IRS Reconsideration Guide
Learn when IRS audit reconsideration may reopen an assessment and how to present new information or challenge unresolved findings.
Disagree With the Results of an IRS Audit?
Get Help Preparing an Audit Reconsideration Request
Details of the IRS Audit Reconsideration Process
One of the most annoying aspects of dealing with the IRS is getting audited. But as annoying as audits are, there's something even worse. It's completing an audit and then having the IRS ask you to pay even more money because of a mistake or error you supposedly made.
Thankfully, there's a process that allows you to challenge the IRS' findings following an audit. It's aptly called audit reconsideration. Despite this name, this process can also be used to challenge an IRS tax assessment after it files a return on your behalf (aka substitute for return).
If you're facing an audit, dealing with a substitute for return, or even just worried about an audit, you may be wondering about the reconsideration process. Here is an overview, or to get help now, contact us at the Timothy S. Hart Law Group today.
When You Can Ask the IRS for Audit Reconsideration
You may request audit reconsideration in the following situations:
- A. You did not appear for an in-person audit or provide the information requested by the IRS during a correspondence audit.
- B. You moved and never received the IRS audit examination report.
- C. You have new information to provide the IRS that you did not present during the original audit.
- D. You disagree with the IRS' audit assessment.
Even if one of the above situations applies to you, audit reconsideration is not available if:
- 1. You already paid the IRS what they say you owe. In this case, you'll file a formal claim with the IRS asking for a refund or amend your return by using IRS Form 1040X, Amended U.S. Individual Income Tax Return.
- 2. The U.S. Tax Court or another court has issued a final decision about your tax liability.
In situations where you want to challenge the IRS in a tax matter unrelated to an audit or substitute for return, you have the option of going to court or taking advantage of the IRS appeals process.
How to Request Audit Reconsideration
The first step requires you to review the examination report and accompanying documents from the IRS to identify what you feel the IRS got wrong. You'll then find the documentation to support your position. Whatever documents you find need to contain new information that the IRS hasn't yet seen or considered.
If your request for audit reconsideration follows a substitute for return instead of an audit, then you should also file the missing return to replace the return the IRS prepared for you.
The second step involves making photocopies of documents in support of your position and writing a letter outlining your arguments as to why you want reconsideration. While there's no specific format or form for this letter, the IRS recommends that you complete IRS Form 12661, Disputed Issue Verification. You'll also want to include a copy of the examination report (Form 4549) if it's available.
In addition to the copies of documents and Forms 12661 and 4549, you want to provide daytime and evening telephone numbers, as well as the best time for the IRS to call you.
You can send your audit reconsideration request by fax or mail using the fax number or mailing address located on the examination report. If this information isn't listed on the examination report, you can call the IRS for this information. You can call 1-877-777-4778 or ask to speak with a Taxpayer Advocate, or you can call the IRS's main number at 1-800-829-1040.
If faxing your request, write the relevant tax year and your tax identification number (Social Security number (SSN), Individual Tax Identification Number (ITIN), Employer Identification Number (EIN), etc.) on each faxed page.
Common Mistakes During the Audit Reconsideration Process
To increase the chances of success and reduce the possibility of delays, there are some common mistakes to avoid. The first mistake is sending information the IRS has already seen. The point of audit reconsideration is to bring new information to the IRS' attention. Making the same arguments using the same information is unlikely to lead to a lower tax bill.
Not providing all the information necessary to support your contentions is also a commonly made mistake. If there is information or documents that can prove what you claim, include it with the audit reconsideration request. If you're lucky, waiting until the IRS formally asks for additional information or documents will only delay a final decision. If you're not lucky, the insufficient information will lead to the IRS denying the relief you request in your audit reconsideration.
A final common mistake is to wait too long to request the audit reconsideration. Even though you can make your request at almost any time after the audit or tax assessment from the substitute for return, it's recommended you do so sooner rather than later. This is to avoid additional interest and/or penalties.
These mistakes are why it's sometimes a good idea to hire a tax professional like the ones from the Timothy S. Hart Law Group, P.C. They can more quickly identify new information to support your position and prepare an audit reconsideration request that is complete and less likely to lead to delays.
Finally, as a practical matter, do not send originals when mailing your audit reconsideration request to the IRS. Doing so won't lead to delays or increase the possibility of rejection, but you won't get the originals returned to you, and you risk losing them in the mail.
How Long Does the Audit Reconsideration Process Take?
The IRS aims to make a decision within 30 days after receiving your request. This is a bit optimistic, as the IRS is often bogged down with work, so it's more likely to take 60 to 90 days. A decision could be further delayed if the IRS requests additional information. If this happens, the IRS will send you this request by letter and give you 30 days to provide the requested information.
What's the Difference Between an Audit and Audit Reconsideration?
An audit refers to the IRS' review of your income tax return to ensure the credits, deductions, and other claims or positions you make are correct and supported by the facts. In contrast, an audit reconsideration is the IRS taking a second look at any conclusions made from the audit because new information has been brought to its attention.
What Happens After the IRS Reviews My Audit Reconsideration Information?
There are three possible outcomes after the IRS reviews your information. First, they will accept all of your arguments and remove (abate) the tax assessed. Second, they will accept part of your arguments and reduce part of the tax assessed. Third, they will disagree with all of your arguments and reaffirm the initial tax assessed.
What Can I Do If I Disagree with the Outcome of Audit Reconsideration?
If you want to challenge the results from the audit reconsideration, you can either request an Appeals Conference or pay the amount due, then file a formal claim for a refund in the U.S. District Court or the Court of Federal Claims. You are not required to hire a tax professional in either situation, but it's probably a good idea. There's higher complexity at this stage and the fact that you've already been unsuccessful once when your audit reconsideration request did not turn out the way you wanted.
Get Help Now
If you're interested in discussing what an audit reconsideration tax attorney can do for you, please contact us at either of our New York City or Albany offices. Even though our tax law firm is based in the state of New York, we can help you with your IRS matter no matter which state you live in. We offer free consultations, so you have nothing to lose by giving us a call.
Frequently Asked Questions About IRS Reconsideration Guide
Answers to common questions about IRS audit reconsideration, available options, and working with an experienced tax attorney.
In some cases, yes. Exchanging one digital asset for another or using cryptocurrency to pay for goods or services can be a taxable disposition. Merely holding a digital asset or moving it between wallets you own generally is not taxable, although paying a transfer fee with digital assets can create a reportable transaction.
Form 1099-DA reports certain digital-asset sales or dispositions to taxpayers and the IRS. Broker gross-proceeds reporting generally began for transactions on or after January 1, 2025. Basis reporting is phased in for certain transactions on or after January 1, 2026. You remain responsible for reporting taxable digital-asset income, gains, and losses whether or not you receive the form.
Missing records do not remove the reporting obligation. A tax professional may be able to reconstruct transaction history from exchange exports, wallet records, blockchain data, bank records, and prior returns, then document reasonable basis and gain-or-loss calculations using the available evidence.
Most reporting problems are handled through civil tax procedures, additional tax, interest, and possible penalties. Criminal exposure generally requires evidence of willful conduct, such as intentional tax evasion or filing a false return. The outcome depends on the facts, so seek legal advice promptly if you are concerned about willfulness or an investigation.
This is a hardship designation that the IRS gives to applicants who cannot afford to pay their tax debt without suffering significant financial hardship. It pauses collection activity while the taxpayer cannot pay.
Yes. Taxpayers often use both of these terms, but they are the same type of relief.
Generally, the IRS pauses enforced collection while an account remains in hardship-based Currently Not Collectible status, and an active wage levy may need to be released. Refund offsets, lien filings, interest, and penalties can still apply.
Yes. While you are in Currently Not Collectible status, penalties and interest continue to accrue.
The IRS may periodically request documentation of your financial status. As long as you qualify for Currently Not Collectible status, the IRS will continue to pause collection efforts.
Revenue officers typically do not visit without warning, but there
are limited exceptions. They may visit your home or business to serve
summonses, assess your assets, or force communication if you have been
ignoring their attempts to reach you.
No, officers collect. Revenue agents handle IRS audits. But our firm
can help you deal with both revenue
officers and agents.
Yes. The IRS (and by extension, revenue officers) has the right to
levy accounts, seize assets, and pursue aggressive collection actions if
voluntary payment is not secured. They can't take away your state
business licenses, but they can strip all your assets so you can't
operate.
Ignoring a revenue officer is generally the worst way to handle this
situation. They may move forward with aggressive enforcement actions,
including seizing the funds in your bank account, garnishing your wages,
and seizing other assets. If you respond in a timely manner, you may be
able to negotiate a more beneficial solution.
Yes, and for many taxpayers, this is one of the main benefits of
retaining an attorney. They can avoid the stress of communicating
directly with the IRS.
The DTF generally starts by issuing notices and assessing penalties. If the notices do not result in payment or resolution, the DTF may pursue enforced collection through garnishment, levies, tax warrants, and other actions.
Yes. The DTF has legal authority to garnish wages, levy bank accounts, and seize assets in certain situations.
New York generally has a 20-year statute of limitations to collect tax debt, which is significantly longer than the IRS collection period in many federal tax cases.
In some cases, the Department of Taxation and Finance may accept an offer in compromise. However, strict eligibility requirements apply.
A tax warrant acts as a civil judgment and perfected lien on a taxpayer’s property. It protects the state’s interest in collecting the unpaid tax debt.
Yes, a tax lien is a bad thing. A tax lien is put in place to help ensure that the IRS can collect your tax debt. It gives them first claim to your property over other creditors. Should you not pay the taxes you owe or make debt settlement arrangements with the IRS, your home or other property that has a lien on it may be levied. A levy is when the IRS seizes your property. State governments, including New York State, can also file tax liens for nonpayment of taxes. People with seriously delinquent tax debt who have had federal liens filed and levies issued may have their passports revoked or denied.
The consequences of a tax lien are serious. A tax lien can be attached to almost all property, such as real estate, personal property, cash, stocks, vehicles and even future acquired assets. It can affect your ability to sell your home or other property. If you file for bankruptcy, the tax lien will often continue and be a valid issue that is not extinguished in the bankruptcy.
In the past, tax liens were also reported on consumer credit reports, which could negatively impact credit scores. This changed in 2017 with an agreement between consumer credit reporting bureaus to remove tax liens from reports. However, businesses with tax liens against property and assets may still have negative consequences to their credit scores.
How long the IRS can have a lien on you depends upon the circumstances. If you pay off your taxes, the lien will be removed within 30 days of payment. If the IRS accepts an installment repayment plan, it may remove the lien within 30 days. If you don't pay your debt, the general statute of limitations on IRS collections is 10 years.
There are limited methods to get an IRS tax lien removed if you cannot pay your debt in full. If the tax amount you owe can be reduced to below $25,000, and a direct debit payment plan has been established, the IRS will typically agree to remove the notice filing within 30 days, as long as all your tax returns are filed. Other methods that may enable you to get the tax lien removed include an offer in compromise if accepted by the IRS. Our attorney will explain possible options for getting a tax lien removed when he learns about your situation.
A tax lien withdrawal can happen after the tax lien has been released. A withdrawal is where the IRS agrees to remove the tax lien notice filing from the public records.
A protest is a written request asking the IRS to send a disputed matter to Appeals. Depending on the case, the protest may need to list the disputed issues, identify the tax periods, explain the facts, state the legal reasons for disagreement, include supporting documents, and be signed under penalties of perjury. The IRS letter usually explains whether a formal written protest, small case request, or specific appeal form is required.
Generally, no. The IRS instructs taxpayers to send the protest to the address listed in the letter that provides appeal rights. The IRS office that made the decision usually reviews the protest first and then forwards the case to Appeals if the dispute is not resolved. Sending a protest directly to Appeals can delay the case and may create procedural problems.
Yes, settlement is a central function of Appeals. Appeals may consider the facts, documents, law, litigation risk, collection alternatives, and practical resolution of the dispute. A settlement may involve compromise on liability, penalties, collection terms, or other disputed issues. Settlement is not guaranteed, and the strength of the presentation matters.
Your options depend on the type of case and the notice you receive. Some cases may proceed to the United States Tax Court, while others may require payment and a refund claim before litigation. Collection Due Process cases may preserve Tax Court review if the hearing request was timely. Because court rights are deadline-sensitive, it is important to review the Appeals outcome promptly.
Yes, if the IRS rejects an offer in compromise, the rejection letter generally explains appeal rights and the deadline. The appeal should address the specific reason for rejection and may require updated financial documents, corrected calculations, or arguments about special circumstances. Visit our page on offers in compromise for more information about tax debt settlement options.
A federal tax lien attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
The IRS pays out refunds to taxpayers every year. There are some instances in which taxpayers who neglected to file their returns for various reasons are owed refunds. However, in order to get a refund for over-paying on taxes, you first have to file your return. Though it is impossible to predict whether you will owe an amount or get a refund on your return, you must prepare and file to be certain. You may be entitled to tax credits and deductions that could help reduce your taxes. Taxpayers have the right to refunds for previously unfiled tax returns as long as they file within the three-year statute of limitations from the date the return was due.
You can see that if you fail to file your tax returns, there could be several negative effects. You could pay a lot more money to the IRS by not filing on time once penalties and interest are factored in. Besides the financial impacts, you could also expose yourself to criminal prosecution. And if you neglected to file and were owed money, you could forfeit your tax refund. Do not let the problem of unfiled tax returns linger any longer. Turn to Timothy S. Hart for assistance today.
You should recognize that the problem of your unfiled taxes will not go away and take the initiative to begin resolving the problem. If you do not and the IRS begins an investigation, you could face criminal charges. It is smart to start addressing the problem with the help of an experienced tax attorney. We will complete your unfiled returns to make sure they are accurate and file them with the IRS and the state. We will communicate with tax agencies for you. Our tax lawyer will negotiate with the IRS to arrange a workable solution for you to be able to meet your back tax obligation.
There is a general 10-year statute of limitations for collecting on an unpaid return. But the clock begins running when the IRS determines that you owe taxes and files a return for you or takes other action, or when you file the return, not when you miss the deadline for filing for that tax year. However, if your period of non-filing is longer than six years, we can often negotiate a resolution requiring that only the last six years’ returns need to be filed.
You resolve unfiled tax returns by facing the problem head on, not by ignoring it. To start the process, gather all the documentation and data you have available for the year or years you have not filed. If you are missing information, our unfiled tax returns attorney can assist you in collecting it. Usually, if you voluntarily file your past-due returns, our attorney will be able to negotiate a payment plan over time or an offer-in-compromise that reduces your taxes owed.
When you have many years of unfiled taxes, the financial and legal implications grow more complex. If you owed taxes on some or all of those years, you will now probably owe a large amount more because of penalties and interest. You might also be facing a criminal investigation if you have let your tax filings lapse for many years. When you have years of unfiled taxes, get assistance from an attorney who will help file your returns, including collecting lost and forgotten filing information, and work to negotiate a solution for paying your taxes.
Yes. You can appeal the denial if you disagree. To appeal, you will fill out another complex form (Form 13711, Request for Appeal of Offer in Compromise). However, this can be a very complicated and lengthy process. You may get frustrated while completing the formalities of this procedure, which is where our attorney Timothy S. Hart can help. Call today to arrange a free consultation about applying for an offer in compromise or getting help with the appeals process if your initial application was denied.
In addition to the payments you make with your offer, you must pay a non-refundable application fee for the amount shown on Form 656. Most recently, it is $205. You must pay the fee for each Form 656 submitted. If you meet certain low-income guidelines, or are filing based on doubt as to liability, you do not have to pay the application fee.
If you hire an offer in compromise tax lawyer, you will also pay an attorney fee. While you may want to save the money by not getting professional assistance, it can be to your great benefit to consult with a skillful tax attorney. Should you file on your own and leave out needed information or make other errors, your application may very well be returned for more documentation or be denied completely. In the event of rejection of your OIC application by the IRS, you can't reapply for the same year.
There are many payment options, but they all are variations of a lump sum cash option or a periodic payment option. The lump sum cash option requires that you submit an initial payment of 20% of your offer amount with your application. You then wait until you receive a written acceptance of your offer and then you pay the remaining balance of the offer amount.
The periodic payment option requires you to submit your initial payment with your application and continue to pay the remaining balance monthly while the IRS considers your offer. If your offer is accepted, you would continue to pay monthly until the balance is paid in full. There are additional options as well. As long as you live up to your end of the agreement, your payments will not change once your offer is accepted.
What is a good offer in compromise depends upon your case. In general, the IRS will typically accept an offer when, based upon the evidence submitted...
- The government is unlikely to collect the liability owed in full
- And the amount offered equals at least the amount that the IRS calculates it can collect from the taxpayer's 1) equity in assets such as bank accounts and other property and 2) disposable monthly income over the statutory collection period.
This determination is often referred to as the "reasonable collection potential." If your offer is too low and does not meet the reasonable collection potential, you could find your application rejected outright. Our tax attorney Timothy S. Hart, who understands the formula the IRS uses in calculating what is reasonable, can help you determine what you can afford to pay and what the IRS (or state) will accept and file the application on your behalf.
The IRS offer in compromise application filing process involves several forms that must be accurately completed. They include the following:
- Form 656, Offer in Compromise. This form is for individual and business tax debt. If you have both that you are seeking an OIC for, you will need to fill out separate forms for each. The form also contains a section where you explain your circumstances and why you should be considered for an offer
- Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individual
- Form 443-B, Collection Information Statement for Businesses]
- A non-refundable application fee of $205
- A non-refundable initial payment for each Form 656 (as needed)
For paying the application fee and initial payment for the form 656, you will get certain payment options that are Lump Sum Cash and Periodic Payment plans. You can choose any of these two payment methods as per your financial ability. Typically, the quicker you can pay the better the discount.
You will also have to submit the comprehensive details of all your income, expenditures, income sources, assets, and equity for documentation purposes. While there are instructions for filling out these forms, it is highly recommended that you seek the advice of a tax attorney familiar with the offer in compromise filing process to assist you.
The IRS will evaluate your application. If they accept your offer, the tax debt settlement process will begin. The IRS and you will come to an agreement of what maximum percentage of tax debt you can afford to pay to the IRS.
For a New York State offer in compromise, there are also complex application forms to fill out (DTF-5, DTF-4 and DTF-4.1) and documentation to provide, including copies of federal tax returns, bank account statements, retirement account statements, a credit report and other supporting information.
Even if you don't think you have enough money to pay your tax liability, it is crucial that you still file your returns. Timothy S. Hart can help guide you in this situation and will negotiate with the IRS or NYS to try and find a payment plan that may work for you. If the IRS believes you are not financially capable of making any payments at the present time, they will not accept the payment plan and may delay collecting taxes from you until you are in better financial health.
Yes. There are situations in which the IRS may not agree to a payment plan. If the taxpayer defaulted on a past installment agreement or provided financial or other information that wasn't true, they may be turned down for a tax payment plan. Or if the IRS, after reviewing the taxpayer's income and expenses, believes that some of the expenses are non-essential, the installment agreement proposal may be turned down. If this has happened to you, reach out to our tax attorney who may be able to negotiate with the IRS on your behalf or counsel you about other potential tax relief options.
Interest continues to accrue on the diminishing unpaid balance of tax debt until it is paid off. Interest on unpaid debt and penalties for late or non-payment can add up to as much as 10% per year. Our tax attorney may be able to negotiate a reduction or waiver of interest and/or penalties depending upon the circumstances, in order to get you the lowest monthly payment possible.
You do not have to work with an attorney to apply for a tax payment plan with the IRS or state. You can contact the tax agency directly and handle the process on your own. However, because tax laws are so complex and ever-changing, by working with a skilled tax attorney who has in-depth understanding of federal and NYS tax laws, you increase your chances of negotiating a more favorable installment agreement. A tax lawyer is especially beneficial if you owe a large amount of tax debt, have unfiled returns, had an existing installment agreement on which you have defaulted or have a lien against you or are being threatened with a levy.
Our attorney knows how stressful it is to owe the IRS money. Timothy S. Hart wants to help you get a tax payment plan that is workable for your individual situation. Contact us today for a free consultation.
A tax payment plan attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
If your offer in compromise is rejected, you have the right to appeal the decision but must do so within 30 days of the date on the rejection letter. If you were turned down and you are not already working with an attorney, it is very important at this stage to get legal help for your appeal. Your appeal is your chance to change the rejection to an approval, and you stand a better chance of doing that and getting the tax settlement help you need with a skilled attorney at your side. Call Timothy S. Hart in Albany at (518) 213-3445 or NYC at (917) 382-5142 to schedule a free, no-obligation consultation.
Yes—you can still apply for a payment installment plan if you were rejected for an OIC. Our attorney will work hard to negotiate a payment plan that is realistic for your financial situation.
There are situations in which the IRS may not agree to a tax payment installment plan. These generally apply in cases where taxpayers have signed installment agreements and then not made their payments or were late in making payments. If incorrect financial information was provided, taxpayers may be turned down for installment plans. In other cases, the IRS, after examining a person's financial records, may determine that some expenses are not essential and turn down installment proposals.
Our tax settlement attorney knows how stressful it is to owe the IRS money. Attorney Timothy S. Hart wants to help you discover an IRS settlement program that is workable for your individual situation. Contact our law firm today for a free consultation.
A tax settlement attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Because of the almost unlimited timeline of when tax records could potentially prove to be useful, it is always best to keep your tax records for life. Yes, it does sound like a long time -- and it is -- but it is even more painful trying to prove some fact to the IRS when you do not have the tax records available. Our attorney Timothy S. Hart represented a client who was audited in 2012 and was asked for tax documents going back to the 1980s. The client had saved the records and was able to produce them, resulting in our tax audit attorney's winning the client's case and saving them a lot of money.
There are also viable non-tax reasons to keep the records. The Form W-2 (your wage statement) can be used to verify that the Social Security Administration has the correct earnings records for you.
For a good explanation of how long to keep records, read IRS publication 552, “Record Keeping for Individuals.”
The IRS typically audits returns filed within the previous three years. They may go back six or more years if they find substantial issues. New York State follows the same general timeline for audits.
The IRS only notifies taxpayers of audit by mail. The notification letter may arrive by certified mail or regular mail. It will contain your full name spelled correctly and your social security number or tax identification number, and it has legitimate contact information for responding to the IRS.
You will not be notified of an audit over the telephone or in an email. If you receive notifications such as these saying you are being audited, it is almost certainly a scam. The scammer may try to use scare tactics to get you to pay them money right away. While being notified about a legitimate audit can provoke anxiety, the IRS and state tax authorities do not demand money over the telephone or via email and do not use scare tactics.
How long an audit takes depends upon the type of audit, reason for the audit and the complexity of the issues involved with individual returns. The availability of information requested in the audit can influence the time it takes, as can scheduling conflicts of the parties involved. If audits are appealed, that adds to the length of the process. The process may take just a few months or much longer, especially if tax authorities find relevant concerns that require them to go back to previous years' returns.
A tax audit attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
The same general payroll tax payments and tax return filing requirements apply to all active employers with employees. These withholding, payment and filing requirements apply whether you operate a corporation, limited liability company, partnership, or sole proprietorship. If you have one employee or 100, you must file payroll taxes.
Audits may be conducted by mail or in person. You might be asked about specific things the auditor wants to have addressed, or the IRS may do an in-depth examination of your business, which could include reviewing how you classify employees, interviewing employees, and looking at several years of payroll records and tax filings to discover whether you were compliant. The audit will conclude with no change to tax liability, meaning all the issues were addressed to the auditor’s satisfaction, or with a change you agree to or a disputed change. If you dispute the change, you may be able to file an appeal. Attorney Timothy S. Hart will advocate for you throughout audit proceedings and negotiate with the IRS on behalf of your business.
Any errors or inconsistencies in filing or paying payroll taxes may cause your business to be audited. Failing to file payroll taxes, inconsistently filing, or paying late, deducting the wrong amount from employee paychecks, and even making math errors in returns may flag a payroll tax audit. Sometimes, according to the IRS, a business return may be selected for audit if the taxes of a business partner with whom you had transactions are being audited. And in some cases, business returns are randomly selected for audit based on a statistical IRS formula. If you have received an audit notice from the IRS, reach out to a payroll tax lawyer who will represent your interests during the audit process.
As tax-exempt organizations, non-profits are typically exempt from federal taxes, sales tax, and property taxes. However, if your non-profit has paid employees on staff, you must withhold employee income taxes, social security and Medicare taxes and pay your portion of the latter two, just as for-profit businesses are required to do. If you have further questions about non-profits and tax responsibilities, reach out to Timothy S. Hart at our Albany office at (518) 213-3445 or New York location at (917) 382-5142.
A payroll tax lawyer can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Your own actions can determine what happens if you have back taxes. In other words, if you take action to get back taxes paid, you can reduce or avoid penalties and negative consequences. If you ignore the IRS's notices and do not take action, back taxes legal problems and significant fines can begin piling up.
Taxes that were unpaid in the year that they were due are considered back taxes. Taxpayers can owe federal, state, or local back taxes. Just because back taxes are unpaid or old does not mean that they will go away on their own.
If you owe back taxes, whether it's a couple of years' worth or more than a decade's worth, you can still file these taxes and begin making payments. There is no real limit on how many years of back taxes you can file. The longer the taxes go unpaid and unfiled, the greater the penalties and interest can become. So, it's in everyone's best interests that you manage and pay back taxes.
You may be wondering, will back taxes be forgiven under certain conditions? The IRS does not just automatically forgive back taxes. However, it does have tax debt relief programs such as partial payment agreements and offers in compromise that can make tax debt settlement more manageable. The IRS does understand that certain taxpayers are struggling, and it has advice for a variety of “what if” scenarios affecting taxpayers.
The best way to find out if you have back taxes is to check with the IRS directly. To find out, check your online account with the IRS, call them by phone, or visit a local IRS office to ask.
The process of filing an FBAR is different from filing annual tax returns. FBAR is not filed with your tax return. It is filed electronically to the Treasury Department using the BSA-E-Filing System.
If you want to paper-file your FBAR, then you need to call the Financial Crimes Enforcement Network's (FinCEN's) regulatory helpline number to request an exemption from e-filing. If they approve your request, they will send a paper FBAR form to you and you need to complete and mail that to the IRS address provided on the form.
On the other hand, if you want an FBAR lawyer or someone else to file the FBAR for you, you must use the form FinCEN report 114a. This will authorize that person to file FBAR on your behalf.
If you need help filling out the FBAR, there are FBAR lawyers in New York and elsewhere who offer their services. You can also get help filling out the FBAR from a Certified Public Accountant (CPA). Timothy S. Hart is both a skilled FBAR lawyer and a knowledgeable CPA. He is deeply familiar with what information must be given on the reporting form, as well as the online filing process and steps. He can fill out and file the FBAR for you, if you wish.
The FBAR penalty is hefty! If you fail to file your FBAR on the due date, it can lead you (as an individual or business entity) to pay a civil penalty of up to $12,921 on each non-willful violation of the filing requirement. On the other hand, if the failure to file an FBAR is found to be a willful violation, the civil penalty will be 50% of the account balance. There is also the potential for criminal penalties if your violation is found to be willful.
What happens if you never filed an FBAR and have learned you should have filed? You must take steps right away to correct the situation before you are hit with severe financial penalties and potentially criminal charges, which could happen if the IRS decides that your non-filing was willful. There is a program called the IRS Voluntary Disclosure Program that could help reduce your penalties if you are in this situation. Our FBAR lawyer can advise you of your possible eligibility for this program.
You can correct an FBAR that has already been filed. To correct an FBAR, you will need to file another complete FBAR report online with the revised information and check the "amended" box. If you don't file online, you will have to request another paper FBAR form. If you need help with amending an FBAR report, Timothy S. Hart can assist you.
You are not required to hire a lawyer to resolve your tax debt, but you are far more likely to get a beneficial solution with an experienced tax attorney representing your interests, especially if you owe a large amount of money. IRS agents are well-informed about tax laws and specialize in collecting tax debt. They also have the authority to negotiate tax debt settlements, but this is not something they will tell you up front, because they want to get as much money as possible from debt-burdened taxpayers. Experienced tax attorneys who represent taxpayers understand how the IRS operates and the power that its agents have to negotiate payments and potentially reduce debt owed. Our experienced tax relief lawyer will work hard to get you the best possible outcome.
Our tax relief attorney will help you by carefully examining all the details of your tax situation, including reviewing the accuracy of the debt you are said to owe. He will discuss your overall financial circumstances with you in order to get a clear picture of your income, expenses and other debts for the purpose of reaching a settlement with the IRS or NYS that is workable for you. He will prepare all the complicated paperwork involved and negotiate and communicate with tax authorities on your behalf.
If you don't pay your taxes on time or make tax debt resolution arrangements with the IRS, in addition to owing more in interest charges and penalties, you could have your wages garnished and potentially have your property and assets seized through a levy. If the IRS or state authorities decide that you are intentionally not paying taxes, you could also be subject to criminal prosecution. However, none of this happens in a vacuum. You will have fair warning through written and mailed notices, audits, liens and other actions that may be taken against you. If you have past-due tax debt, even from 1099-C income, reach out to Timothy S. Hart right away for help. Don't wait until you are contacted by the IRS.
If you have unfiled tax returns, you may be subject to expensive financial penalties and interest charges on the unpaid tax debt. The longer you go without filing, the more likely it is that the IRS or state will begin an investigation against you for nonpayment. The first step to take toward resolving the situation is to file all of your back tax returns, even if you have tax debt you cannot pay. The IRS and New York State have voluntary disclosure programs that allow people with unfiled returns to come clean, file their returns and pay back taxes over time if needed, in order to avoid potential criminal prosecution for tax evasion or fraud.
The IRS and state tax authorities do not want to ruin people financially or send them to jail. They simply want to collect taxes that are due or overdue, which means in many cases they are willing to negotiate payment arrangements and settlements with taxpayers. Our tax debt attorney Timothy S. Hart is skilled at negotiating effective tax debt relief solutions on behalf of taxpayers. Reach out to him today to arrange a free consultation about your situation.
A tax debt attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
A tax penalty attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
The innocent spouse relief process can be quite lengthy. After Form 8857 is submitted to the IRS, it can take up to six months before a decision is made. During this time, the IRS will carefully review the taxpayer's provided information, including contacting the non-requesting spouse about the incorrect or fraudulent income tax return or returns.
By law, the IRS must contact the non-requesting spouse, even if there are claims of spousal abuse or domestic violence. The IRS contacts the non-requesting spouse to let them be involved in the process and will inform them of determinations regarding the request for relief. The IRS does not disclose to the non-requesting spouse any personal information that does not relate to the determination.
If you don't qualify for general innocent spouse relief, separation of liability relief or equitable relief and you are unable to afford to pay the additional taxes, penalties and interest owed, you could potentially get a tax settlement that will allow you to pay less than the amount owed or qualify for an installment payment agreement. Speak to our back taxes attorney to learn about your potential options.
Individuals who are married and file joint returns with their spouse and later divorce can still be audited by the Internal Revenue Service or New York State for a return filed when they were married, because it often takes the IRS or state a year or more before they select returns to audit. Innocent spouse relief is typically for individuals who want to separate their taxes from their ex-spouse and were unaware that their spouse underpaid the taxes on their return.
If the IRS audits a taxpayer and their ex-spouse, both may be found liable and face monetary penalties. For example, the IRS can find unreported income during the audit investigation and assess additional taxes. Even when the income that caused the additional tax belongs to the ex-spouse, both spouses can be found responsible since the tax return was filed jointly. The IRS can choose to initiate collection actions against the taxpayer, their ex-spouse or both. The IRS usually proceeds against both individuals on an audit for a married filing jointly return, even if the couple is divorced.
If you are divorced and facing more taxes and penalties because your spouse provided erroneous information on a joint tax return, contact our innocent spouse relief lawyer Timothy S. Hart to learn about possible solutions to your problem.
A innocent spouse relief attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
What is considered tax evasion? The basic tax evasion definition is when people use intentional means to avoid paying taxes. Every tax evasion case is different, but some examples of possible tax evasion can include:
- Inflating deductions when filing returns
- Taking credits that you are not entitled to take
- Underreporting or hiding income when filing
- Failing to file an income tax return
- Concealing your income
- Failing to report a foreign bank account
Both individuals and corporations can commit tax evasion.
If a tax auditor or other IRS agent suspects tax fraud/evasion, they may initiate a criminal investigation against you. IRS investigators are not required to notify people that they are being investigated, so you may learn you are being investigated in other ways. If you were being audited, the auditor may stop contacting you and may ignore any attempts you make to reach them. This can indicate that your case has been handed over to the IRS criminal investigation division. Criminal investigators will gather evidence by speaking with third parties such as your accountant, perhaps you ex-spouse or others to gain information about your tax situation. They may subpoena your bank records and other financial documents. You could be formally summoned to attend an interview with investigators instead of being asked to meet in a more informal way. If an IRS representative shows up at your door and introduces themselves as an IRS special agent, you are likely under criminal investigation.
If you have any suspicions that you are being criminally investigated for tax evasion by the IRS or New York State, get legal help immediately. Our New York tax evasion lawyer will aggressively stand up for your interests. Understanding the nuances of tax laws is crucial, and having an experienced attorney by your side can make a significant difference in the outcome of your case. We also offer comprehensive tax resolution services in Brooklyn to help you navigate any complexities and find the best possible solution tailored to your situation. Don't wait until it's too late; taking action now could protect your future and financial well-being.
What is tax avoidance vs. tax evasion? The basic answer to this question is that tax avoidance is legal, whereas tax evasion is a crime. As far as tax avoidance is concerned, IRS regulations allow taxpayers to claim deductions, credits, and adjustments to income for which they are eligible, such as mortgage interest deductions or credits for childcare expenses, as a couple of examples.
On the other hand, tax evasion is when people intentionally underreport their income, don't file tax returns, or take other illegal actions in order to avoid paying taxes they owe. If you believe you were mistaken in filing your taxes and thought you were taking legal deductions or other actions and are now being investigated, don't hesitate to reach out to tax evasion lawyer Timothy S. Hart for help.
Generally, under federal and New York State law, the statute of limitations on investigating tax returns is three years. However, if income is underreported by 25 percent or more or there are other signs of tax evasion, then the statute of limitations is six years from the date the alleged fraudulent return is filed.
A tax evasion attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
A wage garnishment attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
A audit reconsideration attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
A IRS collection attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
A U.S. Tax Court attorney can review notices and records, explain the applicable procedures, communicate with the IRS or New York State when appropriate, and develop a response based on the taxpayer’s circumstances.
Seek help promptly after receiving a notice, learning of a filing problem, or facing a deadline or collection threat. Early action generally preserves more time to evaluate the available options.
Gather the relevant tax returns, agency notices, account transcripts, prior correspondence, payment records, and financial documents. The exact records needed depend on the issue.
The available response depends on the facts. It may involve correcting filings, responding to an agency, requesting an appeal, arranging payment, pursuing a settlement, or seeking court review when applicable.
Timothy S. Hart is both a tax attorney and a CPA. That combined legal and financial perspective can help identify the issues, evaluate practical options, and communicate with tax authorities on the client’s behalf.
The IRS and State Tax Departments are not your friend, and are looking after their best interest
Stop fighting alone. Call now for your free consultation with Tim Hart.
