Tax season can be a stressful time for those who run behind the filing schedule. Taxpayers who aren’t able to file their returns for tax season 2023 by April 18, 2023, deadline, can request an extension. Filing an extension will give an additional six months to file taxes. However, it is important to note that an extension does not give taxpayers extra time to pay any taxes owed. Taxpayers need to pay their federal income tax due by April 18, 2023, to avoid interest and penalties.

If you have missed paying the taxes and/or failure to file an extension before the deadline, the following options are the next actions available now.

Option 1: Pay Taxes as Soon as Possible.

If one owes taxes, it is important to pay them as soon as possible. If you are unable to pay the full amount, then can still make a partial payment to reduce the amount of interest and penalties. Taxpayers can make a payment online using the IRS Direct Pay system, which allows individuals to pay directly from their bank account. Taxpayers can also pay by credit or with a debit card, with certain additional fees associated with this method.

Option 2: Set Up a Payment Plan

The IRS gives an option for taxpayers who cannot pay the full amount owed all at once. They can set up a payment plan with the IRS. This will allow taxpayers to make monthly payments until the balance amount is paid in full. To set up a payment plan, an individual needs to fill out Form 9465.

There are two types of payment plans available: short-term and long-term. A short-term payment plan allows payment of the balance in full within 120 days. No extra fee associated with this plan, but interest and penalties will continue to accrue until the balance is paid in full. A long-term payment plan allows payment of a balance over a period of several months or years. There is a fee associated with this plan, and interest and penalties will continue to accrue until the balance is paid in full.

Option 3: Offer in Compromise

If the taxpayer is unable to pay the full amount owed and can’t set up a payment plan, they are eligible for an Offer in Compromise. This is an agreement between the taxpayer and the IRS to settle the debt for less than the full amount owed. To be eligible for an Offer of Compromise, one needs to demonstrate that paying the full amount owed would cause financial hardship. And also need to provide detailed financial information, including their income, expenses, assets, and liabilities. To apply for an Offer in Compromise, the individual needs to fill out Form 656. It is important to note that an Offer in Compromise is not guaranteed, and the IRS will carefully review the individual’s financial information before making a decision.

In case an individual has missed the tax season 2023 deadline and owes taxes; it is important to act as soon as possible. Filing an extension, paying taxes as soon as possible, setting up a payment plan, or exploring an Offer in Compromise are all options to consider. Be sure to consult with a tax professional to determine the best course of action for the specific situation.

IRS Audit Group is Los Angeles-based company that offers tax audit representation services to individuals and businesses facing IRS audits or disputes. The company’s team consists of CPAs, tax attorneys, and enrolled agents who have experience working on both sides of tax disputes. If you receive any mail from IRS regarding a tax audit, don’t panic and don’t delay, contact a tax professional who is experienced in handling IRS audits by us. Contact us for a free consultation on understanding your tax situation.

https://irsauditgroup.com/contact/

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The Internal Revenue Service (IRS) has recently announced that around 1.5 million people across the country have not yet claimed their refunds for the tax year 2019. However, the deadline to file the returns is July 17, 2023, which is three years after the usual deadline. Due to the COVID-19 pandemic crisis, the IRS deferred the deadline for 2019 unfiled returns. The average median refund for 2019 is $893, and the IRS has estimated that $1.5 billion in refunds are still unclaimed.

Many taxpayers may have forgotten or ignored their tax refunds since 2019 due to the pandemic. To prevent losing out on the opportunity, taxpayers need to submit their refund requests prior to the deadline. Typically, individuals have three years to file their tax returns and request any refunds.

While many people would have missed out on filing their tax returns due to the unusual situation caused by the pandemic, some stand to lose more than just their refund of taxes withheld or paid during 2019. Earned Income Tax benefit (EITC) is a tax benefit that many low – and moderate-income employees are eligible for. The credit’s maximum value for 2019 was $6,557. The EITC provides assistance when an individual or family’s income is below a specific threshold. Those who qualified for the EITC in 2019 had incomes below particular thresholds, based on the number of qualifying children.

Taxpayers requesting a 2019 tax refund should also be aware that their checks will be held if they fail to file tax returns for 2020 and 2021. Additionally, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past-due federal debts, such as student loans.

Where To Obtain Essential Documents for Filing 2019 Tax Return?

Even though the tax year was three years ago, the IRS has offered taxpayers several ways to access the data they need to submit their 2019 tax forms. To ensure taxpayers have enough time to file before the deadline, IRS advises people to get started as soon as possible. One approach is to ask their employer, bank, or other payers for copies of important records like Forms W-2, 1098, 1099, or 5498. Another choice is to order a free wage and income transcript via Get Transcript Online at IRS.gov. For many taxpayers, this instrument is by far the quickest and easiest choice. As an alternative, individuals can submit Form 4506-T to the IRS to obtain a “wage and income transcript.” However, it is essential to plan since written requests can take several weeks.

Depending on a household’s tax circumstances, the actual refund amount can change. Therefore, to avoid missing the deadline, taxpayers are urged to review their records and start gathering documentation.

IRS Audit Group is a tax audit representation firm located in Los Angeles, California. If the IRS requires more information to validate your tax return filing, they may ask for it, and in rare cases, they may initiate a tax audit via mail notice. In such situations, it is crucial to have the assistance of a licensed tax professional like the ones at IRS Audit Group. IRS Audit Group is comprised of qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate the burden of dealing with an IRS audit. Having proper representation in an IRS audit is essential, and the IRS Audit Group can provide the necessary support to navigate the process successfully. To learn more about our services, visit the website and contact us for further information.

https://irsauditgroup.com/contact/

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Emergency Number: (310) 498-7508

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Small business owners find it hard to go through an IRS audit. After receiving an audit notice, the first thing to do is to thoroughly read it and gather all necessary paperwork. Consulting with a tax professional will always help you understand the audit process and ensure compliance with tax laws. When responding to IRS, please note to pay special attention to the details. Any mistakes or discrepancies will raise more queries or guarantee additional research. The procedure can go more easily if taxpayers reply to the IRS right away, and act professionally while being audited. Taxpayers can even dispute the IRS’s decision if it determines they are bound to pay additional taxes or fines.

General IRS Audit Process

The general process of an IRS audit involves several stages. The exact process varies depending on the type and scope of the IRS audit, but the following outline is a general overview.

• Notification: The IRS will send a notification letter to inform the taxpayer that they have been selected for a tax audit. The letter will outline the reason behind the audit as well as the paperwork the taxpayer must submit.
• Preparation: The taxpayer is required to compile all essential records and papers for the audit. To comprehend the audit procedure and make sure they follow tax rules, they can consult with a tax professional.
• Examination: To ensure that the tax return is accurate, the IRS will review the taxpayer’s files and records. An on-site visit to the taxpayer’s residence or place of business may be necessary.
• Communication: The IRS will keep in touch with the taxpayer during the IRS audit process to clarify any problems or discrepancies discovered and, if necessary, to request further information or documents.
• Resolution: The IRS will report any changes that need to be made to the taxpayer’s filed return after the examination is finished. The taxpayer will have the chance to refute any conclusions or bargain a deal with the IRS.
• Appeals: The taxpayer has the right to challenge the judgment in court or through an administrative procedure with the IRS if they disagree with the audit’s conclusion.

Overall, the process of an IRS audit can be complex and time-consuming, but being prepared and cooperating with the IRS always helps the process go more smoothly. Complex IRS audits need tax professional help from a tax audit representation company that can analyze your circumstances and represent on behalf of you in front of the IRS for the audit sessions.

How Long Will the Audit Process Take?

Several variables can affect how long an IRS audit lasts. The sort of audit being undertaken is one of the important factors. For instance, if a correspondence audit just entails looking through a small portion of a taxpayer’s return, it might be finished in a couple of weeks. On the other hand, a field audit that needs to visit the taxpayer’s place of business or residence and study a substantial number of records will take several months.

The complexity of the taxpayer’s return, the volume of records and papers being examined, and the IRS agents’ and taxpayers’ availability are additional elements that affect audit tenure. Additionally, if the audit identifies issues or discrepancies that require further review, the process will take longer.

It’s crucial to keep in mind that the timeframe of an IRS audit can be extended if the taxpayer refuses to provide information or documents when requested, contests the audit’s conclusions, or tries to reach a settlement with the IRS.

The duration of an IRS audit varies significantly based on the particulars of each case. But taxpayers can attempt to keep the process moving and make sure that the audit is finished as soon and effectively as possible by collaborating with the IRS agent.

These time-consuming audits can frustrate small business owners as they have to deal with extra work besides running their companies. Also, they will not find enough time to meet the IRS agents and answer all the questions. Thus a tax audit representation firm like IRS Audit Group can help them by representing on behalf of the client. The company is located in Los Angeles, California but as the IRS is a Federal Agency, we can request the case to be transferred to a local IRS office in Los Angeles. Contact us to learn more about our services and get a free consultation on your case.

https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]

Cryptocurrencies and other digital assets have experienced an increase in activity and acceptance by the public in recent years. For this Tax Season 2023, the IRS has increased its efforts to provide assistance to taxpayers on the tax treatment and reporting requirements related to these digital assets. The IRS has introduced the new term “digital assets“ to refer to “virtual currencies”.

What is Digital Asset?

Any digital representation of value that is on a cryptographically protected distributable ledger or any other equivalent technology as specified by the Secretary is referred to as a digital asset, according to the IRS. The IRS lists a number of instances of digital assets, including NFTs, stablecoins, as well as virtual currencies like a cryptocurrency that can be used for payments (non-fungible tokens that are unique digital identifiers recorded in a blockchain).

Disclosure on Individual Tax Return 

To assist taxpayers in providing accurate answers, the guidelines for answering the question have been clarified and broadened in this tax year 2022 forms. Every individual filer must respond to the question with simple “yes” or “no” answers on the front of Form 1040, U.S. Individual Income Tax Return, whether they received or sold a digital asset in the tax year 2022, regardless of whether they are associated with digital assets or not. The subject, which is now on 2022 forms, gives more information and specificity to help taxpayers understand when to correctly mark the “Yes” or “No” boxes.

When to Check “Yes” Or “No”?

In general, if a taxpayer got digital assets in the form of a payment, prize, or award, they should check “Yes”. Also, a taxpayer should select “Yes” if they obtained digital assets as a result of mining or a hard fork (the division of a cryptocurrency into two). A taxpayer should also tick “Yes” if they have given up any other financial stake in a digital asset by payment, sale, exchange, or swap for another digital asset. Check “No” if a taxpayer simply owned digital assets during the year without engaging in any transactions. A taxpayer should also select “No” when transferring digital assets between accounts that share the same owners or when buying digital assets with money that isn’t digital.

How to Report Digital Asset Income?

Digital asset income is reported in much the same way as other revenue, mostly dependent on the source of the income. If digital assets are received in exchange for work, the taxpayer must disclose the value of those assets as wages on your tax return 2022. If the digital assets received were payment for services provided, the value of those assets would be reported on Schedule C, Profit or Loss from Business. Similarly, Schedule C would also record any such dispositions of digital assets to clients made in the course of a trade or company.

If digital assets are held as capital assets and sold, exchanged, or transferred it during the tax year 2022, the investor must use Form 8949, Sales and Other Dispositions of Capital Assets to calculate the gain or loss from that activity. The gain or loss is then reported on Schedule D, Capital Gains, and Losses. If, however, digital assets were transferred to an individual as a gift other than the taxpayer’s spouse during the tax year 2022, Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, will generally need to be filed if the value exceeds $16,000.

An incorrect or false response to the updated digital asset question could create complications for taxpayers in the future. For instance, an incorrect response may result in various types of penalties. The advice and assistance from knowledgeable Dual Licensed Tax Professionals and CPAs might be helpful when deciding how to answer the digital asset question instance.

IRS Audit Group is a tax audit representation firm in Los Angeles, California. Usually, in a few cases, the IRS may ask for more information to validate the tax return filings. But rarely, IRS may like to audit your tax information through a letter of notice via Mail. In such cases, it is important to engage a tax professional like ours to represent your tax audit. Our licensed professionals comprise qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate your burden. Please contact us for more information. https://irsauditgroup.com/contact/

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Emergency Number: (310) 498-7508

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The Internal Revenue Service (IRS) has issued warnings of new scams that urge taxpayers to use wage information on a tax return to claim false credits in hopes of getting a big refund. The new scheme circulating on social media encourages people to use tax software to fill out a Form W-2 to include false information. Scam artists encourage taxpayers to make up numbers showing large amounts of income and related withholding. Then, the scammers suggest simply e-file a bogus tax return to snag a large refund due to the amount of fake withholding. This deliberate misinformation about inflated income is used to take advantage of refundable tax credits.

Scam Variations

Two variations of this scheme are also being seen by the IRS; both involve misusing Form W-2 wage information in hopes of generating a larger refund.

• One variation involves scammers suggesting taxpayers file Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to apply for a credit based on earnings made as an employee rather than a self-employed individual. These credit dates to the pandemic period for 2020 and 2021 and can’t be accessible for 2022 tax returns.
• Another variation of this scam involves taxpayers making up fictional employees that they claim are employed in their household and using Schedule H, Household Employment Taxes. Then, taxpayers file for a refund based on false sick and family wages they never paid in the first place.

Many such scams, where taxpayers suggesting to claim huge refunds by filing the tax return electronically in hopes of getting a substantial refund.

Vigilance

The IRS reminds taxpayers that they are actively watching for this scheme and others along with the Security Summit partners in the tax industry and the states. In addition, the IRS works with payroll companies and large employers—as well as the Social Security Administration—to verify Form W-2 information.

Penalties

Falling for such scams unknowingly or deliberately for getting viral on social media will be subject to a wide range of penalties. This may include a frivolous return penalty of $5,000. Filers also run the risk of criminal prosecution for filing a false tax return.

What To Do?

Seek out tax advice from credible sources, including the IRS website, and consult trusted tax professionals. Ignore advice from viral reels and videos that sounds too good to be true. And please do not share such contents which misguides other taxpayers. For anyone who has participated in one of these schemes, there are several options that the IRS recommends. People can amend a previous tax return or consult with a trusted tax professional.

IRS Audit Group is a tax audit representation firm from Los Angeles, California. The company employs a team of certified tax lawyers who possess expertise in both state and federal tax audits. Irrespective of the client’s location, these tax professionals can evaluate your audit situation and represent you before the IRS to secure a favorable outcome for the client. Please contact us for more information. https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]

Taxpayers from disaster areas in most of California and parts of Alabama and Georgia now have until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments. Previously, the tax deadline was May 15, 2023, for these areas. Currently, tax relief is available to any area designated by FEMA. The current list of eligible localities and other details for each disaster is available on the Tax Relief in Disaster Situations page on IRS.gov.

Extended Tax and Payment Deadlines List

Several tax filing and payment dates that were set to begin on January 8, 2023, have been postponed by the tax relief. Below are a few of the tax reliefs that are postponed for this tax season 2023.

• Individual and business tax returns for 2022 are now due on October 16, 2023, for disaster-affected areas.
• Applicable taxpayers will have until October 16 to make 2022 contributions to their IRAs and health savings accounts.
• The expected tax payments for the fourth quarter of the tax year 2022, which have a deadline of January 17, 2023, are also postponed to October 16, 2023
• The estimated tax payments for tax season 2023, which are typically due on April 18, have been postponed until October 16, 2023.
• The deadline for filing quarterly payroll and excise tax returns, which was previously January 31, April 30, and July 31, has been extended until October 16, 2023.

Details on other returns, payments, and tax-related actions that qualify for the extended time are available on the Disaster Assistance and Emergency Relief for Individuals and Businesses page.

How to Claim the Extension?

Any taxpayer with an IRS address of record located in the disaster region will automatically receive filing and penalty relief from the IRS. Taxpayers can obtain this assistance without getting in touch with the IRS. However, if a concerned taxpayer receives a notice from the IRS about a late filing or late payment penalty with an original or extended filing, payment, or deposit due date that falls within the postponement period, the taxpayer should contact the IRS at the number on the notice to have the penalty waived.

How To Claim Casualty and Property Loss on Taxes If Impacted?

Disaster-related casualty losses incurred by individuals or businesses may be claimed on the previous tax year 2022 or the current tax year 2023. To claim on the previous tax year 2022, the taxpayers need to file it in this tax season 2023. To claim on the tax year 2023, the claimant must file it in the next tax season 2024. Losses of personal property that are not compensated by insurance or other sources of payment may also be deducted by individuals.

The IRS will assist any taxpayer whose records are located in the disaster region. If a taxpayer living outside of a disaster area and qualify for relief, call the IRS at 866-562-5227 to explain your situation, after assessment, IRS will provide the relief. This also covers employees supporting relief efforts who are connected to a reputable governmental or charitable organization.

The tax relief is based on FEMA’s local damage assessments and is part of a coordinated federal response to the harm caused by the severe storms. For more information on disaster recovery visit  DisasterAssistance.gov.

IRS Audit Group is a tax audit representation firm in Los Angeles, California. Usually, in a few cases, the IRS may ask for more information to validate the tax return filings. But rarely, IRS may like to audit your tax information through a letter of notice via Mail. In such cases, it is important to engage a tax professional like ours to represent your audit. Our licensed professionals comprise qualified CPAs and IRS Enrolled Agents. They can analyze your tax situation and help alleviate your burden. Please contact us for more information. https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]

The IRS is offering weekend hours to taxpayers as part of the IRS’s larger effort to help people during the tax season 2023. Taxpayers can walk in without appointments to meet the assistance in person and enquire regarding tax filing.  They can have any tax-related queries like setting up an online account or getting an Identity Protection PIN among other topics. People can get hands-on assistance from IRS employees at TACs. However, cash payments are not accepted. The special Saturday availability will take place from 9 a.m. to 4 p.m., on Feb. 11, March 11, April 8, and May 13. Detailed locations of the centers are listed on the IRS’s Official Website. But IRS insists taxpayers first visit IRS.gov to check information before visiting the office. They may even find online resources to resolve their tax query.

Special Saturday Services Provided

Taxpayers who have queries about tax bills, IRS audits, or need help in resolving a tax problem can get assistance from the IRS special officers having expertise in those specific areas. IRS Taxpayer Advocate Service employees are to be also available to help with some issues. All services offered at particular TACs are listed on the IRS’s Contact Your Local Office website. Taxpayers should remember that IRS TACs do not provide tax return preparation services, but information regarding free tax preparation choices in the area will be provided.

For non-English speakers, an over-the-phone translation service will provide professional foreign language interpretation in a variety of languages. The IRS employees will schedule appointments at later dates for deaf or hard-of-hearing people who require sign language interpreter services. To schedule an appointment, these people can instead dial 800-829-4059 for TTY/TDD.

What to Bring to the TACs?

Taxpayers should bring the following documents:

• Current government-issued photo identification,
• Social Security cards or ITINs for members of their household, including spouse and dependents (if applicable)
• Any IRS letters or notices received and related documents,
• For identity verification services, two forms of identification and if filed, a copy of the tax returns for the year in question.
• Current mailing addresses and proof of bank account information can also be requested by IRS staff.

Hire A Tax Professional Instead

Taxpayers have different levels of skill, education, and expertise. They may or may not be skilled in tax preparation and accurately filing their income tax return. Despite all the efforts by the IRS, still many taxpayers file their tax returns with inaccurate forms, wrong/missing information, math errors, and more. These errors can lead to higher tax payments and even IRS Audits. Thus, hiring a skilled tax professional will reduce your burden and makes sure that there are no such kinds of errors. Tax professionals prepare your tax returns and provide support related to the payment and reporting of taxes. Tax professionals also advise, provide guidance and support for audits and represent on behalf of taxpayers for trials. Tax professionals provide to help taxpayers minimize their tax bills by utilizing all possible deductions and credits while ensuring they still meet their tax obligations.

IRS Audit Group is a renowned IRS Tax Audit Representation Company. We are a team of tax professionals, Lawyers, CPAs, and Enrolled Agents who specialize entirely in “Tax Audit Representation” and have over 15 years of experience. We collaborate with all IRS offices across the country. We can request that your case be transferred to a local IRS office in Los Angeles, California, as the IRS is a federal agency. Contact us to find out more about our services. https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]

Tax season 2023 has officially started and along comes an increased risk of falling victim to tax scams. These scams involve fraudsters who use a variety of tactics to impersonate the Internal Revenue System (IRS) and trick individuals into giving up their personal information or money.

Common Tax Scams

IRS letter Scam:  Scammers send letters or notices that look like official IRS communication. These letters may demand immediate payment for unpaid taxes, jeopardize legal action or request personal information such as social security numbers or bank details.

Tax Transcript Scam: Fraudsters are sending fake email communications about tax transcripts claiming to be from “IRS Online”. A tax transcript is a summary of your tax records and history. IRS will never send such confidential information over email. IRS warns taxpayers not to open these emails as they contain malware that infects their devices to extract sensitive information like Social Security Numbers, Bank Account Details, and Passwords.

Ghost Tax Preparers: Ghost tax preparers are individuals who prepare tax returns but do not sign such documents. Unreliable ghost preparers frequently print the return, have the taxpayer sign it, and send it to the IRS. The ghost will prepare e-filed returns, but they refuse to digitally sign as the paid preparer. But IRS makes it mandatory for tax preparers to provide a digital signature and PTIN at the end of the tax filing form. Thus, taxpayers avoid such ghost preparers as they can file false information claiming to get more refund simply to satisfy you of their services.

Natural Disaster Relief: Natural disaster fraud is the deliberate use of deception to trick people and the government for personal gain. Natural disaster fraud comes in many forms including price gouging, insurance fraud, and forgery/impersonation. These scammers reach out to victims via phone, mail, or social media offering to help in relief funds in exchange for personal information.

IRS Telephone Scams: Scammers impersonate IRS agents and make unsolicited phone calls to individuals demanding immediate payment for unpaid taxes. They use tactics to make the call seem more legitimate such as spoofing the caller ID to make it appear that the call is from IRS. The IRS will never call the taxpayers demanding money in any form to pay them immediately. IRS will usually send a letter by mail informing about any tax owed or any IRS Audit to be done. IRS will always provide the opportunity to taxpayers for questioning or appealing on the tax owed. IRS will also never ask for debit or credit card details over the phone and will not threaten to bring local police or law enforcement agents.

What to do When You Encounter Such Scams?

• Do not provide any personal and financial information if received an unsolicited mail, call, or text message requesting payment.
• Verify the legitimacy of the request by contacting IRS directly at the phone number listed on the official website to verify the authenticity of the request.
• Visit the identity protection page if clicked on links in a suspicious email or website and entered confidential information.
• Report the W2 variant to the IRS – if a victim or not – and should also report any BEC/BES variants to the Internet Crime Complaint Center.
• Contact the Treasury Inspector General for Tax Administration (TIGTA) if an IRS imposter has contacted you. Report IRS imposter scams online by calling TIGTA at 1-800-366-4484. Forward email messages that claim to be from the IRS to [email protected].
• File a complaint with the Federal Trade Commission (FTC) via their online complaint form and Federal Communications Commission (FCC) by visiting the Consumer Complaint Centre.

How to Avoid Such Scams?

Be aware of unsolicited communications, IRS will not initiate contact with taxpayers via email, text, or social media. Use a secure method to submit tax returns such as an authorized tax preparer, IRS e-file, or a secure mailbox. Do not send tax returns or payments via email. Stay up to date on the latest scams and fraud tactics by regularly checking the IRS website, news, and other resources.  Installing call-blocking software for smartphones will avoid unwanted phone calls. Work with a reputable tax preparer who is properly licensed and registered with IRS. The IRS is aware of these scams and provides guidance on how to avoid and identify them. By taking these steps taxpayers can protect themselves from IRS scams and other types of fraudulent activity.

IRS Audit Group is a team of tax professionals, CPAs, Enrolled Agents, and Tax Attorneys, specializing in IRS Tax Audit Representation.  We will file a power of attorney and contact the IRS or state agency to represent our clients. We will ease your stress-out IRS audit with our expertise in seamlessly resolving your case with IRS. Contact us for a free consultation to understand your tax situation. https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

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Internal Revenue Service announced that the interest rates will remain the same for the calendar quarter beginning April 1, 2023.  The rate for overpayment and underpayment for individuals will be 7% annually, compounded daily.

What is Overpayment?

An overpayment occurs when a taxpayer pays more than the amount of tax owed. Taxpayers may overpay due to various reasons such as errors in calculating taxes, administrative errors, delayed terminations, incomplete job records, incorrectly completed work schedules or default hours, duplicate transactions, irregularly processed unpaid leaves of absence, changes in percent time, or errors in time reporting.

The overpayment interest rate for the second quarter of tax season 2023 is 7% for individuals and 6% for corporations. Also, the portion of the amount exceeding $10,000 will get 4.5% for the corporations. This interest rate was the same as in the first quarter of 2023. Previously the interest rate in the fourth quarter of 2022 for overpayments was 6% per year. It increased by 1% for both individuals and corporations in the first quarter of 2023.

What is Underpayment? 

Underpayment occurs when a taxpayer doesn’t pay enough taxes during a year, either through withholding or estimated taxes. IRS charges underpayment when taxpayers don’t pay their taxes, penalties, and additions to tax or interest by the deadline. Even if the taxpayer requests an extension, the interest in underpayment still applies.

The current interest rate for underpayment beginning April 2023 is 7% (taxes owed but not fully paid) and 9% for large corporate underpayments. The interest rate has been increased by 1% for underpayments from the first quarter of 2023. Previously the interest rate in the fourth quarter of 2022 for underpayments was 6% per year and 8% for large corporate underpayments.

How to Dispute?

If there is any dispute regarding the overpayment, taxpayers can request a refund from IRS. If a taxpayer believes the IRS assessment is incorrect, he can provide additional documents or evidence to support the claim. The IRS reduces the amount of interest owed by taxpayers only if the interest is applied because of any unreasonable error or delay by an IRS officer. For dispute interest due to unreasonable error or IRS delay, the taxpayer can submit a Claim for Refund and Request for Abatement form or send a signed letter requesting to reduce or adjust the overcharged interest.  If the taxpayer feels that IRS has underpaid the interest or credits that they are eligible for, they can request an Informal Conference and Appeals Review. The dispute will be reviewed by the IRS Examination or Collection office that made your tax assessment. If they cannot resolve it, the appeal will be considered for an IRS audit.

Taxpayers can represent themselves on the appeal or hire a tax professional. The tax professional must be eligible as:

• An attorney
• A certified public accountant, or
• An enrolled agent authorized to practice before the IRS.

Interest rates for underpayments and overpayments vary and may change quarterly. The interest rate charged for earlier quarters or years is unaffected by the changes. Therefore taxpayers should make sure to pay taxes on time to avoid interest charges and those who are unable to pay in full should work with IRS to set up a payment plan.

IRS Audit Group can be at your service in representing your case for federal or state tax audit. We are a tax audit representation company in Los Angeles, California. We serve across the country with all the states as IRS is a federal agency and we could request IRS to transfer your case to California. Contact us for a free consultation to understand your case.

https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]

Tax Season 2023 started and one of the important questions that come up during tax season is if you opt to prepare your tax statement or hire a tax professional. It really depends on several factors including financial situation, tax knowledge, time, patience, and effort needed to prepare a tax return. Both of these two options have their own pros and cons, the choice ultimately depends on the personal comfort level with taxes of an individual.

When To File by Yourself?

Preparing your own taxes can be done using tax software or through the IRS website. It is a good option to save a few bucks, but it is not always the best choice.  Here are a set of situations where you can do your own tax filing are:

• The tax situation is simple.
• Financial limitation to save money.
• Good understanding of tax laws and tax preparation process
• Comfortable using tax software.
• Have patience and time to deal with tax preparation.

Disadvantages of Filing Your Own Taxes

There are potential disadvantages while filing your own taxes. Tax filing is more time-consuming especially when there is trouble understanding tax laws. If you have multiple income sources, then it adds more complexity due to numerous tax laws. Using online tax software speeds up the process but it can be difficult to get help if any question arises. Filing your own tax increases the risk of errors which lead to penalties, interest, or even an IRS audit.

Why Hire a Tax Professional?

Hiring a professional tax preparer can be a wise choice for individuals as well as for businesses. Tax Professionals have the knowledge and expertise to minimize the complex tax code and they ensure maximum tax savings and thus minimize the risk of the tax audit. Hiring a professional tax preparer may be necessary for a few scenarios as follows/

• Don’t have time and patience to deal with tax preparations!
• Multiple income sources
• Owning a business or rental property and having a complicated situation.
• Planning to itemize deductions.
• Experienced major life events.
• Have foreign accounts and investments or active stock traders.

Disadvantages of Hiring a Professional

The only crucial disadvantage of choosing a tax professional can be difficulty in finding a trustworthy and experienced tax preparer. Not all tax preparers are equal, some may not have expertise in handling complex tax situations. There are many scammers who pose as legitimate tax preparers.  Hence, it is important to do proper research about potential tax preparers by reviewing their credentials, client testimonials, etc.

To do filing by your own effort or hire a professional depends on personal circumstances and level of comfort with tax laws and the tax preparation process. Doing your own taxes is the finest method to save money if you are confident in your capacity to comprehend the tax rules. If not, it’s likely time to spend the money and employ a tax professional. In the end, you have to balance the worth of your time and money versus your mental health.

IRS Audit Group is a tax audit representation company in Los Angeles, California. We offer a free initial consultation to assist you to comprehend your tax concerns completely and effectively, regardless of whether they are related to California state income taxes or taxes from another jurisdiction. If you need assistance or counseling with tax issues in California or another state, please contact the IRS Audit Group to learn more about our services.

https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

[email protected]