media/files/fraudweek/pdfs/2023-fw-files/fraud-week-2023-ethicalworkplaces_checklist_final.pdf

11/13/2023

Liberty Financial Solutions, LLC is proud to serve as a co-sponsor of the ACFE's !

See the link below for information on how to protect yourself from check fraud.

https://www.fraudweek.com/-/media/files/fraudweek/pdfs/2023-fw-files/fraudweek2023_checkfraudinfographic_final.pdf

11/10/2023

The Last Page

Check out The Last Page's latest video on YouTube previewing Episodes 1 and 2 of Season 1.

Is Genesis the only book in the Bible that talks about the Garden of Eden?

Watch this video to find out. Please like, smash, and subscribe!

https://youtu.be/Zh-WZVEcE-I

11/08/2023

Understanding Tax Penalties: How They Accumulate and Ways to Minimize Them

When filing your taxes, one misstep and you might find yourself facing tax penalties and interest that can quickly accumulate, adding strain to your financial situation. The aim here is to demystify tax penalties, how they accumulate, and ways to minimize or avoid them.

One thing to note is that the IRS charges interest (currently at 8%) on penalties, making these penalties on top of your original tax debt that much more costly.

To get out of this situation you need a qualified tax resolution expert on your side, fighting on your behalf and negotiating with the IRS. If you find yourself owing $10,000 or more to the IRS or state, reach out to a tax resolution professional to learn your options.

Let's jump into the types of penalties the IRS can assess on top of your tax debt.

Common Tax Penalties

Failure-to-File and Failure-to-Pay Penalties often go hand in hand. Failing to file your tax returns on time or failing to pay your owed taxes can lead to these penalties. Among the two, the failure-to-file penalty is usually more severe, underscoring the necessity of filing your tax returns even if you are unable to pay the taxes that are owed immediately.

Accuracy-Related Penalties are triggered when there are discrepancies in the income reported or errors in the tax returns filed. This category includes negligence, substantial understatement of tax, and overvaluation of property claims. These penalties emphasize the importance of accurate and honest reporting. Sadly, if you're ever under audit, the IRS will at a minimum assess the negligence penalty almost automatically; no questions asked.

Also, when a check issued to the IRS bounces, a Penalty for Bad Checks or Electronic Payments is levied based on the amount of the check.

Employers are required to withhold and remit employment taxes to the IRS. Late Payment of Employment Taxes can result in penalties that escalate over time. Employers are required to pay these taxes in the right amount, on time, and in the right way. Failure to do so can be costly, starting at 2% but going as high as 15% depending on the timeline.

Self-employed individuals or those with other non-wage income are required to make estimated tax payments throughout the year. A Penalty for Underpayment of Estimated Tax may be assessed if these payments are not made or are insufficient.

The Accumulation of Penalties

Also worth noting is that tax penalties can have a compounding effect over time. For instance, the failure-to-file penalty starts accruing from the day after the tax filing deadline and grows with each month the return remains un-filed, until the penalty reaches its maximum limit. The same mechanics apply to other penalties like the failure-to-pay penalty, which underscores the importance of addressing tax issues promptly to prevent an accumulation of penalties.

Strategies to Minimize or Eliminate Tax Penalties:

Filing on time is a simple yet effective strategy to avoid the failure-to-file penalty. Even if you can't pay your taxes, filing on time can save you from the failure to file penalty.

Utilizing payment plans offered by the IRS can also help manage tax debts in a structured manner, thereby avoiding the failure-to-pay penalty. These installment agreements allow taxpayers to pay their tax debts in manageable monthly installments.

If full payment is not possible, paying as much as you can by the due date can further reduce the total penalties and interest accrued. This proactive step can also demonstrate good faith, which may be beneficial in negotiations with the IRS down the line such as if you issue an Offer in Compromise or a Partial-Pay Installment Agreement.

Engaging a tax relief professional can provide valuable insights into your tax situation, helping to make informed decisions that minimize penalties. Their expertise can be instrumental in navigating the complex tax landscape.

The IRS might provide penalty abatement for reasonable cause or under the first-time penalty abatement policy. It’s worthwhile to explore this option, and a tax professional can guide you on the eligibility criteria and the process involved.

Tax penalties can add a significant burden, but with a proactive approach and a solid understanding of tax regulations, they can be minimized or avoided altogether. Engaging a tax relief professional can provide personalized advice and assistance, ensuring you remain compliant while minimizing your tax burden.

11/07/2023

New IRS R&E Rules Risk Stifling Software Innovation for Startups
https://news.bloombergtax.com/tax-insights-and-commentary/new-irs-r-e-rules-risk-stifling-software-innovation-for-startups

In this week’s column, tax expert Andrew Leahey writes that new IRS guidance requiring more software development expenses to be amortized could harm innovation and add a legal gray area.