California is known for its frequent and severe wildfires, particularly in the summer and fall. These fires can have a devasting impact on communities, ecosystems, and the economy. In January 2025, Southern California was hit by a series of devasting wildfires, most notably the Palisades Fire and the Eaton Fire, which caused substantial damage in the Los Angeles area. These fires have become the focus of recovery efforts and financial relief programs, particularly in the 2025 tax filing season.

Impact of Wildfires on Tax Season 2025

As tax season 2025 begins, victims of California wildfires may have special obstacles in completing their taxes and may need additional relief or extensions. Fortunately, both the Federal Government and California state authorities provide tax help for those affected by disasters like wildfires.

Tax Relief Measures for Wildfire Victims

Tax filing extension:

The IRS provides automatic filing extensions to individuals and businesses affected by wildfires. This gives taxpayers in declared disaster zones extra time to file their returns without incurring penalties. Generally, the filing date is extended to October 15, 2025.

The California Franchise Tax Board (FTB) also offers similar extensions for state taxes.

Casualty Loss Deductions:

FEMA (Federal Emergency Management Agency) assisted payments to wildfire victims are not taxable. As a result, taxpayers do not need to include disaster relief assistance as income on their tax returns. If your home or business is in a declared disaster zone, you may be eligible for special tax benefits or deductions due to wildfire damage.

State-Specific Relief:

California provides programs that allow taxpayers to postpone property tax payments or reduce assessed property values in response to wildfire damage, offering further relief to individuals affected.

Automatic Filing Extensions:

If you live in an affected location, the IRS will automatically provide you an extension to file your taxes. You do not need to take any more steps to obtain this extension.

Local relief measures:

In addition to Federal and State relief, various local government initiatives also provide tax relief or financial help, which include property tax deferrals or extensions, and support programs to assist businesses recover and maintaining operations.

Steps to Take During Tax Season 2025 If You Are a Wildfire Victim

1. Claim casualty losses: Keep track of and document all wildfire-related damages (ex: home damage car damage, lost possession, etc.).
2. Consult a Tax professional: It is recommended that you speak with a tax professional who can walk you through the procedure, especially when it comes to seeking disaster-related tax relief.
3. Check for Relief Programs: Check for updates from the IRS and the California Franchise Tax Board (FTB) on new or expanded relief programs for wildfire victims. You may also be qualified for disaster assistance programs, which provide financial assistance in addition to tax benefits.
4. Document Your Payments: Keep detailed records of any fire-related losses and expenses, including receipts, photographs, and evidence of any relief payments received.

The recent wildfires have already caused significant challenges for individuals and businesses in California, but with available tax relief measures and recovery programs, those affected have a better chance of rebuilding and recovering their financial stability during the 2025 tax season. The wildfire victims can reduce the strain of recovery and receive much-needed financial assistance by taking advantage of the available tax relief measures by Ithe RS.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

As the Tax Season 2025 begins, tax refund also becomes a commonly used term while filing the taxes with the IRS. A tax refund is the money that the IRS returns to the taxpayers if they’ve overpaid the taxes. Filing your tax return is an important step in meeting tax obligations and potentially earning a tax refund if overpaid. Tracking your tax refund status is simple, and the IRS provides a few useful tools to keep you updated. Below is the step-by-step guide on how the tax refund process works, and what support system does the IRS provide in tax refund?

1. File your Tax Return

Filing your tax return with the IRS is the initial step to getting your tax refund. To file tax returns, collect all necessary documents including W-2s, 1099s, receipts for deductions, etc. Complete the tax return using Form 1040 or other applicable forms.

E-file: This is the fastest way of tax filing using electronic tax preparation software (ex: Turbo Tax, H&R Block, etc.) or directly through the IRS e-file system.

Paper file: If you choose, you can send a paper return to the IRS.

Mistakes in tax filing can result in delays or even tax audits. If you encounter discrepancies, our tax professionals can review your return to ensure compliance and accuracy.

2. IRS Processes Your Tax Return

Once you have filed your tax return, the IRS will process your tax return by checking the following.

Review for accuracy: In this step, the IRS will check your information such as social security numbers, income, deductions, and credits are correct.

Calculation of Refund: the amount of tax refund you’re entitled to will be calculated, based on total tax payments (via withholding or estimated payments) and the taxes owed.

3. IRS Issues Your Refund

Here is how your refund will be issued by the IRS:

Direct Deposit: This is the fastest option for tax refund, if you choose direct deposit on your tax return, the IRS will send your refund directly to your bank account. If you e-filed your return and there are no issues, by direct deposit you will get your refund in 21 days or less.

Paper Check: if you’ve opted for the paper check, the IRS will mail your refund to your address. Paper check refunds will typically take about 6 to 8 weeks to process and mail.

4. Track Your Refund

The IRS offers simple and reliable tools, that enable you to check the status of your refund after filing. The “Where’s My Refund?” tool is the simplest and most reliable way to check your return status online. You can get it through the IRS website or their mobile app. On mobile, you can use the IRS official app “IRS2Go” to track your refund status.

Steps to Use the “Where’s My Refund?” Tool:

Step 1: Open your web browser and visit the IRS official website.

Step 2: On the “Where’s My Refund” page, enter the required information.

• Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN)
• Choose your filing status from the list (single, married filing jointly, head of household, etc.)
• Enter the exact refund amount including any cents, as shown on your tax return

Step 3: Click on the “Submit” button after entering your information to access the refund status

Step 4: View your refund status.

The tool will display one of the following statuses:

• Return received – the IRS has received and it is processing your tax return
• Refund approved – your tax return is approved by the IRS, and it will be sent soon
• Refund sent – your refund has been issued either by direct deposit or paper check

Step 5: Check for daily updates.

Once a day the IRS will update the “Where is My Refund’ tool, usually overnight. So, for the most up-to-date information, check the IRS website once a day.

How to use IRS2Go?

Step 1: Download the App from the Google Play Store (Android) or the Apple App Store (iOS).

Step 2: After downloading, open the app, and select the “Where is My Refund’ option.

Step 3: Enter the Required Information (SSN, ITIN, etc.)

Step 4: Check Your Refund Status

5. Call the IRS (if needed)

If you can’t access the IRS website or mobile app, or if you have specific questions regarding your refund status, you can call the IRS refund hotline: 1-800-829-1040.

While the IRS provides tools to track your tax refund, discrepancies can sometimes arise. If you face issues with your tax refund—such as refund delays, tax audits, or incorrect refund amounts—our expert tax audit representation team is here to help.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

What is the Energy Efficient Home Improvement Credit?

The Energy Efficient Home Improvement Credit is a tax incentive for homeowners who make qualified energy-efficient improvements to their homes. This credit allows taxpayers to claim up to 30% of certain qualified expenses, including energy efficiency improvements, residential clean energy property, and home energy audits. The maximum credit one can claim in this tax season 2025 is $3,200 if taxpayers make qualified energy-efficient improvements to your home after Jan. 1, 2023.

What is the Residential Clean Energy Property Credit?

The Residential Clean Energy Property Credit is a tax credit for homeowners investing in renewable energy systems like solar, wind, geothermal, fuel cells, or battery storage technology.

Who is Eligible?

To qualify for the Energy Efficient Home Improvement Credit, the home must be your primary residence, located in the United States, and an existing home that you improve or add onto. For the Residential Clean Energy Property Credit, you may claim the credit for improvements to your main home, whether you own or rent it. The credit applies to new or existing homes located in the United States.

How to Apply?

To apply for these credits, taxpayers need to file IRS Form 5695 with their tax return. Make sure to keep records of your qualified expenses, including receipts and manufacturer certifications, to support your claim.

What are the New Changes for the Tax Year 2024-2025?

For the Energy Efficient Home Improvement Credit, starting from tax season 2025.

• Qualified Manufacturer Requirement: No credit will be allowed for an item unless it is produced by a qualified manufacturer recognized by the IRS.
• PIN Reporting: Taxpayers must report the Product Identification Number (PIN) for each qualifying item on their tax return to claim the credit.

For the Residential Clean Energy Property Credit, the credit percentage rate remains at 30% for property installed through 2032, but it will phase down to 26% for property placed in service in 2033 and 22% for property placed in service in 2034.

These credits provide a significant opportunity for homeowners to invest in energy-efficient and renewable energy improvements, reducing their tax burden while contributing to a more sustainable future.

Eligibility Requirements for Energy Efficient Home Improvement Credit

1. Primary Residence: The home must be your primary residence and located in the United States.
2. Existing Home: The credit applies to improvements made to an existing home, not a new home.
3. Qualified Improvements: The improvements must meet specific energy efficiency standards, such as:
   • Exterior windows and skylights must meet Energy Star’s most efficient certification requirements.
   • Exterior doors must meet applicable Energy Star requirements
   • Insulation materials or systems must meet the prescriptive criteria established by the International Energy Conservation Code (IECC) standard.
4. Business Use: If you use your home partly for business, the credit is based on the share of expenses allocable to non-business use.

Eligibility Requirements for Residential Clean Energy Property Credit

1. Main Home: The credit applies to improvements made to your main home, whether you own or rent it. The home must be located in the United States.
2. Qualified Clean Energy Property: The property must be new and meet specific requirements, such as:
   • Solar electric panels and solar water heaters must be certified for performance by the Solar Rating & Certification Corporation or a comparable entity. To get certified by the Solar Rating & Certification Corporation (SRCC), manufacturers must apply for OG-100 (solar collectors) or OG-300 (solar water heating systems) certification. They need to submit an application with product specifications, undergo testing at an SRCC-recognized lab, and pass a performance review. Upon approval, SRCC issues certification, which may require periodic renewal. For details, visit the SRCC Application Resources.
   • Wind turbines, geothermal heat pumps, and fuel cells must meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE). To qualify for the Energy Efficient Home Improvement Credit, wind turbines, geothermal heat pumps, and fuel cells must meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE). For detailed information on these efficiency tiers, please refer to the CEE Tiers and ENERGY STAR page.
   • Battery storage technology must have a capacity of 3 kilowatt-hours or greater.
3. Business Use: If you use your home partly for business, the credit is based on the share of expenses allocable to non-business use.

The Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit provide valuable incentives for homeowners to invest in energy-efficient and renewable energy improvements. These credits not only reduce your tax burden but also contribute to a more sustainable and eco-friendly future. By understanding the eligibility requirements, maintaining proper documentation, and staying informed about the latest changes, taxpayers can take full advantage of these credits and make impactful improvements to their homes. Keep in mind the importance of keeping accurate records and verifying that the products you install meet the required standards to ensure a smooth application process.

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

Contact

Telephone Number: (310) 498-7508

[email protected]

Tax disputes between the IRS and taxpayers often arise due to discrepancies in tax filings, misinterpretation of tax laws, or IRS audits. When a taxpayer undergoes a tax audit, they might contest the IRS’s evaluation, which can necessitate the use of Alternative Dispute Resolution (ADR).  ADR is a series of processes that allow taxpayers and the IRS to resolve tax problems outside of the typical litigation or formal appeals processes. The purpose of ADR is to provide taxpayers with a speedier, less expensive, and more flexible way to resolve issues with the IRS while reducing the adversarial nature of tax disputes.

This tax season 2025, the IRS has made significant modifications to its ADR programs to improve their efficiency, accessibility, and fairness. To enhance efficiency and accessibility, the IRS has introduced three pilot programs focusing on the Fast Track Settlement (FTS) and Post-Appeals Mediation (PAM) processes. These initiatives, effective from January 15, 2025, to January 15, 2027, aim to expedite dispute resolutions between taxpayers and the IRS.

Overview of the Pilot Programs

1. Expansion of FTS Eligibility: Traditionally, FTS was available to specific taxpayer segments. In the tax season 2025, the new pilot program broadens eligibility, allowing a wider range of taxpayers under examination in the Large Business and International (LB&I), Small Business/Self-Employed (SB/SE), and Tax Exempt/Government Entities (TE/GE) divisions to participate. This expansion aims to facilitate quicker resolutions by involving Appeals earlier in the examination process.
2. “Last Chance” FTS: This pilot introduces an opportunity for cases that have already been through the traditional Appeals process without resolution to re-enter FTS. By doing so, it provides a final chance for settlement before potential litigation, promoting efficiency and reducing the burden on both taxpayers and the IRS.
3. Concurrent Use of FTS and PAM: Previously, participation in FTS precluded taxpayers from utilizing PAM. The new pilot removes this restriction, allowing taxpayers to engage in both ADR processes. This change encourages the use of multiple resolution avenues, enhancing the likelihood of timely settlements.

Implications for Taxpayers

These pilot programs reflect the IRS’s commitment to making ADR processes more efficient and accessible. By expanding eligibility and providing additional opportunities for resolution, taxpayers can expect a more streamlined experience when addressing disputes. The concurrent use of FTS and PAM, in particular, offers flexibility, enabling taxpayers to explore multiple pathways to resolve their issues without the constraints of previous limitations.

Why ADR Matters in IRS Audits

IRS audits are conducted to verify the accuracy of tax returns, ensuring that taxpayers comply with federal tax laws. If an audit results in additional tax liabilities, penalties, or other disputes, taxpayers can challenge the IRS’s findings through appeals or ADR. The new FTS programs offer a faster, less adversarial way to resolve tax disputes compared to lengthy appeals or litigation.

How an IRS Audit Representation Firm Can Help

If you or your business is undergoing an IRS audit, working with a professional IRS audit representation firm can significantly improve your chances of a favorable outcome. These experts can:

• Guide you through the audit process
• Represent you in ADR proceedings, including FTS and PAM
• Negotiate settlements with the IRS to minimize liabilities.
• Ensure compliance with tax laws to prevent future audits.

The IRS’s introduction of new ADR pilot programs in the 2025 tax season reflects its commitment to making tax dispute resolutions faster and more accessible. Taxpayers undergoing an IRS audit now have improved options to resolve disputes efficiently through expanded FTS eligibility and mediation opportunities. If you are facing an IRS audit and need professional representation, seeking help from an IRS audit representative firm can be the key to a smoother resolution.

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

Contact

Telephone Number: (310) 498-7508

[email protected]

Introduced in 1975, the Earned Income Tax Credit (EITC) is celebrating its 50th anniversary in this 2025 tax season. EITC provides financial relief to millions of working families and individuals with low to moderate incomes. In the previous Tax Season, 2024, approximately 23 million workers and families received about $64 billion from EITC, with the average recipient receiving $2,743.

The EITC has made significant updates to its program to benefit taxpayers in this filing season of 2025. Below are the several changes that taxpayers must be aware of.

1. Increased Maximum Credit

The maximum credit has increased to $7,830 (up from $7,430 in 2023) for taxpayers with three or more qualifying children. For taxpayers with two qualifying children, the credit is up to $6,804. For taxpayers with one qualifying child, it is up to $3,995. The maximum credit for taxpayers with no qualifying children is $600 (up from $560). Individuals without children are eligible for the EITC, which provides credit even if they do not have dependents.

2. Broader Eligibility

Income limits have been increased a little for the 2025 tax season, making EITC available to a greater pool of eligible workers, particularly those with modest incomes. Investment income must be $11,600 or less to qualify for EITC, ensuring that the people who earn money from investments will also qualify for the credit.

3. Tax Refunds for Eligible Workers

For qualifying workers, EITC can provide a significant refund, reducing tax payments or even resulting in a refund if no taxes are payable. Even those workers without children owe no federal income tax, they may be eligible for a return through the EITC.

4. Enhanced Filing Procedures with IP PIN

To combat identity theft and streamline processing, the IRS now allows taxpayers to electronically file returns even if a dependent has been claimed on a separate, previously filed return. This is possible if the primary taxpayer on the subsequent return includes a valid Identity Protection Personal Identification Number (IP PIN). This change aims to reduce processing times and expedite refunds for those affected by duplicate dependent claims. Taxpayers without an IP PIN will have their e-filed returns rejected if a dependent has already been claimed by another filer. To obtain an IP PIN, taxpayers can use the IRS’s online tool, ensuring they have this six-digit number to protect their tax filings.

Who is Eligible for the EITC in Tax Season 2025?

The EITC is designed to benefit low-to-moderate-income workers, particularly those with children. Eligibility for the 2024 tax year (filed in Tax Season 2025) depends on income level, filing status, and the number of qualifying children.

Basic Eligibility Requirements:

• Must have earned income from employment, self-employment, or certain disability payments.
• Investment income must be $11,600 or less for the tax year 2024.
• Must have a valid Social Security number for themselves, their spouse (if filing jointly), and any qualifying children.
• Cannot file as “Married Filing Separately.”
• Must be a U.S. citizen or resident alien all year.
• Cannot claim foreign earned income exclusion.

How to Claim the EITC

Step 1: Determine Eligibility: Use the IRS EITC Assistant Tool to confirm eligibility. Workers also may visit the Child-related tax benefits comparison page to learn more about basic eligibility rules for the EITC and several other tax credits

Step 2: File a Federal Tax Return: Even if not required to file due to low income, taxpayers must file a tax return (Form 1040) and include Schedule EIC if they have qualifying children.

Step 3: Provide Required Information: Include earned income details (W-2s, 1099s, self-employment records). If claiming children, provide Social Security numbers and details proving residency.

Step 4: Choose E-File for Faster Processing: E-file with Direct Deposit for the fastest refund.

Step 5: Expect Delayed Refunds If Claiming EITC: Due to anti-fraud measures, the IRS cannot issue refunds before mid-February if the return includes EITC or Additional Child Tax Credit (ACTC).

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

Contact

Telephone Number: (310) 498-7508

[email protected]

Officially, the 2025 tax season started on Monday, January 27.  The IRS anticipates over 140 million individual tax returns in this tax season 2025 to be filed before the federal deadline on Tuesday, April 15. This year more than half of these returns are expected to be filed with the assistance of a tax professional. To ensure accuracy and safeguard against potential scams, the IRS strongly encourages taxpayers to seek help from a trusted tax professional.

Here are some important updates and tips to be aware of while you begin your tax filing.

IRS Online Account

For the average taxpayer, filing the annual tax can be confusing. There are numerous tools and services available to help individual taxpayers, one of which is an IRS Online Account. This digital platform allows taxpayers to quickly access tax information, making the tax season 2025 easier and helping to safeguard your tax information.

Benefits of IRS Online Account

• The IRS Online Account allows taxpayers to access information on their payoff amount, which is updated on the current day
• Taxpayers can view the balance for each tax year in which they owe taxes
• It displays their payment history
• Key details from their most recent tax return, as originally submitted
• Payment history and the details of any payment schedule they have set up with the IRS
• Digital copies of any IRS notices that they have received

Gather and organize all year-end income documents

It is significant for taxpayers to have all of the relevant paperwork before starting to prepare their returns. This allows them to file a complete and accurate tax return. Here is some information that taxpayers need before filing their taxes:

• Social Security Numbers
• Bank account and routing numbers
• Sources of income
• Types of deductions

 Understand refund timing and how to avoid delays

Several factors can influence the timing of a refund once the IRS receives the tax return. While most of the refunds from the IRS are issued in less than 21 days, some returns may require further review and processing time if there are any problems, missing information, or indications of identity theft or fraud.

Use direct deposit for a faster refund

The quickest method for taxpayers to receive their refund is to file electronically and select direct deposit. Since refunds are electronically deposited, there is no chance of a paper check being stolen or lost in the mail. It’s also the easiest way to get a refund.

Free filing options

75% of all taxpayers can use free brand name tax software to prepare and file their federal income tax returns online through IRS Free File. All taxpayers, regardless of income level, can use the IRS Free File Fillable Forms.

Identity Protection Personal Identification Number (IP PIN)

Tax season comes not only the responsibility of filing returns but also the increased risk of identity theft. In response, from this tax season 2025, the IRS has created a key tool for taxpayers: The Identity Protection Personal Identification Number (IP PIN).

The IRS IP PIN is a six-digit number provided to eligible taxpayers to help prevent fraudulent use of their Social Security Number (SSN) on federal income tax returns. Each year a new IP PIN will be generated. The IRS adds an extra layer of security by providing a unique PIN to each taxpayer who opts in, making illicit access much more challenging.

Applying for an IP PIN is simple and can be done online through the IRS website. The process includes validating your identity via the IRS secure portal, which may require information from previous tax returns, personal accounts, or personal identity documents. The IRS offers alternative ways to apply for an IP PIN. These include applying via mail or in person at an IRS office.

1099-K Threshold Changes

Form 1099-K is used to record the yearly gross amount of transactions (e.g., digital payments, credit card/debit cards, store value of gift cards, payment applications, and online marketplaces) processed by third-party settlement organizations (TPSO). The form is used for reporting taxable income. A much-anticipated 1099-K reporting threshold change for online marketplaces and payment apps will come into effect for the following two years. Form 1099-K should be sent to:

• Taxpayers who recorded more than $2,500 in business transactions during calendar year 2025
• Taxpayers who recorded more than $600 in business transactions in calendar year 2026

Digital Assets on Taxes in Tax Season 2025

The IRS definition of a digital asset is any digital representation of value maintained on a cryptographically protected distributed ledger (blockchain) or similar technology. Cryptocurrencies, NFTs, stablecoins, and tokenized securities are increasingly popular among digital assets. Anyone who sold cryptocurrency got it as payment, or had other digital asset transactions must appropriately report it on their tax returns.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

Tax debt can be a daunting challenge for many individuals and businesses. Incurring debt with the Internal Revenue Service (IRS), whether due to financial hardships, errors in tax submissions, or late payments, can lead to considerable stress, penalties, and possible legal repercussions. When taxpayers cannot pay their full tax liability, the IRS offers a potential solution known as an Offer in Compromise (OIC). This program allows taxpayers to settle their tax debt for less than the full amount owed, providing relief in certain circumstances.

What is an Offer in Compromise?

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. This option is available to those who can demonstrate that paying the full amount would cause financial hardship or that there is doubt as to the collectability of the full amount.

Types of Offers in Compromise

If you owe IRS the debt in this tax season 2025, understand the three types of OIC programs below to enroll.

1. Doubt as to Collectability: This is the most common type of OIC. It applies when the taxpayer’s income, expenses, and asset equity indicate that they cannot pay the full amount of the tax debt.
2. Doubt as to Liability: This type of OIC is used when there is a genuine dispute about the accuracy of the tax debt. For example, if the IRS made an error in calculating the tax liability, the taxpayer may qualify for this type of offer.
3. Effective Tax Administration: This option is available when paying the full tax debt would not be fair or equitable due to exceptional circumstances, such as a serious illness or disability.

Eligibility for an Offer in Compromise

To qualify for an OIC, taxpayers must meet several criteria as below.

• File all required tax returns and make all required estimated tax payments.
• Not be in an open bankruptcy proceeding.
• Have a valid extension for a current year return (if applying for the current year).
• Employers must have made tax deposits for the current and past two quarters before applying.

Taxpayers can use the IRS pre-qualifier tool to find out if they are eligible.

How to apply for an Offer in Compromise?

The OIC process can be complex and time-consuming, but with the help of a tax professional, it can be navigated successfully. Here’s an overview of the steps involved:

1. Determine Eligibility: A tax professional can help you assess whether you qualify for an OIC based on your financial situation.
2. Complete the Application: The OIC application requires detailed financial information, including various forms such as Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses. Accuracy is critical, as errors can lead to rejection.
3. Submit the Offer: Along with the application, you must submit a non-refundable application fee of $205 and an initial payment toward your offer. To calculate an initial offer amount, you will need to gather information about your financial situation, including cash, investments, available credit, assets, income, and debt. A tax professional can extend their hands in estimating the initial payment offer.
4. IRS Review: The IRS will review your application, request additional documentation if needed, and make a determination. This process can take several months.
5. Acceptance or Rejection: If your offer is accepted, you must comply with the terms of the agreement, which may include making payments over time. If your offer is rejected, you may appeal the decision or explore other tax resolution options.

Make a copy of your application package (all the forms you have filled) and keep it for your records. Mail the completed application package to the appropriate IRS facility mentioned in this booklet.

Payment Options for OIC

You can pay your offer amount in two ways, either a lump-sum payment or a series of periodic payments. Your initial payment varies depending on your offer and the payment method you choose.

1. Lump-sum Payment: With this option, you must make an initial payment of 20% of the total amount with your application and then pay the remaining balance in no more than five payments. You will have up to five months to pay the whole amount after your OIC is accepted.

2. Periodic Payment: In the periodic payment method, you can make an initial payment with your offer and then continue to pay the remaining amount in monthly installments until it is paid in full.

If you meet the low-income certification requirements which is mentioned in Form 656, Section 1, you do not need to make an initial payment. Furthermore, if you select the periodic payment option, you must continue to make monthly payments while the IRS reviews your OIC application.

How a Tax Professional Can Help

Navigating the Offer in Compromise process can be challenging, especially for those unfamiliar with IRS procedures and requirements. A tax professional can provide invaluable assistance by:

• Evaluating Your Financial Situation: A tax professional can help you determine whether an OIC is the right solution for your tax debt.
• Preparing Your Application: Ensuring that your application is complete, accurate, and supported by the necessary documentation is critical to success.
• Negotiating with the IRS: Tax professionals have experience communicating with the IRS and can advocate on your behalf to achieve the best possible outcome.
• Exploring Alternatives: If an OIC is not the right option, a tax professional can help you explore other solutions, such as installment agreements, penalty abatement, or currently not collectible status.

If the IRS accepts your OIC, you must pay the offered sum and follow all other requirements of the agreement. This includes filing your future tax returns and paying any taxes owed on schedule during the next five years. If your OIC is rejected by the IRS, you have 30 days to file an appeal. You can request an appeal by submitting Form 13711 or a separate letter.

If you’re not sure about the OIC option, speak with a tax professional who can explain the implications of making an offer. IRS Audit Group is the best in the business, tailored to your specific scenario, and will handle all your tax concerns from start to end.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The Internal Revenue Service (IRS) and the Coalition Against Scam and Scheme Threats (CASST) have announced several changes for the 2025 tax filing season. These changes are designed to protect taxpayers from becoming victims of scams and schemes and to prevent tax professionals from having their credentials compromised. Below are a few changes that are important for taxpayers before filing.

1. New Fuel Tax Credit Statement

To protect taxpayers, the IRS has introduced a new form, the “Statement Supporting Fuel Tax Credit (FTC) Computation – 1,” to educate taxpayers on the eligibility requirements for claiming the Fuel Tax Credit. This credit is designed for off-highway business and farming use.

Key Details:

• Who Should File the New Statement? Individuals filing Form 1040, U.S. Individual Income Tax Return, for the tax year 2024 who claim non-taxable use of gasoline, aviation gasoline, undyed diesel fuel, or undyed kerosene on Form 4136, Credit For Federal Tax Paid On Fuels.
• Location of the New Statement: The “Statement Supporting Fuel Tax Credit (FTC) Computation – 1” is in the instructions for Form 4136 for the tax year 2024. The statement should be completed and attached to Form 1040 along with Form 4136.
• Information Required: The statement asks for business information, including the business name and Employer Identification Number (EIN), and details about the machinery or vehicle for which the fuel was purchased. Taxpayers will also need to complete a table showing the relationship between the estimated purchase price of the fuel and the actual cost and gallons reported on Form 4136.
• Documentation: Taxpayers should maintain receipts and explanations with their records but should not include them with the tax return. The IRS may request proof, such as receipts, later. No proper documentation can even lead to the IRS issuing notice of tax audits. In such a case, a professional tax audit representation firm must be engaged to represent you with the IRS officials.
• Erroneous Claims: Claims based on frivolous positions or intended to delay tax administration are subject to a penalty under the Internal Revenue Code (IRC) 6702(a). This penalty is $5,000 for each improper credit claimed and is assessed against each spouse on a married filing jointly return.

2. Increased Review of “Other Withholding” Claims

The IRS is stepping up its review of “other withholding” claims on Line 25C of Form 1040. Taxpayers are encouraged to attach supporting documentation to their returns to reduce potential delays in verification.

Key Forms Covered by Line 25C:

• Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.
• Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax.
• Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.
• Form W2G, Certain Gambling Winnings.
• Form 8959, Additional Medicare Tax.
• Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc.

3. Addressing “Ghost Preparers”

During the tax season 2025, the IRS will send letters to taxpayers whose returns appear to have been completed by a paid preparer who did not sign or include their PTIN. These letters are intended to educate taxpayers about the dangers of “ghost preparers” and to help the IRS identify those who are preparing returns without proper identification.

Issues with Ghost Preparers:

• Ghost preparers can leave taxpayers exposed to inaccurate claims.
• They often vanish after filing the return, leaving the taxpayer to deal with any issues that arise.

4. CASST Task Force and Public-Private Partnership

Convened by IRS Commissioner Danny Werfel, the CASST task force includes federal and state tax agencies, software and financial companies, and key national tax professional associations. This group has formed a new public-private partnership focused on combating scams and schemes.

Commissioner Werfel’s Statement: “Since its creation, this special group across the tax community has been working to take extra steps to protect taxpayers and the tax professional community. This effort includes expanding outreach and education on emerging scams, developing innovative approaches to identify potentially fraudulent returns at the point of filing, and creating infrastructure improvements to protect taxpayers as well as federal, state, and industry tax systems.”

Stay Vigilant

The IRS and CASST members anticipate an increase in misinformation spread by influencers and scammers around the 2025 tax season. Instead of relying on ill-informed information from social media or shady tax return preparers, taxpayers should consult trusted tax professionals.

Trusted Sources for Tax Information:

• Follow IRS social media.
• Visit an IRS walk-in center.
• Talk to a certified tax professional.

Reporting

The IRS encourages the public to report improper and abusive tax schemes, as well as tax return preparers who knowingly prepare improper returns, including “ghost preparers.” Reports can be made by mailing or faxing a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, along with supporting material, to the IRS Lead Development Center.

• Mail: Internal Revenue Service Lead Development Center MS7900 1973 N. Rulon White Blvd Ogden, UT 84404
• Fax: 877-477-9135

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

The Internal Revenue Service announced the 2025 tax season to begin on January 27, 2025. Understanding tax deadlines is crucial for effective financial planning and compliance. Missing key dates can lead to significant consequences, including penalties for late filing or payment, accumulating interest on unpaid taxes, and potential legal implications such as tax audits, wage garnishments, or other enforcement actions. Here are the key tax deadlines for 2025:

Personal Tax Filing Deadlines:

• April 15, 2025: Deadline for filing individual income tax returns (Form 1040).
• October 15, 2025: Extended deadline for individuals who have filed for an extension.

Business Tax Filing Deadlines:

• March 15, 2025: Deadline for Partnerships (Form 1065) and S-Corporations (Form 1120-S).
• April 15, 2025: Deadline for C-Corporations (Form 1120).
• September 15, 2025: Extended deadline for businesses that have filed for an extension.

Other Key Deadlines:

Any deadline on a weekend or legal holiday is typically extended to the next business day. For example, since June 15, 2025, is a Sunday, the deadline will be June 16, 2025.

State-Specific Deadlines and Extensions

While the federal tax filing deadline is typically April 15, state tax deadlines can vary. Many states align with the federal deadline, but some set different dates due to state-specific holidays or administrative decisions. For example, in Massachusetts and Maine, Patriots’ Day can affect the tax deadline. A few portals offer a state-by-state breakdown of tax deadlines. Additionally, certain states without income taxes may have other tax deadlines to consider. It’s essential to consult your state’s tax authority to confirm specific deadlines and ensure timely compliance. Federation of Tax Administrators provides a comprehensive list of state tax forms and filing options.

Additionally, the IRS provides information on tax relief for taxpayers impacted by specific events, which may affect deadlines. The IRS provides a list of state-specific tax resources that may help understand local requirements: IRS State Tax Links.

Additional Resources and Tools

Links to IRS forms and official resources:

• • Form 1040 instructions.
  • Form 4868 for individual extensions.
  • Form 7004 for business extensions.

IRS Customer Helpline: 1-800-829-1040

Avoiding Penalties and Interest

Filing your taxes on time and paying any amounts due is critical to avoid unnecessary penalties and interest charges. Understanding the common causes of penalties and implementing simple strategies can save you from financial strain and added stress.

Common Reasons for Penalties

Tax penalties typically arise due to two primary reasons:

Late Filing vs. Late Payment:

Tips to Avoid Penalties

By taking proactive steps, you can minimize the risk of penalties:

• Pay at Least 90% of Your Estimated Liability: Paying most of your estimated taxes by the filing deadline can help avoid underpayment penalties.
• Set Reminders for Deadlines: Use digital tools or calendar alerts to stay on top of filing and payment dates.
• Use IRS Resources: Access tools like the IRS Tax Calendar or consult with tax professionals to ensure compliance.

Conclusion

Understanding and adhering to tax deadlines is vital for effective financial planning and avoiding unnecessary penalties or stress. As we’ve outlined, key dates like April 15, 2025, for individual filing and March 15, 2025, for business filing should be marked on your calendar. Extensions, while helpful, only grant more time to file—not to pay. Planning ahead, estimating your tax liabilities, and making payments by the original deadlines can significantly reduce the risk of penalties and interest.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]

IRS has begun to accept applications for Low Income Taxpayer Clinic (LITC) matching grants from all qualified organizations. Eligible organizations can start applying from April 22, 2024, to June 12, 2024, for the grants awarded from Jan 2025 to Dec 2025.

What is Low Income Taxpayer Clinic (LITC)?

Low-Income Taxpayer Clinics (LITCs) are organizations that provide free or low-cost assistance to low-income taxpayers who have disputes with the IRS or need help understanding and complying with their tax obligations. LITCs are typically independent from the IRS and offer services such as representation in IRS audits, appeals, and tax court proceedings, as well as education and outreach to taxpayers.

Who is an Eligible Organization?

To qualify for IRS grants to operate a LITC, organizations must meet certain eligibility criteria outlined by the IRS.

1. A clinical program at an accredited law, business, or accounting school whose students represent low-income taxpayers in controversies with the IRS under the supervision of a qualified representative (and when necessary, refer to qualified volunteers to provide representation when the students cannot do so);
2. An organization whose employees and volunteers represent low-income taxpayers in controversies with the IRS;
3. An organization exempt from tax under IRC Section 501(a) whose employees and volunteers represent low-income taxpayers in controversies with the IRS or refer low-income taxpayers to qualified representatives to provide representation;
4. An organization described in examples 1), 2), or 3) that also operates a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC; and
5. An organization that operates a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC.

IRC Section 7526(c)(5) requires clinics to provide matching funds on a dollar-for-dollar basis for all federal funds awarded by the IRS. The matching funds requirement ensures that each LITC grant represents a financial partnership between the clinic and the federal government for the benefit of low-income and ESL taxpayers.

What’s New in Tax Season 2024?

• The eligibility criteria have been expanded to better serve low-income and ESL taxpayers. It removed the requirement for eligible organizations to provide direct controversy representation. Representation may be provided by referring taxpayers to qualified representatives who have agreed to handle the referred cases on a pro bono
• For previous years, the maximum annual federal funding available was $100,000, which is increased to $200,000 as included in the President’s fiscal year 2025 Budget Request. If the amount differs when Congress appropriates funds, the LITC Program Office will adjust all awards accordingly.

How To Apply?

There are two types of LITC grant applications: LITC Full Grant Applications and NCC Requests.

1. A new applicant seeking an LITC grant award for the first time, or a returning clinic whose LITC award period has ended or will end on December 31, 2024, must submit a Full Grant Application to apply for 2025 funding. LITC Full Grant Applications must be submitted electronically via Grants.gov.
2. A returning clinic funded with a multiyear LITC grant that ends after December 31, 2024, must submit an NCC Request. All NCC Requests must be submitted via GrantSolutions at grantsolutions.gov.

When will the Grant be Awarded?

Qualified applicants will receive notification of their selection for the award in October 2024 for the 2025 grant year. Award recipients are expected to attend the Annual LITC Grantee Conference, scheduled for December 2024. This conference offers an invaluable opportunity for new and returning LITCs to connect, exchange best practices, and receive training on tax law topics relevant to low-income and ESL taxpayers.

Contact Information: For any inquiries regarding the LITC Program or the grant application process, you can contact the LITC Program Office by phone at 202-317-4700 (not a toll-free call) or via email at [email protected].

IRS Lists Non-Covered/ Partially Covered Locations

Though the IRS makes an immersive effort to support LITCs in serving low-income taxpayers, there are still many areas that need to be covered by LITCs to serve the taxpayers of those regions. IRS lists the below areas that are either partially covered by any LITCs or completely not covered.

• Florida – Citrus, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, Taylor, Brevard, Lake, Orange, Osceola, Seminole and Volusia counties.
• Hawaii – the entire state.
• Kansas – the entire state.
• Montana – Blaine, Broadwater, Carbon, Carter, Custer, Daniels, Dawson, Deer Lodge, Fallon, Fergus, Flathead, Garfield, Golden Valley, Granite, Jefferson, Judith Basin, Lincoln, Madison, McCone, Mineral, Missoula, Musselshell, Petroleum, Phillips, Pondera, Powder River, Powell, Prairie, Richland, Sanders, Sheridan, Stillwater, Sweet Grass, Toole, Treasure, Valley, Wheatland and Wibaux counties.
• Nevada – the entire state.
• North Dakota – the entire state.
• South Dakota – the entire state.
• West Virginia – the entire state.
• The territory of Puerto Rico – the entire country.

IRS Assistance in Application Process

IRS continues to help applicants through various webinars and direct inquiries to guide them in the application process. Questions about the LITC Program or the grant application process can be addressed to the LITC Program Office by email at [email protected]. Alternatively, you may contact Karen Tober by email at [email protected].

The following important dates help organizations navigate the application process.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles; California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.  https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

[email protected]