tax compliance

Tax Compliance – how to get in tax compliance with the IRS.

tax complianceLooking to resolve your tax debt with the IRS?  Unaware of all of the steps involved?  The first step is always tax compliance.  You must be fully compliant in order for the IRS to consider certain tax resolutions. So, what exactly does compliance mean?

What is Tax Compliance?

Do not feel alone.  IRS tax liabilities can happen to anyone.  Many taxpayers make phone calls to tax attorneys for help in complete shame wondering if he or she will understand the hardship that caused all of their tax problems.  There are many reasons tax problems arise such as illness, family crisis, a turn in the economy to name a few, or maybe it is just due to a simple unintentional oversight.

Tax Return Compliance

To obtain some sort of tax resolution with an installment agreement or offer in compromise (settlement for less than you owe), the IRS requires that you be “in compliance.” All unfiled tax returns that are required to be filed must be filed.  Not a difficult thing to do, but it is quite common for taxpayers to be delinquent in filing their tax returns.

The next step is to identify the delinquent returns that need to be filed.  This is easily done by calling the IRS and requesting a “compliance check.”  The IRS representative will give you a list of tax return years that need to be filed.  Be sure to ask if any substitute returns have been filed by the IRS for those years.  Obtain wage and income transcripts and account transcripts for those years to assist you with filing.  This is important, especially if you do not have records of your own to prepare your returns for the non-compliant years.

Tax deposits and estimated tax payments

If you are self-employed or run a business, you must be compliant with all federal tax deposits and/or quarterly estimated deposits. This is where most taxpayers run into problems due to calculation errors or simply by missing a deposit due to various personal and business reasons.  Taxpayers put that money elsewhere and then try to make it up somewhere in the year and end up with tax debt plus penalties.

Many good, honest people fall out of compliance and run into tax-related issues.  Try not to avoid the situation.  Face your tax problems head on, educate yourself to get back into compliance or look to a tax attorney for help.

Estimated tax payments for individuals

In order to obtain tax resolution, all quarterly estimated tax payments must be paid.  They are due April 15th, June 15th and September 15th of the current year and January 15th of the following year.  Many taxpayer’s wonder how much they should be paying and how to estimate amounts.  It is easiest to look on your last tax return and divide the tax liability by four.

Also, your CPA can assist you with estimating those payments if you anticipate your next return to be substantially different than your present one. There is also IRS estimated tax payment information at IRS.gov that can assist you in determining your estimated payments in an attempt to eliminate future liability on your next return.

Estimated tax deposits for businesses

Just as certain individuals do, businesses may also have to make quarterly estimated payments toward future return years. It pretty much works the same, but in addition to paying your quarterly tax payments, businesses must also be current with their required federal 941 employment tax deposits and possibly with their 940 unemployment taxes, as well.

941 employment tax deposits are due either quarterly, monthly, or semi-weekly depending on the amount of wages that are issued each quarter. IRS Notice 931 can assist you with these types of filings and payments.

Tax return and estimated tax compliance is the IRS’s way of ensuring that taxpayers will not incur tax debt at tax time.  Stay ahead of this to avoid tax problems that may result in tax liens, bank levies and wage garnishments.

If you have questions about Tax compliance – The San Diego Tax Attorneys at Delia Law have many years of tax preparation and tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation at (619) 639-3336. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

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