Nicholas Hartney, E.A.©

How Much Does it Cost to Hire a Tax Attorney, CPA, or Enrolled Agent for IRS Tax Audit Examanations? ©

2018-02-11T06:15:00.001-07:00

Taxpayers call them audits; the Internal Revenue Service prefers the term, examinations. But whatever word you use, there is no mistaking that it describes one of life’s most dreaded experiences-the government probing into your financial affairs to find a way to extract more taxes from you.

Congress has granted the IRS wide powers to examine your finances, even allowing them to question other people about your financial affairs to determine if you are being truthful.

In recent years, due to budget cuts which has led to fewer IRS personnel, the number of audits dropped 16% in 2017, which is the sixth year in a row for fewer audits according to the IRS.

So if you are one of the unfortunate 0.84% of individual taxpayers that have been audited the past year (do not feel bad, the chances are closer to 50% that each one of us will be audited at some point in our lifetimes) you need to start building your defense as over 80% of the people who are audited end up owing additional taxes. But do not worry, as experienced tax pros, Genesis Tax Consultants, can spot probable audit issues.

WHAT IS AN AUDIT?

An audit is the process where the IRS determines if you properly reported all of your income, from all sources, and claimed the proper credits, deductions, and exemptions.

The IRS is trained to find something needed in order to make a determination that you made mistakes, which will allow them to assess you with additional taxes, penalties, and interest which will grow quickly if unpaid.

The burden of proving that you correctly claimed any credits, deductions, and exemptions is on you, not the IRS. This means the IRS is taking the stance that you are guilty until you are proven innocent, and they win over 80% of all audits (mostly because people cannot verify what is on their tax return).

The biggest reason for the IRS winning such a high number of cases is not because taxpayers are dishonest, rather that they have poor record keeping, which IRS auditors are quick to admit to.

THINGS THAT INCREASE YOUR CHANCES OF AN AUDIT:

· Being self-employed

· Earning over $100,000

· You didn’t file a tax return

· You are claiming more deductions than most similarly situated taxpayers

· Comparative size of an item to the rest of the return

· A item on the return that is out of character for the taxpayer

· An item that is reported in an inappropriate place on the return

· Evidence of intent to mislead the IRS on the face of the return

· Losses from businesses and investments claimed on your tax return

· Amended Tax Returns

HOW MUCH TAX LAW DO YOU NEED TO KNOW TO REPRESENT YOURSELF IN AN AUDIT?

Tax law is complex, contradictory, and confusing. It is found in over 100,000 pages of IRS regulations, Letter Rulings, Manuals, Official Publications, and Revenue Rulings and in thousands of federal court decisions that describe how the tax laws are to be applied in individual cases.

Contact Me For Help, Nick Hartney, Licensed to Represent Taxpayers Before the Internal Revenue Service

Do I have to Pay Taxes on Cryptocurrency? | Cryptocurrency Tax Preparation by Genesis Tax Consultants, LLC ©

2018-01-31T08:45:00.001-07:00

Cryptocurrency Tax Basics You Should Know©

While the cryptocurrency market is down across the board currently, if you are looking to get out
or get in the speculative game of trading fiat currency, gains or losses will come nontheless and with tax consequences . So everyone dumping or pumping their dollars and euros into fiat money like Bitcoin, Ethereum, and Litecoin, many are still confused about how the tax treatment of it for federal income tax purposes. In 2014, the Internal Revenue Service (IRS) made it clear that virtual currency will be taxed as a capital asset, provided they are convertible into cash; meaning that capital gains rules apply to any gains or losses. Sounds simple enough right? Here is why it may not be as easy as that:

Buying and selling cryptocurrency for speculative investment purposes will have gains and losses, basis, holding period and a triggering event calculated the same as when purchasing and selling stocks.
Using cryptocurrency to pay for goods or services, or to buy other cryptocurrencies is a triggering event for tax purposes, meaning the result will usually end up in a loss (but the possibility remains for a gain or wash).

More complicated cryptocurrency tax issues:

HOW DO YOU CALCULATE CAPITAL GAINS ON CRYPTOCURRENCY?

For tax and accounting purposes, capital gains and losses are calculated by determining how much your cost basis has gone up or down from the time you acquired the cryptocurrency until a taxable event is triggered.

How to calculate the basis in cryptocurrency:

Basis is the cost that you paid for the cryptocurrency. The actual cost is sometimes referred to as "cost basis" because you can make adjustments to basis over time. For example, if you add to the asset, either as a new purchase or a reinvestment, your basis is your cost plus the cost of each subsequent purchase/reinvestment.

When I trade cryptocurrency on an exchange, I pay commissions and fees. How do I treat those costs?

When you calculate the basis of your cryptocurrency, you will figure the purchase price plus any related costs, such as commissions. Fees are treated differently. If you pay investment-related fees, then you may be able to deduct the fees on your Schedule A, assuming you itemize. But that's only for 2017. The new tax reform law eliminated the deduction for 2018 through 2025 but there is a work-around: If, instead of owning cryptocurrency personally, your business owns the investments, you can deduct investment-related fees on a Schedule C (or your entity's tax form).

What is considered a taxable event when dealing with cryptocurrency?

A taxable event occurs after a sale or disposition of an asset. When it comes to cryptocurrency, a taxable event occurs whenever it is traded for cash or other cryptocurrency or whenever cryptocurrency is used to purchase goods or services.

There's also another potentially complicating factor. The IRS doesn't require third-party reporting for virtual currency (yet) so there's no form 1099-B or equivalent issued at the end of the tax year. Some companies like Coinbase will offer a summary of transactions which can be used to help you file your taxes but if you withdraw cryptocurrency from an exchange, the exchange can no longer track when happens. In that way, it's the same as taking money out of your bank. For that reason, cashing cryptocurrency out of an exchange or similar platform may be treated as a sale - even if the withdraw is forced.

What is a holding period?

The holding period is the time you acquired the cryptocurrency until the time of the taxable event (i.e. you sold it, exchanged it for other cryptocurrency, or used it to purchase goods or services).

Holding your cryptocurrency for more than one year before a taxable event is considered a long-term gain or loss.
Holding your cryptocurrency for one year or less before a taxable event is considered a short-term gain or loss.

For example: Kevin bought 100 shares of stock on Jan. 1, 2018. To determine his holding period, he should begin counting on Jan. 2, 2018. The second day of each month thereafter counts as the beginning of a new month, regardless of how many days each month contains. If he sells the property on Jan. 1, 2019, his holding period will be one year or less and he will realize a short-term capital gain or loss. If he sells the property on Jan. 2, 2019, his holding period will have been one year and a day, and he will realize a long-term capital gain or loss.

Capital Gains Rate vs. Ordinary Income Rates

The capital gains rates can be favorable to taxpayers. For 2017 (the return that you'll file when tax season opens in January 2018), capital gains rates for long term gains (those held more than a year) range from 0% to 20%. Short-term capital gains are taxed as ordinary income, which means your marginal tax rate will apply to your short-term gains as well (in 2017 ordinary tax rates are 15%, 25%, 28%, 33%, 35%, and 39.6%). After 2018 the tax rates go to 10%,12%,22%,24%,32%,35%, and 37%. So if you make more than $37,950 in 2017 you will be in the 25% tax bracket, so you would end up paying at least 5% more than you would on a short-term gain than you would on a long-term capital gain.

What happens when you lose money on cryptocurrency?

If your realized losses exceed your realized gains, you have a capital loss for tax purposes. You can claim up to $3,000 (or $1,500 if you are married filing separately) of capital losses and the amount of your loss offsets your taxable income for the tax year. If your losses exceed those limits, you can carry the loss forward to later years subject to certain limitations and restrictions.

What are realized gains and losses?

Cryptocurrency has been up and down over the past year. For tax purposes, you mostly care about the beginning and the end: what happens in the middle doesn't really count. For example, every time that Bitcoin takes a dive, that doesn't equal a real, or realized loss. Similarly, when it goes back up, that doesn't equal a real, or realized gain. To realize a gain or a loss for tax purposes, you have to do something with the asset. Typically, that means that you sell it or otherwise dispose of it - generally, the taxable event mentioned earlier.

Here's a quick example to help you sort out the math: Assume you invest in Bitcoin worth $1,000. Over the year, assume that the value of the Bitcoin climbs to $25,000 due to market conditions and not any additional investment on your part. You continue to hold onto it. Result? Unrealized gain, no capital gain. Now assume that the value of Bitcoin takes a hit and it falls to $500. Result? Unrealized loss, no capital loss. Finally, assume that Bitcoin climbs back to $750 and you get rid of it. Result? You have a realized capital loss of $250 ($750 selling price – $1,000 basis). You take the loss at the basis, not the high price (the $25,000 high value is meaningless for purposes of capital gain or loss) nor at the low price (the $500 low value is similarly meaningless for purposes of capital gain or loss). You want it to mean something. But it doesn’t. At least not for tax purposes.

So where do I report my gains or losses?

At tax time, you’ll report your realized gains and losses on a Form 8949 and summarized on Schedule D attached to your Form 1040, Individual Income Tax Return, where you will transfer the results to the reconciliation page. You will not file a 8949 Schedule D if you do not have any realized gains or losses: even if the value changes, if there's no sale, exchange, or use for products and services there is no taxable event to report.

So what if I invest in cryptocurrency outside of the United States. I know that I have to report brokerage accounts and other assets on an FBAR. Does that apply here?

As of the date of this post, you do not have to report your cryptocurrency on your FBAR. In 2014, the IRS issued a statement, saying, "The Financial Crimes Enforcement Network, which issues regulatory guidance pertaining to Reports of Foreign Bank and Financial Accounts (FBARs), is not requiring that digital (or virtual) currency accounts be reported on an FBAR at this time but may consider requiring such accounts to be reported in the future." The IRS has confirmed that position for 2017 taxes.

Since I don't have to report it on an FBAR, what happens if I just don't report it all, anywhere?

The IRS has been cracking down on cryptocurrency reporting. They've made some headway into investigating potentially unreported transactions, including some initial success in legal efforts to force Coinbase to turn over customer records. It's likely not an isolated push: In the Coinbase matter, IRS Senior Revenue Agent David Utzke noted that for the 2013 through 2015 tax years, the IRS processed, on average, just under 150 million individual returns annually. Of those, approximately 84% were filed electronically. IRS matched data collected from forms 8949, Sales and Other Dispositions of Capital Assets, which were filed electronically and found that just 807 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin in 2013; in 2014, that number was just 893; and in 2015, the number fell to 802. The IRS argues that those numbers indicate that taxpayers aren't reporting or paying tax on cryptocurrency transactions.

It is no secret that the Internal Revenue Service is making reporting cryptocurrency a compliance priority. Stay ahead of the game by making sure your records and tax reporting are above-board, if not end up paying hefty penalties and interest on unreported income (not to mention the potential of jail time, yikes!).

-If you need someone to prepare your current or back years tax returns look no further. Contact me today. Nicholas Hartney, EA

High IRS Tax Debt Will Lead to Revocation of Passports for U.S. Citizens

2018-01-17T04:36:00.002-07:00

High IRS Tax Debt to Lead to Revocation of Passports for U.S. Citizens

Jan. 16, 2018

The Internal Revenue Service today strongly encouraged taxpayers who are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy.

Please review the Services I can help you with to avoid the revocation of your passport:

Settlement of Tax Debt with an IRS Offer in Compromise

INSTALLMENT AGREEMENT

CURRENTLY NOT COLLECTIBLE

IRS PENALTY ABATEMENT

PREVIOUS YEARS UNFILED RETURNS

This month, the IRS will begin implementation of new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt. A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

Paying the tax debt in full
Paying the tax debt timely under an approved installment agreement,
Paying the tax debt timely under an accepted offer in compromise,
Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
Having requested or have a pending collection due process appeal with a levy, or
Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

A passport won’t be at risk under this program for any taxpayer:

Who is in bankruptcy
Who is identified by the IRS as a victim of tax-related identity theft
Whose account the IRS has determined is currently not collectible due to hardship
Who is located within a federally declared disaster area
Who has a request pending with the IRS for an installment agreement
Who has a pending offer in compromise with the IRS
Who has an IRS accepted adjustment that will satisfy the debt in full

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

To get back on the right track please contact me today.

-Nick Hartney, Licensed to Represent Taxpayers Before the IRS

Do I Need to Hire a Tax Attorney, CPA, or Enrolled Agent?

2018-01-15T12:55:00.003-07:00

Do You Need to Hire a Tax Attorney or Other Tax Professional?

The truth is not every legal matter requires the use of an attorney and likewise nor does all tax matters. Owing less than $10,000 because you claimed 10 dependents on your W-4 or did not make estimated tax payments on your self-employment are two examples. However, in many other situations involving large amounts of tax owed, or non-filed tax returns, you may not wish to chance the perils of going it alone without the advice of an experienced tax professional who can help you out. In fact, while good professional representation may not be cheap, it can help get you out of a number of sticky situations - such as the abatement of penalties on a large tax bill, arguing for legitimate tax deductions on previous disallowed items, overturning the assessment of the trust fund recovery penalty, or even the settlement of taxes for less than the full amount owed - not to mention the potential alternatives for not using an attorney -- including larger repayment plans, lost deductions, or worse, jail time.

While each person or business' situation is different, there are times when you really should hire a tax professional, whether that be a tax attorney, CPA, or enrolled agent.

Here are the Top 10 Reasons to Hire Representation Before the IRS

1. Tax law is complicated. If you are not a tax professional, you probably have no business acting like one in certain instances. Even experienced lawyers typically do not represent themselves in court. A solid case can quickly unravel without the help of a trained and emotionally detached tax professional. Similarly, failing to hire a tax professional when starting a business, reviewing a contract or embarking on other endeavors with potential legal ramifications can result in otherwise avoidable pitfalls.

2. Not having a tax professional may end up costing you more. What is at stake? A criminal case may determine whether or not you spend time behind bars, while having a civil penalty from being assessed the trust fund recovery penalty could hurt your personal credit. Also, you can claim professional fees if you are a business, so hiring a tax professional can save you money and a lot of headaches.

3. Tax professionals know how to challenge IRS assessments. You may not even know that the IRS improperly issued a tax levy or wage garnishment against you, or that the denial of an expense contradicts the inclusion of income. And did the Revenue Officer properly follow the collection due process every step of the way, or did he trample on your rights? Your tax professional will find out and make sure they follow the rules.

4. Tax professionals understand how to properly fill out IRS collection statements and handle other IRS procedures such as appeals. If you're not a tax professional, you may struggle with the deadlines and protocol for properly filling out and filing certain IRS documents. One late or incorrect filing could derail your case, delay a given legal procedure or worse - have the case thrown out altogether (resulting in enforced collection actions such as a bank levy).

5. Because you don't know how to deal with a bad Revenue Officer who is not following due process. Tax professionals depend on their knowledge and experience to know when to file an appeal, when to speak with the Revenue Officer's Group Manger, or when to use the Taxpayer Advocate's Office to help win their clients' cases. When things go bad with your Revenue Officers most taxpayers have no idea where to turn. Your tax professional will.

6. You're not sure what your options are -- or what a 'CAP' is? Doing what the Revenue Officer says is not the only choice, even if there is evidence showing you have the assets to full pay. A tax professional who understands the IRS procedures will be best situated to explain your options and can help you avoid potentially severe penalties even before your case is assigned to a Revenue Officer.

7. Because it is probably better to avoid problems in the first place rather than try to fix them once they arise. You may have heard the saying "an ounce of prevention is worth a pound of cure?" Well, hiring a tax professional in many instances will help you avoid potential legal headaches down the road. Do you understand the fine print of the Partnership Agreement, the Articles of Incorporation or the Articles of Organization you are signing? A tax professional will.

8. A good tax professional can strike up a good settlement offer in compromise or repayment plan, if necessary. An experienced tax professional probably has seen cases similar to yours or at least knows enough to make a calculated guess about how it might be resolved. Sometimes a settlement (offer in compromise) is the best choice, while other times it is clear you don't qualify to see your case through resolution through an installment agreement, or currently not collectible status.

9. The IRS has legal representation. Taxpayers are generally at a disadvantage when squaring off against Revenue Officers or with ACS. As explained above, tax law is complicated, and the IRS will take advantage of this inequity.

10. Tax professionals (not salespeople, so be careful who you are speaking with) often provide a free initial consultation. Reaching out to a tax professional with a free consultation (either on the phone or through email) will give you an idea of the type of case you have, but it will also help you decide whether you need to hire a tax professional.

Contact me today and I will be happy to help you out.

-Nick Hartney, Licensed to Represent Taxpayers Before the IRS

Choose a Tax Preparer Wisely

2018-01-12T07:09:00.001-07:00

Tax Debt? Don't Feel Bad, Even Celebrities Fall Behind With Their Tax Ob...

2017-03-19T07:43:00.001-06:00

How to Remove a Tax Lien from your Credit Reports

2016-09-15T00:18:00.004-06:00

The three national credit reporting agencies, respectively Equifax, Experian, and TransUnion collects tax lien information from the county courts and are updated by the Internal Revenue Service as well.

Usually, no action is required by the taxpayer as the status of the lien is updated to show that it is released, typically prior to 30 days after the debt has been satisfied (either through the statute expiring, payment of the liability, compromise of the liability to satisfaction, etc.) However, if you need the update to be added immediately, or it has been over 30 days and not yet showing as released, you can send the tax lien release information yourself directly to the aforementioned national credit reporting agencies.

The first step is to get a copy of your personal credit to verify whether or not the status of the lien has been updated. If it has not, you can dispute the status stating that it should indicate the lien was released. You can do all of this easily and quickly online, and can upload the tax lien release documentation online as well. If you prefer, you can also mail the documentation verifying the lien was released.

With those documents, the credit agencies should be able to update the status of the lien. The lien will then show that it has been paid and released. Paid tax liens remain 7 years from the file date.

If you need help with your a tax lien or any other tax matters please contact me at Nick@GenesisTaxConsultants.com or call me at (303) 731-3193. I represent taxpayers in all 50 states and also those living abroad.

Top 10 Tips to Know if You Get a Letter from the IRS

2015-04-21T08:27:00.001-06:00

Top 10 Tips to Know if You Get a Letter from the IRS

The IRS mails millions of notices and letters to taxpayers each year. There are a variety of reasons why we might send you a notice. Here are the top 10 tips to know in case you get one.

1.   Don’t panic. You often can take care of a notice simply by responding to it.

2.   An IRS notice typically will be about your federal tax return or tax account. It will be about a specific issue, such as changes to your account. It may ask you for more information. It could also explain that you owe tax and that you need to pay the amount that is due.

3.   Each notice has specific instructions, so read it carefully. It will tell you what you need to do.

4.   You may get a notice that states the IRS has made a change or correction to your tax return. If you do, review the information and compare it with your original return.

5.   If you agree with the notice, you usually don’t need to reply unless it gives you other instructions or you need to make a payment.

6.   If you do not agree with the notice, it’s important for you to respond. You should write a letter to explain why you disagree. Include any information and documents you want the IRS to consider. Mail your reply with the bottom tear-off portion of the notice. Send it to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

7.   You won’t need to call the IRS or visit an IRS office for most notices. If you do have questions, call the phone number in the upper right-hand corner of the notice. Have a copy of your tax return and the notice with you when you call. This will help the IRS answer your questions.

8.   Always keep copies of any notices you receive with your other tax records.

9.   Be alert for tax scams. The IRS sends letters and notices by mail. The IRS does not contact people by email or social media to ask for personal or financial information.

10.   For more on this topic visit IRS.gov. Click on the link ‘Responding to a Notice’ at the bottom left of the home page. Also, see Publication 594, The IRS Collection Process. You can get it on IRS.gov/forms at any time.

Tips for Filing an Amended Return

2015-04-20T07:45:00.002-06:00

Tips for Filing an Amended Return

Have you found that you made an error on your federal tax return? If so, you may need to file an amended return. Here are ten tips that can help you file.

1.   Tax form to amend your return. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your tax return. You must file a paper Form 1040X; it can’t be e-filed. You can get the form on IRS.gov/forms at any time. See the Form 1040X instructions for the address where you should mail your form.

2.   Amend to correct errors.  You should file an amended tax return to correct errors or make changes to your original tax return. For example, you should amend to change your filing status, or to correct your income, deductions or credits.

3.   Don’t amend for math errors, missing forms. You normally don’t need to file an amended return to correct math errors. The IRS will automatically correct those for you. Also, do not file an amended return if you forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail you a request for them in most cases.

4.   Most taxpayers don’t need to amend to correct Form 1095-A, Health Insurance Marketplace Statement, errors.  Eligible taxpayers who filed a 2014 tax return and claimed a premium tax credit using incorrect information from either the federally-facilitated or a state-based Health Insurance Marketplace, generally do not have to file an amended return regardless of the nature of the error, even if additional taxes would be owed. The IRS may contact you to ask for a copy of your corrected Form 1095-A to verify the information.

5.   Time limit to claim a refund.  You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. That means the last day for most people to file a 2011 claim for a refund is April 15, 2015. See the Form 1040X instructions for special rules that apply to some claims.

6.   Separate forms for each year. If you are amending more than one tax return, prepare a 1040X for each year. You should mail each year in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. Check the form’s instructions for where to mail your return.

7.   Attach other forms with changes. If you use other IRS forms or schedules to make changes, make sure to attach them to your Form 1040X.

8.   When to file for second refund.  If you are due a refund from your original return, wait to get that refund before filing Form 1040X to claim an additional refund. Amended returns take up to 16 weeks to process. You may spend your original refund while you wait for any additional refund.

9.   Pay added tax as soon as you can. If you owe more tax, file your Form 1040X and pay the tax as soon as you can. This will stop added interest and penalties. Use IRS Direct Pay to pay your tax directly from your checking or savings account.

10.   Track your amended return.  You can track the status of your amended tax return three weeks after you file with ‘Where’s My Amended Return?’ This tool is on IRS.gov or by phone at 866-464-2050 FREE. It is available in English and in Spanish. The tool can track the status of an amended return for the current year and up to three years back. To use ‘Where’s My Amended Return?’ enter your taxpayer identification number, which is usually your Social Security number. You will also enter your date of birth and zip code. If you have filed amended returns for multiple years, you can check each year one at a time.

Still need help? Contact Nicholas Hartney, EA at nick@patriotresolution.com or nick@irstaxhelp.tax

Obamacare Overview and How it Affects Your Taxes For Those of You Who Filed Extensions

2015-04-19T08:30:00.002-06:00

Health Care Law and Taxes – More Time to File

Most taxpayers will simply check a box on their return to indicate that everyone listed on the front of the return has qualifying health care coverage for the entire year and may not need more time to file.

However, people who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through theFree File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension onForm 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

If you received your coverage through a Marketplace, you may have received an incorrect Form 1095-A, Health Insurance Marketplace Statement, or your form may have been delayed. If you have not yet filed your income tax return, you should file by April 15 using either the Form 1095-A that you have received or the corrected form, if available. Alternatively, you may file for an extension of time to file by April 15 using Form 4868. For more information including information about what to do if you already filed your tax return, see our Incorrect Forms 1095-A and the Premium Tax Credit questions and answers.

An extension to file will give you until Oct. 15 to file your taxes. It does not give you more time to pay your taxes. You still must estimate and pay what you owe by April 15 to avoid a late filing penalty. You will be charged interest on any tax that you do not pay on time. You may also owe a penalty if you pay your tax late. In light of some tax filers not receiving their correct Forms 1095-A, in time, the Treasury Department and IRS released guidance providing penalty relief for individuals who are unable to file an accurate return by April 15. Generally, in order to qualify for this relief, taxpayers must file either Form 1040 series or Form 4868 by April 15. A return must be filed by Oct. 15. More specifics on the relief is included in Notice 2015-30, Penalty Relief Related To Incorrect Or Delayed Forms 1095-A.

For more information about the Affordable Care Act, visit IRS.gov/aca.

If you need help with any tax issue please contact me at either nick@patriotresolution.com or nick@irstaxhelp.tax

What to Know about Late Filing and Late Paying Penalties

2015-04-17T09:05:00.000-06:00

What to Know about Late Filing and Late Paying Penalties

April 15 was the tax day deadline for most people. If you are due a refund there is no penalty if you file a late tax return. But if you owe tax, and you failed to file and pay on time, you will usually owe interest and penalties on the tax you pay late. You should file your tax return and pay the tax as soon as possible to stop them. Here are eight facts that you should know about these penalties.

1.   Two penalties may apply. If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2.   Penalty for late filing.  The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

3.   Minimum late filing penalty.  If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

4.   Penalty for late payment. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

5.   Combined penalty per month.  If the failure-to-file penalty and the failure-to-pay penalty both apply in any month, the maximum amount charged for those two penalties that month is 5 percent.

6.   File even if you can’t pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. Use IRS Direct Pay to pay your tax directly from your checking or savings account. You should try other options to pay, such as getting a loan or paying by debit or credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.

7.   Late payment penalty may not apply.  If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8.   No penalty if reasonable cause.  You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time. There is also penalty relief available for repayment of excess advance payments of the premium tax credit for 2014.

Contact Nick for assistance in helping you abate late IRS filing and payment penalties.

Why Gamble With Your Tax Debt? Contact Nicholas Hartney, EA Today to Fix Your Tax Problems | 7 Things to Consider Before Placing Your Bet

2015-04-17T04:57:00.005-06:00

Hiring a Tax Resolution Firm is a Gamble | 7 Things to Consider Before Placing Your Bet on a Tax Firm

1. Did the tax resolution firm contact you without being solicited to do so (i.e. Ambulance Chaser)? I have wrote extensively about these firms . If after reading these posts you are still unsure....

..2. Can you speak to the person who will be working your case? If no, then you ~~probably~~ want to avoid this tax resolution firm. If you can then you want to ask them...

..3. Will they be handling your case or should you expect to be working more with their paralegals (who 99.99% of the time are not true paralegals, really just anyone they can find willing to work for $10-$12 an hour). This should be an interesting conversation.

4. Ask them about their billing. How will they bill you? Can you see an example of a retainer billing statement? Will they charge you $50 per fax? Hundreds of dollars for a template letter? Again, this should be an interesting conversation.

5. How long have they been with the firm? Most of the Tax Resolution firms are high-pressure boiler rooms and as such have the tendency to have an extremely high turnover rate.

6. Is the majority of their salary based on asking on their clients for more money? Most of these firms treat their attorneys, CPA's and enrolled agents as a sales force, not a professional tasked with resolving the case.

7. After questioning the tax resolution firm, ask yourself if it feels like a bait-and-switch. Is the sales person saying one thing and the representative telling you something different, is their gaps in their stories?

If you have questions or are ready to have me help you get the ball rolling on the path to resolving your tax issues please contact me asap.

Nicholas Hartney, EA | If You Missed the IRS Tax Deadline these 5 Steps Can Help

2015-04-17T01:29:00.003-06:00

If You Missed the Tax Deadline These Tips Can Help

April 15 has come and gone. If you didn’t file a tax return or an extension but should have, you need to take action now. Here are some tips for taxpayers who missed the tax filing deadline:

File as soon as you can. If you owe taxes, you should file and pay as soon as you can. This will stop the interest and penalties that you will owe. IRS Direct Pay offers you a free, secure and easy way to pay your tax directly from your checking or savings account. There is no penalty for filing a late return if you are due a refund. The sooner you file, the sooner you’ll get it.

IRS Free File is your best choice. Nearly everyone can use IRS Free File to e-file their federal taxes for free. If your income was $60,000 or less, you can use free brand-name tax software. If you made more than $60,000, use Free File Fillable Forms to e-file. This program uses electronic versions of IRS paper forms. It does some of the math and it works best for those who are used to doing their own taxes. Either way, you have a free option that you can only access on IRS.gov. It’s available at least through the Oct. 15 extension period.

Use IRS e-file to do your taxes. No matter who prepares your tax return, you can use IRS e-file through Oct. 15. E-file is the easiest, safest and most accurate way to file your taxes. The IRS will confirm that it received your tax return. The IRS issues more than nine out of 10 refunds in less than 21 days.

Pay as much as you can. If you owe tax but can’t pay it in full, you should pay as much as you can when you file your tax return. IRS electronic payment options are the quickest and easiest way to pay your taxes. Pay the rest of the tax you still owe as soon as possible. Doing so will reduce future penalties and interest.

Use the IRS.gov tool to pay over time. If you need more time to pay your tax, you can apply for an installment agreement with the IRS. The best way to apply is to use the IRS Online Payment Agreement tool. You can use the IRS.gov tool to set up a direct debit agreement. You don’t need to write and mail a check each month with a direct debit plan. If you don’t use the tool, you can use Form 9465, Installment Agreement Request to apply. You can get the form on IRS.gov/forms at any time.

A refund may be waiting. If you are due a refund, you should file as soon as possible to get it. Even if you are not required to file, you may still get a refund. This could apply if you had taxes withheld from your wages or you qualify for certain tax credits. If you do not file your return within three years, you could lose your right to the refund.

If you need assistance please email me asap.

Five Things to Know if You Need More Time to File Your Taxes

2015-04-13T09:17:00.003-06:00

Nicholas Hartney, EA | 5 Items You Need To Know If You Need More Time To File

The April 15 tax deadline is coming up. If you need more time to file your taxes, you can get an automatic six month extension from the IRS. Here are five things to know about filing an extension:

1.   Use IRS Free File to file an extension. You can use IRS Free File to e-file your extension request for free. Free File is only available through IRS.gov. You must e-file the request by midnight on April 15. Don’t forget to come back to Free File to e-file your taxes for free. You can access the program at any time through Oct. 15.

2.   Use Form 4868. You can also request an extension by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must mail this form to the IRS by April 15. Form 4868 is available on IRS.gov/forms at any time.

3.   More time to file is not more time to pay. An extension to file will give you until Oct. 15 to file your taxes. It does not give you more time to pay your taxes. You still must estimate and pay what you owe by April 15 to avoid a late filing penalty. You will be charged interest on any tax that you do not pay on time. You may also owe a penalty if you pay your tax late.

4.   Use IRS Direct Pay. The safe, fast and easy way to pay your tax is with IRS Direct Pay. Visit IRS.gov/directpay to use this free and secure way to pay from your checking or savings account. You also have other electronic payment options. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.

5.   IRS helps if you can’t pay all you owe. If you can’t pay all the tax you owe, the IRS offers you have options. Contact Nick today at nick@genesistaxconsultants.com

If you found this Tax Tip helpful, please share it!

Tax Resoultion Companies Who Employ Shady Unlicensed Salespeople

2015-04-08T04:51:00.001-06:00

Need help? Contact Nick to get you on the right path for a fraction of the cost that others will charge you.

Tax Resolution Scams Still Going Strong

2015-04-06T08:56:00.002-06:00

It amazes me that the old school boiler tax resolution firms are still out there.

A taxpayer who is called or calls the tax resolution firm is connected with a high-pressure salesperson, and maybe with two or three of them (often times a "manager" comes on for good measure). The taxpayer is assured that the firm will settle and resolve the taxpayer’s tax obligations. The salespeople earn commissions and large bonuses. Tax resolution firms take large retainers, anywhere from $2,500-$10,000+.

The taxpayer somehow is able to come up with the retainer money and that money is burned through with over and double billing in a month or two with very little progress. To bill down the clients retainers employees of the tax resolution firm send the taxpayer boilerplate letters requesting information by artificial deadlines. When there is no response to the letters, the associate heading the case will write what is called "a money letter" followed by several "money calls" to harass the taxpayer for additional retainer funds.

If the taxpayer is unable to pay the tax resolution firm they will deem the case closed and revoke their contacts with the IRS and state taxing authorities, with the taxpayer realizing no resolution or relief. If the taxpayer requests a refund of fees paid to the tax resolution firm, the firm will run through the retainer billing statement and make adjustments to ensure all the retainer is used up.

The tax resolution firm is able to get away with this due to the fine print in the retainer agreement which the tax resolution firm required the taxpayer to sign prior to beginning representation.
The majority of the time taxpayers cases are worked by people called "paras", i.e. a 'paralegal' with no formal schooling. These 'paras' at tax resolution firms are not subject to any professional regulation, evidenced from their low salaries of $12 an hour-but will bill taxpayers up to $300 per hour for clerical work.

Eventually the taxpayer figures out she has been had and throws in the towel. By the end of the taxpayer's relationship with the firm they end up owing more to the IRS than they did when they started with the tax resolution firm due to additional accrued penalties and daily compounded interest. I offer an alternative to these run of the mill tax resolution companies by helping taxpayers either resolve their own debt or by representing them before the IRS for a small monthly fee.

Contact me to get it done right!

Nicholas Hartney, EA | History of the IRS and What a 1040 Looked Like in 1913

2015-04-03T00:49:00.002-06:00

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Brief History of IRS

Origin
The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th AmendmentIn 1913, Wyoming ratified the 16^th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16^th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

1913 Form 1040 (PDF 126KB, 4 pages, including instructions)

A New NameIn the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.

Today’s IRS OrganizationThe IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble the private sector model of organizing around customers with similar needs.

Today's IRS Organization

Nicholas Hartney, EA | Instructions for Filing an Extention of Time to File Income Tax Returns with the IRS

2015-04-02T00:38:00.003-06:00

Form 4868 for those of us who need some extra time to file their #taxreturns Automatic 6-month extension by filing.
http://www.irs.gov/pub/irs-pdf/f4868.pdf …

Purpose of Form Use Form 4868 to apply for 6 more months (4 if “out of the country” (defined on page 2) and a U.S. citizen or resident) to file Form 1040, 1040A, 1040EZ, 1040NR, 1040NR-EZ, 1040-PR, or 1040-SS

Qualifying for the Extension

To get the extra time you must:

1. Properly estimate your 2014 tax liability using the information available to you,

2. Enter your total tax liability on line 4 of Form 4868, and

3. File Form 4868 by the regular due date of your return.

If you do not pay the amount due by the regular due date, you will owe interest. You may also be charged penalties. For more details, see Interest and Late Payment Penalty on page 2. Any remittance you make with your application for extension will be treated as a payment of tax. You do not have to explain why you are asking for the extension. We will contact you only if your request is denied. Do not file Form 4868 if you want the IRS to figure your tax or you are under a court order to file your return by the regular due date.

There are three ways to request an automatic extension of time to file a U.S. individual income tax return.

1. You can file Form 4868 and pay all or part of your estimated income tax due. See How To Make a Payment, on page 3.

2. You can file Form 4868 electronically by accessing IRS e-file using your home computer or by using a tax professional who uses e-file.

3. You can file a paper Form 4868. It’s Convenient, Safe, and Secure IRS e-file is the IRS’s electronic filing program. You can get an automatic extension of time to file your tax return by filing Form 4868 electronically. You will receive an electronic acknowledgment once you complete the transaction. Keep it with your records. Do not mail in Form 4868 if you file electronically, unless you are making a payment with a check or money order (see page 3). Complete Form 4868 to use as a worksheet. If you think you may owe tax when you file your return, you will need to estimate your total tax liability and subtract how much you have already paid (lines 4, 5, and 6 below). Several companies offer free e-filing of Form 4868 through the Free File program. For more details, go to IRS.gov and click on freefile. Pay Electronically You do not need to submit a paper Form 4868 if you file it with a payment using our electronic payment options. Your extension will be automatically processed when you pay part or all of your estimated income tax electronically. You can pay online or by phone (see page 3). E-file Using Your Personal Computer or Through a Tax Professional Refer to your tax software package or tax preparer for ways to file electronically. Be sure to have a copy of your 2013 tax return—you will be asked to provide information from the return for taxpayer verification. If you wish to make a payment, you can pay by electronic funds withdrawal or send your check or money order to the address shown in the middle column under Where To File a Paper Form 4868 (see page 4). File a Paper Form 4868 If you wish to file on paper instead of electronically, fill in the Form 4868 below and mail it to the address shown on page 4. For information on using a private delivery service, see page 4. Note. If you are a fiscal year taxpayer, you must file a paper Form

When To File Form 4868 File Form 4868 by April 15, 2015. Fiscal year taxpayers, file Form 4868 by the original due date of the fiscal year return. Taxpayers who are out of the country. If, on the regular due date of your return, you are out of the country and a U.S. citizen or resident, you are allowed 2 extra months to file your return and pay any amount due without requesting an extension. Interest will still be charged, however, on payments made after the regular due date, without regard to the extension. For a calendar year return, this is June 15, 2015. File this form and be sure to check the box on line 8 if you need an additional 4 months to file your return. If you are out of the country and a U.S. citizen or resident, you may qualify for special tax treatment if you meet the bona fide residence or physical presence tests. If you do not expect to meet either of those tests by the due date of your return, request an extension to a date after you expect to meet the tests by filing Form 2350, Application for Extension of Time To File U.S. Income Tax Return. You are out of the country if: • You live outside the United States and Puerto Rico and your main place of work is outside the United States and Puerto Rico, or • You are in military or naval service on duty outside the United States and Puerto Rico. If you qualify as being out of the country, you will still be eligible for the extension even if you are physically present in the United States or Puerto Rico on the regular due date of the return. For more information on extensions for taxpayers out of the country, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. Form 1040NR or 1040NR-EZ filers. If you cannot file your return by the due date, you should file Form 4868. You must file Form 4868 by the regular due date of the return. If you did not receive wages as an employee subject to U.S. income tax withholding, and your return is due June 15, 2015, check the box on line 9. Total Time Allowed Generally, we cannot extend the due date of your return for more than 6 months (October 15, 2015, for most calendar year taxpayers). However, there may be an exception if you are living out of the country. See Pub. 54 for more information. Filing Your Tax Return You can file your tax return any time before the extension expires. Do not attach a copy of Form 4868 to your return. Interest You will owe interest on any tax not paid by the regular due date of your return, even if you qualify for the 2-month extension because you were out of the country. The interest runs until you pay the tax. Even if you had a good reason for not paying on time, you will still owe interest. Late Payment Penalty The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 15, 2015. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%. The late payment penalty will not be charged if you can show reasonable cause for not paying on time. Attach a statement to your return fully explaining the reason. Do not attach the statement to Form 4868. You are considered to have reasonable cause for the period covered by this automatic extension if at least 90% of your actual 2014 tax liability is paid before the regular due date of your return through withholding, estimated tax payments, or payments made with Form 4868. Late Filing Penalty A late filing penalty is usually charged if your return is filed after the due date (including extensions). The penalty is usually 5% of the amount due for each month or part of a month your return is late. The maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $135 or the balance of the tax due on your return, whichever is smaller. You might not owe the penalty if you have a reasonable explanation for filing late. Attach a statement to your return fully explaining your reason for filing late. Do not attach the statement to Form 4868. How To Claim Credit for Payment Made With This Form When you file your 2014 return, include the amount of any payment you made with Form 4868 on the appropriate line of your tax return. The instructions for the following line of your tax return will tell you how to report the payment. • Form 1040, line 70. • Form 1040A, line 46. • Form 1040EZ, line 9. • Form 1040NR, line 66. • Form 1040NR-EZ, line 21. • Form 1040-PR, line 11. • Form 1040-SS, line 11. If you and your spouse each filed a separate Form 4868 but later file a joint return for 2014, enter the total paid with both Forms 4868 on the appropriate line of your joint return. If you and your spouse jointly file Form 4868 but later file separate returns for 2014, you can enter the total amount paid with Form 4868 on either of your separate returns. Or you and your spouse can divide the payment in any agreed amounts.

Nicholas Hartney, EA | IRS Attempting to Block Passports For People Who Owe Back Taxes

2015-04-01T07:27:00.004-06:00

You can send your thank you cards to Harry for this one.

The IRS and Justice Department are working together to catch ex-pats behind on their income taxes. Even though there are no longer debt prisons they can still arrest people behind on their taxes when they land on U.S. soil. Sen. Harry Reid (D-Nev.) and a handful of others in Congress think the government could do more to apprehend people on the move and even prevent them from obtaining or leaving the States in the first place. In 2012, the Government Accountability Office reported on the potential for using the issuance of passports to collect taxes.

The thought is to restrict passports and travel until you pay the IRS what they say you owe (including penalties and interest). Several successive proposals have been defeated for now. Some say the right to travel is fundamental, practically constitutional.

According to an introduced Senate Bill 1813, an idea to punish tax debtors, the State Department would be allowed to revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt in an amount in excess of $50,000.

As an enrolled agent and someone who has represented taxpayers for over 10 years I can foresee major problems with this from the taxpayer's perspective, starting with lack of due process.

The IRS is notorious for assessing people an arbitrary tax bill by having the IRS computer process and prepare what are called Substitute-For-Returns (S.F.R Sec. 6020(b)) if you fail to file an income tax return.

IRC 6020(b) states, "If any person fails to make any return required by any Internal Revenue Law or regulation made there under at the time prescribed therefore, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise."

When the IRS prepares an SFR they will give you the lowest possible deductions and if you have a 1099-MISC issued to you they will tax it at 100%, i.e. they will not consider any expenses you had to offset the total taxable income. The return will be processed "in the best interests of the Service". On top of that they will assess failure to file and failure to pay penalties (which max out at 50% of the tax due), then apply compounded daily interest! Before you know it, a few years of unfiled tax returns or perhaps even if a new 1099 is issued that you either forget about or one is issued under your taxpayer ID in error, $50,000 can add up very fast, and when dealing with the IRS you are guilty before being proven innocent. If passed this law will hurt a lot of innocent people.

Now with Harry Reid announcing retirement a mere few months after his workout injuries perhaps this no-travel, no-passport idea will lose steam and die...

And before I forget, Happy Retirement Harry!

Tax Vocabulary of the Day

2013-07-28T13:56:00.001-06:00

Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

Omni-Financial Sued Over Violating No Call List |How to Stop Tax Debt Telemarketers From Calling You

2012-07-25T16:56:00.002-06:00

*Ring *Ring..."Hello my name is blah blah, from blah blah Financial, we are calling you regarding a tax lien that has recently been filed, are you aware of that?"

That's the first call. If you decide to humor the telemarketer be prepared for the nature of the calls to become more and more aggressive.

If you eventually end up telling them to "take you off their list" or that you are on the no-call list (Omni-Financial was the first telemarketing company in Colorado to be fined, 2001 Court Ruling Awards Consumer Monetary Reward After Suing Omni-Financial, for calling people on the do-not-call list and apparently hasn't learned their lesson as they continue to do so FCC Warns Omni-Financial) you may still have difficulty getting rid of them.

It reminded me of a scene from the 2005 film, The 40-Year Old Virgin where Trish, played by Catherine Keener mistakes Andy, played by Steve Carell, as a telemarketer and tells him off. The audio can be heard by playing the below video (Caution, contains NSFW language!).

There is a whole slew of companies harassing consumers who had the misfortune of having a federal or state tax lien filed. If you are on the Do Not Call List file a complaint with the FTC and if your business is being harassed after you asked them to no longer contact you by phone I would recommend filing a complaint with the BBB.

Costs of Representation

2012-07-07T15:13:00.002-06:00

I find that working on a retainer is the fairest way to bill on tax representation as tax debt is analogous to lifting a rock off the ground-you never know what types of critters will be hiding underneath. And unlike my competitors I do not over bill and only charge $175 an hour as compared to $250+ as most firms and tax attorneys charge.

The work to handle most individual income tax debt cases averages $2000, payroll tax debt for businesses average $4000. I do allow the fees to be split up. To keep fees low it is important to provide me with requested information in a timely fashion (i.e. not missing IRS deadlines or providing me with the information the day of our deadline).

My Tax Preparation Fees are as follows:

*Same price regardless of filing status (i.e. single, joint, head of household, married filing
seperately, widow) *Add $100 for State Return and $150 for all prior years (prior to current year).

Base Amount and W2s Only $125
For wage earners, no schedules. Also used as the base amount for each return that does include
any schedules.

Schedule A $75
Itemizes allowable deductions against income; instead of filling out Schedule A, taxpayers may
choose to take a standard deduction of between $5,150 and $14,300, depending on age, filing
status, and whether the taxpayer and/or spouse is blind.

Schedule B $75 per page
Enumerates interest and/or dividend income, and is required if either interest or dividends
received during the tax year exceed $1,500 from all sources or if the filer had certain foreign
accounts.

Schedule C $250 per business
Lists income and expenses related to self-employment, and is used by sole proprietors.

Form 8829 $75
Expenses for Business Use of Your Home

Schedule D $75 per page
Is used to describe capital gains and losses incurred during the tax year, and to calculate the tax
amount due given the special reduced tax rates applied to capital gains and qualified (domestic)
dividends.

Schedule E $75
Is used to report income and expenses arising from the rental of real property, royalties, or from
pass-through entities (like trusts, estates, partnerships, or S corporations).

Schedule EIC $50
Is used to document a taxpayer's eligibility for the Earned Income Credit.

Schedule F $125
Is used to report income and expenses related to farming.

Schedule H $50
Is used to report taxes owed due to the employment of household help.

Schedule J $125
Is used when averaging farm income over a period of three years.

Schedule L $50
Is used to figure an increased standard deduction in certain cases.

Schedule M $50 (2009 and 2010)
Is used to claim the up to $400 "Making Work Pay" tax credit (6.2% earned income credit, up to
$400).

Schedule R $75
Is used to calculate the Credit for the Elderly or the Disabled.

Schedule SE $50
Is used to calculate the self-employment tax owed on income from self-employment (such as on a
Schedule C or Schedule F, or in a partnership).

Nicholas Hartney, E.A.
720.491.3531

What a Successful IRS Offer in Compromise Looks Like (Proof of an Accepted Offer in Compromise, Not Just Words) $5000 settlement on over $65,000 of tax debt

2012-07-07T14:23:00.004-06:00

This client owed over $65,000 and as you can see below the IRS settled for $5000 through their Offer in Compromise program. This of course is not typical for every client. The selling points for convincing the IRS to settle on this taxpayer's debt was his age (over 60), health issues (artery disease), and lack of assets and monthly disposable income.

This taxpayer had hired the now defunct Tax Masters who had him on a $100 a month payment plan after he paid them to prepare an Offer in Compromise. I stepped in and first had the IRS drop the installment agreement (i.e. monthly payment plan), then negotiated a currently not collectible status. After that he was able to borrow $5000 from a friend (which we noted in the Offer in Compromise) and after 8 months they finally agreed to accept the Offer.

If you need help with your back taxes please email me Email Nick

Reference and Recommendation for Nicholas Hartney, E.A.'s Services

2012-06-29T14:56:00.000-06:00

I failed to file tax returns to the IRS for over 10 years. Finally, this problem caught up with me and the IRS levied my bank accounts, leaving me with absolutely zero amounts in my checking and saving accounts. More, they garnished my retirement pay by an amount that would have only left me about $300 per month from the $3,000 I usually receive.

Naturally, I was in a panic. I had seen all the commercials on TV for tax resolution companies, but each one failed scrutiny via Google searches about complaints against them. I didn't know what to do so I tried Googling for local tax resolution companies and found Nick Hartney's website, www.patriotresolution.com.

I checked his company out on the Internet and couldn't find a single complaint ... I gave him a call.

Here are the facts I've learned:

1. You see TV commercial after TV commercial from companies promising to handle your IRS problems for "pennies on the dollar" and each is BS ... that is, unless you are in certain circumstances that only apply to a very few ... that's how they try to get away with making the "pennies on the dollar" claims

2. Nevertheless, most of the "TV commercial companies" eventually wind up being busted by the Federal Trade Commission and/or their local state attorney generals office ... such as Roni Deutch, American Tax Relief, Tax Masters and just about any other tax resolution company you see advertised on TV!

3. You're going to have to file your back tax returns and you're going to have to pay the IRS, including penalties, interest and fees ... the only questions are how can you get the back returns filed quickly and then negotiate with the IRS for how much you'll have to pay each month to enable the IRS to release bank levies, garnishments and withhold action to take your home -- that's where a tax resolution expert can help and Nick is an expert in this field

No "pie in the sky" promises; no unrealistic expectations, Nick tells you the facts and then goes to work to get your returns filed and then negotiate the best deal possible with the IRS to enable you to pay the lowest amount each month possible (that amount will be high ... but not as high as it would be if you tried this on your own!).

Nick is an honest player in a sea of dishonest big TV advertised companies. He saved my financial life. Plain and simple.

Dave C.

Note from Nick: Dave is one of many clients available to provide a telephone reference on demand.

State of Colorado Offer in Compromise Program

2012-03-13T11:41:00.001-06:00

In order to get the State of Colorado to accept an Offer in Compromise on your back taxes you will first need the IRS to approve one for the same tax periods. Which makes sense. Most states will strongly consider the acceptance of an Offer in Compromise once the IRS has agreed to one for the same periods. Taken from the Colorado Department of Revenue's site (original site: here)

Offer in Compromise of Tax Liability

Under certain circumstances the Department may accept a taxpayer's offer to settle their tax liability for less than the full amount due. Taxpayers who meet the following qualifications may initiate the process by submitting the documentation listed below. The taxpayer bears the burden of establishing the grounds for a potential settlement and has no legal entitlement to have any tax liability settled through an Offer in Compromise. Any submitted offer must reflect the taxpayer's maximum capacity to pay. The Department reserves the right to conduct an independent examination of the taxpayer's financial condition in review of the documentation submitted to determine the veracity of the information contained therein. Any previously initiated collection activity will continue while a submitted offer is being considered. The State may rescind any acceptance of an offer if the taxpayer fails to comply with the required terms and conditions, if additional information becomes available or if the information provided by the taxpayer is found to be false.

Qualifications

The Department will only consider a submitted Offer in Compromise if the following criteria are met:

All required tax returns have been filed through the current period.
The IRS has already accepted an Offer in Compromise covering the same years and liabilities.
The State has not previously accepted an Offer in Compromise from the taxpayer to cover prior liabilities.
The taxpayer has not previously received tax relief such as a tax liability discharged through bankruptcy, an innocent spouse relief or any prior settlement.
The taxpayer cannot be reasonably expected to satisfy all outstanding delinquencies within the period for collection as prescribed by Colorado Revised Statute 39-10-101 (2)(b).

Required Documentation

The following documentation must be included with the submission of an Offer in Compromise. Failure to include any of the following documentation will preclude the Department from considering the submitted OIC.

IRS Form 656
IRS Form 433 "Collection Information Statement for Wage Earners and Self-employed Individuals"
Verification of IRS acceptance of a submitted Offer in Compromise
Proof of payment for IRS Offer in Compromise
An IRS "Record of Account"
Any other relevant information pertaining to the Offer in Compromise agreement with the IRS
The Department's financial form "Statement of Income and Expenses" (DR 6596).
Completed Offer in Compromise "Terms and Conditions".
A written statement detailing the circumstances that warrant special consideration for an Offer in Compromise as well as the amount being offered.
Written disclosure of any transfer of real or personal property such as vehicles, cash or title transfer of property.
Written disclosure of marital and filing status.

Acceptance and Payment

If an offer of settlement is extended, the taxpayer will be notified in writing and payment must be remitted in full within 15 days from the date of notice to the taxpayer, unless specifically stated otherwise by the Department. No payment plans are allowed for less than the full taxes, penalty, and interest due. If a payment is made and the bank does not honor the check, the Department will rescind the offer in settlement and the full tax liability including penalty and interest will be due.

Any overpayment of taxes for the following three years will be retained by the Colorado Department of Revenue and applied to the tax debt. The taxpayer may not reduce quarterly estimated payments or the amount of withholding during this time.