Practical Resolutions for IRS Back Taxes and Tax Troubles: Tax Advice on the Big Biz Show

I recently provided advice about how to successfully file tax returns and avoid potential IRS back taxes during my interview on the Big Biz Show. I discussed the penalties of filing late returns and urged people to seek extensions the proper way in order to avoid failure to file penalties such as fines up to $25,000 per year and/or sentences of one year in prison per each un-filed year. Due to the current recession more people are struggling to pay their back taxes. In fact, the economy is so bad Motel 6 won’t even leave the light on anymore! Read on for more tax resolution advice from my interview.

How to Deal with Delinquent Tax Returns, Late Tax Returns, and Late Tax Filing

Question: If I have not taken care of my taxes and it’s April 14^th should I file an extension?

Answer: Yes, do an extension, but send in some money with it. That way, you avoid the failure to file penalties, and the IRS has a record that you actually filed an extension and made a good faith effort to pay something.

Question: Michael, before you mentioned that your average client is between four and eleven years behind on their tax returns. Is that accurate?

Answer: Yes. That’s accurate. I recently pulled something up on the Fox News website for Dallas-Fort Worth that said “Recent IRS statistics show that the number of people with tax debt problems is at a 10-year high. And this year alone, more than 4 million people will not be able to pay by April 15. There are currently more than 26 million people with some kind of IRS problem.”

Question: I left my return lying around the house, it wasn’t signed, and my girlfriend accidentally sent it in. So how does that work? Will I have to file for an extension?

Answer: Yes. You will need to get an extension or get a copy of the return, sign it, and send it in before the deadline or it will be considered a delinquent tax return.

Reducing your Tax Debt to Pennies on the Dollar with an Offer in Compromise

Question: Is it true you have been able to help your clients negotiate penalties down to ten cents on the dollar? You’ve obviously negotiated some fees and interest right?

Answer: Of course. When you do an offer in compromise, which is a tax settlement situation, tax penalties don’t matter because the principle is being reduced. We don’t even talk about penalties and interest when we’re doing an offer because they’re getting a reduction on the principle.

How to Avoid IRS Back Taxes–Helpful Filing Tips

Question: A lot of people think January 1^st is a fresh start. With three quarters of the year left to get my 2010 taxes in shape, what is the first thing I need to do?

Answer: Well, you’ve got to sit down with your CPA, accountant, or tax advisor and do an estimate. Do a projection for the end of the year. Do it now. At latest do it in the summer otherwise you’re going to get a surprise and it’s not going to be pretty.

Question: Is filing a Schedule C, a tax return for small business or independent contractors, a possible red flag for auditing?

Answer: If you file a Schedule C attached to your form 1040 with $100,000 or more of gross, not net, of gross income it’s five times more likely to be audited then if you were a W-2 wage earner because small businesses often co-mingle business and personal expenses.

Question: One of my daughters is about to start working. Does she have a requirement at the end of the year to file taxes with form 1040EZ at age sixteen?

Answer: She will file her own return, but will not claim herself. It will be more advantageous for you to claim her as a dependent so she’ll get the withholding back and you’ll get a bigger refund or pay less because you support her cost of living.

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For more expert advice on how to beat IRS back taxes listen to the full interview on the Big Biz Show.

Michael Rozbruch, CEO of Tax Resolution Services, is a certified Tax Resolution Specialist. To speak with our team of expert tax attorneys call our office today at 1-866-IRS-PROBLEMS or visit www.taxresolution.com and receive a free, no-risk tax resolution consultation.

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