Services
TAXATION ASSISTANCE
IRS AUDIT
IRS APPEAL
IRS LIENS
IRS
LEVY
OFFER IN COMPROMISE
PAYROLL TAX PROBLEM
SALES TAX AUDIT
TAX PLANNING AND PREPARATION
INSTALLMENT
AGREEMENT
STATE
LABOR PROBLEM
FINANCIAL
ASSISTANCE
FINANCIAL CONSULTING
FINANCIAL ANALYSIS
FINANCIAL PLANNING
FINANCIAL STATEMENT ANAYSIS
NEW BUSINESS CONSULTATION
BUSINESS AQUISITIONS
LOAN DEBT
APPLICATION
LEASE vs. BUY ANALYSIS
CASH
MANAGEMENT
1- Computer and classifiers:
The IRS computer is to blame for 75% of all audit. Tax return date is sent to the IRS National Computer Center where it is analyzed by a computer program called the Discriminate Function. Each tax return is given " DIF " score- the higher the DIF score, the more audit potential the return has.
2- Other Reason for audit:
a)
IRS special Target:
Every
year , the IRS decides that certain occupations need special scrutiny.
Past favorites have included doctors, waitperson, and airline pilots.
Also targeted are people working for or running cash businesses..
b)
Market Segment specialization program
The
IRS is zeroing in on 31 different types of workers, including truckers,
attorneys, morticians, gas station, owners auto dealers, insurance agency
owners, telemarketers and check cashing service owners..
c)
Prior audits:
Previous
IRS audits often beget new ones. If you were audited and IRS made large
adjustments, you have a higher chance than most of hearing from the IRS
in the future- although it is not certainty...
d)
Criminal activity:
If
you are charged with a crime involving large cash transactions, such as
drug trafficking, expect an IRS audit, if not a criminal tax investigation.
Tax code requires that all income , from sources legal or illegal, be
reported.
E)
Amended returns and refund claims:
You
may file an amended tax return at any time within three years of the date
the original tax return was due and filed. The audit likelihood for amended
returns claiming refund is fairly high.
F)
Information's Tips:
EX-Spouses,
disgruntled business associates, former employees and law enforcement
agencies can all report you to the IRS.
G)
Random selection:
The
IRS selects about 50000 individual taxpayers at random every three years
for a taxpayer compliance measurement program (TCMP) audit. TCMP audits
are excruciating line-by-line examinations of a tax return.
3- Types of Audits:
| G) Random selection: | ||
| a) Office | tb) Field | tc) Correspondence |
After the audit , the IRS sends an examination report with proposed adjustment-additional taxes, penalties and interest. If you don't sign and return a copy of the report within a few weeks, IRS usually sends a 30-day letter explaining how to protest the report. "Protest" is the official term for appealing and IRS determination. You must protest within 30 days of the date in the appeal notice letter- not the date you received it.
If the IRS sends you a tax bill and you don't contest or pay it, the IRS has the right to inform the public that you owe taxes. This is done by recording a notice of Federal Tax Lien at your county recorder's office. The lien is placed on public record where you live or own real estate ( or both).
A recorded tax lien is a notice to the world that you owe taxes. The IRS can not collect any money by just filing a tax lien. Instead the IRS must seize your property by way of a levy- to collect what you owe. Usually this means taking money held for you by others, such as your bank, stockbroker or employer.
It is sometimes possible to wipe your tax slate clean at an enormous discount. There is no bottom limit on what the IRS will accept, if you know how to make your offer. There are cases where the IRS has accepted a little as 5% of an outstanding tax bill-including interest and penalties and called it even. This procedure is called the offer in compromise.
IRS collectors are extremely tough to deal with if you owe payroll taxes. Keep in mind that revenue officers can seize assets and force you out of business if you owe back payroll taxes. The trust fund recover penalty is one of the scariest parts of the entire tax code. The penalty can be assessed against low-level or innocent employees who never dreamed it could happen.
IRS
investigations of business owing payroll taxes are carried on by specially
trained Revenue officers. They begin by putting together a list of people
who had authority over paying the bills of the business the primary considerations
are:
*
Who signed (or signs) the checks?
*
Who made ( or makes) the financial decisions in the business?
*
Who had ( or has) the power to pay or direct payment of bills?
*
Who had ( or has) the duty of tax reporting?
The objective of an audit is to verify that you have correctly reported the tax or fees on your returns. In a sales tax audit, for example, the auditor wants to determine the following about the returns that you filed:
*
Have you reported all gross receipts from sales of tangible personal property
and taxable labor and service?
*
Have you reported the cost of all business equipment and supplies that
you purchased without tax either from out-of-state vendors or for resale?
*
Did you properly apply tax to your sales and uses of tangible personal
property?
The
auditor's goal is to answer these questions as accurately as possible
in the minimum amount of time.
Throughout the year, we advise, represent, and prepare tax return for individuals, partnership, corporations, estates, trusts and any other entities with tax reporting requirements.
Most tax collectors will grant installment agreements if they don't believe you can make a full payment. In a few states, to get an installment plan, you must prove that you would be deprived of the necessities of life if your assets or wages were seized.
Any employee receiving less than the wage to which the employee is entitled, may recover in a civil action the balance of the wages, including interest, thereon, and equal amount as liquidated damages, together with the cost of the suit and reasonable attorney 's fees, notwithstanding any agreement to work for a lessor wage.
When people are asked what most threatens their investment returns, what do they answer? Many say it's risk. Other say poor Management. Still others say inflation. Good guesses, but they are all wrong.
Risk
is intimidating, but you can control it. Poor management can hurt a portfolio,
but you can replace a manger. You can not control inflation, but at its
worst, inflation in America has not taken a bigger bite out of your earnings
than the biggest threat of all: Taxes!
Every
year taxes can take a third of your earnings and more. A big part of your
interest, dividends and capital gains is just gone. Have today's tax law
left you any legal way to avoid this threat ? Indeed they have.
You usually want to know the answer to several financial questions. Given your assumptions about 50 to 100 different variables ( sales growth rates, receivable collections, rent, wage levels, salaries, interest rates and so on) you need to ask the following question:
1) How much money I need to maintain a positive cash flow?
2) When exactly will I need this money?
3)
What kind of money ( debt or equity or both) should it be??
Answering
these question is almost impossible when you use a simple set of stand-alone
projections. Our financial analysis system will help you to answer these
questions.
Six steps to building your financial situation:
1-
Increase your cash flow
*
Earn additional income
*
Manage expenses
2-
Manage Debt
*
Consolidate debt
*
Eliminate debt
3-
Create Emergency Fund
*
Save three months' income
*
Prepare for emergency expenses
4-
Ensure proper protection
*
Protect against loss of income
*
protect family assets
5-
Build long-term savings
*
Outpace inflation
*
Minimize Taxation
6-
Preserve your Estate
*
Help limit probate costs
*
Maintain privacy
Our financial analysis system will help you to achieve these six steps and build your financial life style,
Analyze accounting reports which typically include: Income statement, Balance sheet, Statement of cash flow, and other supporting schedules.
a)Income Statement
The financial statement that shows all income, expenses, gains, and losses for an accounting period. The difference between revenues and expenses is called the " net income" this report is frequently called a " P & L. "
b)
Balance sheet
The
financial statement that shows the financial position of the business,
as of a particular date, by listing the balances of the company's asset,
liability, and equity accounts.
c)
Statement of cash flow
A financial
report which explains the change in the cash balances as shown on consecutive
balance sheet reports.
The entity in which a taxpayer does business has far reaching impact. and yet, frequently this is a "quick question" there is no "quick answer".
What is needed is a well thought out answer, after careful consideration of the client, the business and the applicable tax rules. Finding the right choice of entity must be a group effort. We should discusses and, when appropriate, compares and contrasts the rules as they pertain to c-corporation, partnership (general and limited), limited liability companies and sole proprietorships throughout the life cycle of the business.
The final main entry strategy is to acquire a going concern. This can tremendously simplify the process of getting into business. A business an be viewed as basically a bundle of habits-customer buying, suppliers supplying, employees doing their jobs. In a going concern, these habits are already present. The premises are set up, any necessary permits are in effect.
Two important needs can be circumvented by the entrepreneur through entering business via acquisition: the need for expertise and the need for capital. Expertise is a going concern should already be present in employees of the business. The need for capital in acquisition entry is often circumvent by having the selling owner help with financial through leveraging the buyout.
Our Loan & Debt application program will help you:
1) Working Capital-Getting cash from receivable and inventories.
2) When exactly will I need this money?
3) Sources of short-term cash-more payable, less receivable.
4) Obtaining bank loans through accounts receivable financing.
5) Obtaining loans against inventory.
6) Obtaining " financing " from customer prepayments.
7) Choosing the right mix of short-term financing.
8) Traditional bank lending ;short term bank loans.
9) Obtaining term loans from insurance companies
10) Obtaining term loans from pension funds.
11) Equipment financing.
12) Using equipment leasing as a financial sources.
Leasing become popular in recent years because there has been a trend emphasizing the ability to use property over the legal ownership of property. Other reasons often mentioned include the sharing of tax benefits between lessors and lessees. But the big incentive for leasing continues to be the nontax attributes such as flexibility, a hedge against obsolescence and inflation risk, service and maintenance contracts, convenience, lower costs, and off-balance-sheet financing.
Our consulting practice will help you to manage your cash. The cash flow statement is important because it prevents you from equating sales with cash flow unless sales are actually cash sales. It also tells you what your minimum cash point will be over the time period in question. From a projections perspective, the cash flow statement tells you how to manage the cash you have. It gives you the insight and time to react, to decide how to spend ( or not spend ) cash under a variety of circumstances.
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Barouti Financial Services ,LLC.
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