We can provide assistance if you are having problems with the Internal Revenue Service (IRS) or other taxing authorities. Individual Income Tax Problems The IRS computer system matches income reported to you by banks, employers, and others to the amounts you report on your individual income tax return. If the IRS computer system cannot make a match of an item, it will generate a letter to you, proposing an increase to your tax bill. More often than not, the IRS computer system is wrong, the taxpayer did report the income, but a match could not be made to the bank or other payer's documentation. The first defense against this problem is careful review of all documents received from the bank or other payer. When we prepare an income tax return, these documents are carefully presented on the return in a way to preclude any mismatch by the IRS computer system. Even with our careful presentation, a mismatch can occur. On the other hand, someone else may have prepared your return and he or she was not careful in the presentation of income items and a mismatch occurs. In those cases, you might receive a letter from the IRS proposing an adjustment. These IRS letters are often referred to as a "letter audit". We can assist you to resolve these audits, usually by correspondence with the IRS, providing them with explanations and documentation to show the correct reporting of items. While much less common, the other type of audit for individuals is the "office audit". In this type of audit an actual person at the IRS has reviewed and selected your return for further examination. The IRS sends a letter asking to arrange a time for the examination at a local IRS office. Usually the auditor will list certain items he or she wishes to investigate. For example, the examiner may seek substantiation of charitable contributions and employee business expenses. We can assist you in resolving these audits, usually by meeting with the IRS on your behalf at the IRS office. You would not even be required to attend (and perhaps you should not attend). Most states have matching programs based on income reported to them through the IRS. State and local taxing authorities may also disagree with amounts of estimated tax payments paid and similar issues. We can assist with these problems as well. Business Tax Problems Business tax problems can occur on business income tax returns, payroll tax returns, excise tax returns, sales or use tax returns, Ohio Commercial Activity Tax (CAT), and other types of returns. We can provide assistance when taxing authorities question or wish to adjust a taxpayer's business tax return. Business Income Tax Returns Just like the IRS computer matching program for individuals, the IRS computer system can find mismatches of income reporting on business tax returns. Our methods of dealing with these problems are similar to those listed for individual income tax problems. Payroll Tax Returns The most common problem with timely filed federal payroll tax reports (Form 941) is the IRS attempting to levy a penalty for untimely deposits of these taxes. Being a day late on one monthly tax deposit can generate an overstated penalty from the IRS. Our first defense to assist our clients is helping them to remember to pay these taxes timely. We do that by having a notification system for clients that wish to participate. Through this system, we remind clients in advance as payment dates occur for monthly and quarterly payroll tax obligations. Careful preparation of Form 941, especially regarding preparation of the deposit schedule, listing liability by period, is the best method to avoid these problems. However, if a taxpayer is late on a deposit, the IRS computer system will generate a penalty by applying payments that were made in an order that maximizes the IRS penalty. The order the IRS uses to apply the payments made is often not the correct method. We can assist by providing the IRS with a schedule that orders the application of the payments made to minimize the amount of the penalty. This difference can sometimes be substantial. Another common problem with payroll tax reports can occur when the quarterly reports do not total to the annual reports. For example, the wages and withholding reported on the four quarterly federal Forms 941 should match the amounts reported on annual federal Forms W-2 and W-3. The amount of monthly or quarterly deposits of Ohio withholding paid on Forms IT-501 should match annual Form IT-941. Careful preparation of these reports can eliminate this potential problem. However, if the problem occurs, we can assist you to resolve this matter with the taxing authority. Excise Tax Returns The most common excise tax we encounter is the "Heavy Highway Vehicle Use Tax Return", Form 2290. Proof of payment of the tax on these large trucks is required when the owner needs to obtain vehicle licensing at the Bureau of Motor Vehicles. The government runs this tax on a fiscal year July 1 through June 30. The initial return for each fiscal year is due by August 31, to report all trucks on the road anytime during July. If a company puts a truck on the road after July, the company needs to file an additional return reporting that truck for the remainder of the fiscal year. The biggest problem we see taxpayers encountering is the failure to report these mid-year additions. We can assist with access to online vendors when last minute filing for a vehicle is required. Sales, Use, and CAT Tax Returns The most common problem we see taxpayers encounter with these types of taxes is the failure to file the return in a timely manner. We assist our clients by a notification system for those that wish to participate. We remind clients of these due dates in advance through this notification system. Another problem a taxpayer may have is determining the correct tax base for the tax. We can assist in obtaining information about exempt transactions and other matters that affect the amount of tax due. |
