Preparing for an IRS Tax Audit Read More »
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]]>While this is a scary time in your life, it doesn’t have to be. There are steps you can take to better understand the process, how to protect your legal rights and how to put the audit in the past in a quick and efficient manner.
Here are a few steps you should take as soon as you receive notice of an audit:
These are just a few of the many steps you can take as you prepare for a tax audit. You may need to do other things based on the details of your specific situation.
Go into the process with a clear idea of what the IRS is looking for, as well as a plan for protecting your legal rights. Contact one of our offices online today or give us a call: Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.
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]]>Tax Resolution Information Read More »
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]]>If you owe money on taxes, your first priority should be filing your tax returns. A lot of people are hesitant to make filings when they can’t pay. However, this is a major mistake as it can lead to substantially higher tax penalties. The IRS’s top priority is collecting your taxes, not punishing you for being unable to pay. If you are working towards payment, your situation will be much easier.
One of the biggest threats from the IRS is a tax levy, the seizure of your property to cover taxes. Before a levy happens, you will be contacted several times in writing by the IRS. You can avoid a tax levy by showing financial hardship or by setting up an installment agreement. Failing to respond may result in collections efforts. In short, make sure you address tax notices right away and attempt to come to an agreement with the IRS promptly.
For most people who owe less than $10,000, it doesn’t make sense to hire an attorney for tax liability. However, if you owe more than this or have a complex situation, you should strongly consider working with a tax attorney.
Working with a tax resolution service can help you to take control of your tax situation and avoid the more severe penalties. Additionally, it can help you to minimize the total amount you end up paying the IRS.
Working with a tax attorney can help you navigate the complexities of tax law to find the best path forward for you.
A tax resolution service can often help you save substantial money by avoiding tax penalties and reducing the amount you pay to the IRS. The sooner you get on a path to settling your IRS debt, the fewer penalties there will be and the less money it will cost you overall. Furthermore, there is a lot to be said for the peace of mind that comes with having a clear path to paying off your taxes.
There are many tax resolution strategies and techniques that can be applied. It takes experience and knowledge of the tax laws to know how to apply them correctly. These are some ways that a tax attorney may be able to help you:
The cost of working with a tax attorney depends significantly on the specifics of your situation. However, no matter your needs, if you owe at least $10,000 in taxes or are struggling to resolve the situation yourself, having effective tax attorney representation is worth every penny.
When you first contact The Law Office of Lance R. Drury, we will collect information about your situation. We will work tirelessly to ensure that your IRS troubles are resolved as quickly and favorably as possible.
Every tax situation is unique and needs to be addressed with care and focus. Nonetheless, we apply a similar general framework to every situation, even though the specifics may vary substantially.
Contact The Law Office of Lance R. Drury today to learn more about our tax resolution services. We will schedule your consultation to begin taking on your IRS debt or audit situation.
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]]>Handling Back Taxes Read More »
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]]>No matter who you are, if you are a working adult, you likely pay taxes. Unfortunately, sometimes people get behind on their taxes for various reasons. It may be financial struggles or a miscalculation. Whatever the reason, when you have IRS debt, it can be very stressful. However, the good news is that there are a number of things you can do to address the situation.
Owing money to anyone is unpleasant, especially when that someone is the U.S. government. This leads some people to want to ignore the problem. Of course, this is the wrong course of action. The IRS isn’t going to forget about the fact that you owe taxes, so you can’t either.
This starts with always submitting tax returns. Even if you are unable to pay right away, you should always file your return. First and foremost, if you don’t file, the IRS has no way of knowing that you are trying to make good on your back taxes. Secondly, the penalty for late filing is 5% of the tax owed per month up to a maximum of 25% of the outstanding balance. In other words, you will quickly increase your problem by trying to ignore it.
Despite how it may feel at times, tax laws are not designed to punish people for being in difficult financial situations. In fact, there are a number of options that the IRS provides to help you pay off your debt.
One of the most valuable options is Form 656, which is an application for an “Offer in Compromise.” This means that you will settle your back taxes for some amount that is less than the current outstanding balance.
You may want to consider an Offer in Compromise if you have little equity in assets and do not have a high income.
Another option is to set up a payment agreement. This can either be an agreement to pay within a short amount of time (helping to reduce penalties and interest during that time) or an installment agreement. For many people with back taxes, the installment agreement is the best option.
Installments can be made over a fairly long time, up to 72 months, in the case of a streamlined agreement. If you have such an agreement set up, the IRS will not pursue further collection efforts as long as you are current.
If you owe more than $10,000, you should strongly consider consulting with an attorney. They can help you avoid some of the more challenging situations. Additionally, an attorney will be able to help you navigate your repayment options.
However, it is important to hire the right help. There are many tax relief scams and less-scrupulous services. It is always best to work with an experienced tax attorney. They should be admitted to the bar in your jurisdiction.
It is often very valuable to hire an attorney. Simply having a knowledgeable advisor can help to reduce the stress and help you find a path to repayment. Plus, selecting the right repayment option can save you hundreds or even thousands of dollars.
In some cases, it is possible to request a delay in collection efforts by the IRS. This is usually an option when you are in a difficult financial situation. If approved, the request will prevent the IRS from using more aggressive collection efforts such as tax liens, wage levies, and other such mechanisms.
This can be helpful for people who need a little time to get their finances in order to repay the tax debt. However, again, it may not be an option for everyone. It is intended for those who are facing financial hardship. So, if you are gainfully employed and simply underpaid your taxes, this likely won’t be an option for you.
Perhaps the most important thing you can do about your IRS debt (other than submitting tax returns on time) is to be consistent. Create a plan based on the options that the IRS offers, then stick to it. For example, you will be in a much better situation if you create an installment agreement of amounts that you can consistently pay than one that you can’t keep up with.
While the IRS is hardly a forgiving entity, it does provide options to help people get back on the right path. The government wants you to be on the right path and isn’t interested in punishing you for the sake of punishment. However, the IRS also won’t hesitate to use more aggressive collection efforts if it deems doing so to be necessary.
If you have a repayment plan and stay consistent, you will likely be able to find your way back to being current on taxes. In the event that you can’t keep up with payments, contact the IRS immediately. Changing the payment amount or getting a short deferral is better than simply not paying.
Dealing with back taxes is stressful and can be financially straining. Fortunately, the tax laws can help you to get back on track. If you need professional help to navigate the law and find the right repayment option, contact The Law Office of Lance R. Drury. We provide tax lax services in St. Louis and Ste. Genevieve, MO and Nashville, TN that can empower you to resolve disputes with the IRS and avoid more severe penalties.
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]]>Carbon Dioxide Sequestration Tax Credit Read More »
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]]>In 2008, the U.S. Treasury began enacting a tax credit that would benefit companies in the business of carbon oxide sequestration. With tax credits for a reduction in carbon footprint, the carbon recapture industry began to improve in 2018, but details about the credit didn’t come until the end of 2020 and the start of 2021. Even with final regulations in place, the carbon recapture industry is striving to understand who qualifies for the credit and how they qualify.
The carbon sequestration tax credit is a federal income tax reduction for business owners and individuals that capture a certain amount of “qualified carbon oxide.” After it is captured, the qualifying plant must do one of three things:
The amount of the credit depends on a couple of different factors. This includes when the equipment was put into service and how the carbon oxide is disposed of. For example, if a plant buries it permanently instead of using it in another commercial project, the credit would be higher. The range per metric ton is $10 to $50.
Determining who can claim the carbon sequestration tax credit is based on ownership. It can get complicated if there are multiple owners, but basically, the person who both owns the equipment and ensures capture and disposal is the person who can claim the credit. This is often the individual who owns the actual carbon-emitting facility, but it could also be a third party contracted with that owner to offload the captured carbon.
In some situations, one person will own the carbon capture equipment, but he or she will contract with someone as a carbon offtaker. In that situation, it’s important that the agreement to be the carbon offtaker is in writing with a binding contract. This makes it so state law can enforce the contract if one of the parties falls short on the arrangement. In these contracts, there are certain regulations that the U.S. Treasury has set forth. Some are optional, while others are required.
With a binding written contract in place, qualified plants have the option of including certain provisions. Those include:
Binding written contracts are required to have certain provisions as laid out by the U.S. Treasury as well. Those include:
In section 45Q, there is also an alternate rule. It states that the taxpayer who would be entitled to the tax credit based on the outlined required provisions could transfer that benefit to the carbon offtaker instead, thus sharing the carbon reduction tax credits.
If the owner of the carbon capture equipment chooses, he or she can transfer the benefit of the tax credit to the carbon offtaker. In some cases, it is a direct transfer from one person to another, but in other cases, there are multiple offtakers. If there are multiple people involved, the carbon offtaker is only eligible to be transferred the percentage that he or she offloaded.
For example, a carbon sequestration might turn up $100 in credits. The owner could decide to transfer the credits to his or her three offtakers. The first carbon offtaker offloads 40% of the carbon. The second offtaker offloads 50% of the carbon. The third offtaker offloads the remaining 10% of the carbon. The tax credits would then be split into three portions: the first offtaker taking a $40 credit, the second taking a $50 credit, and the third taking a $10 credit. These transfer elections are conducted annually, so each commercial party should be able to allocate credits with ease.
There are several types of businesses that could qualify for a carbon sequestration tax credit as a “qualified facility” or “qualified plant.” These qualified facilities and plants include:
There are also minimum capture requirements that must be met for a “qualified plant” to be eligible for the carbon oxide sequestration tax credit. For industrial or electricity generating facilities that put out no more than 500,000 metric tons each year, at least 25,000 metric tons of that has to be captured and reused in another commercial process. For electricity generating facilities that put out more than 500,000 metric tons each year, at least 500,000 of that has to be captured within the year. Direct air capture facilities are required to capture at least 100,000 each year.
Since these baseline requirements are so strict, there are some facilities that might otherwise be qualified but do not produce the right amount of emissions to even get close to the threshold. The good news is that if a plant is unable to meet the minimum capture requirements one year, there is no repercussion for the tax credits claimed in the past.
Whether you are the owner of carbon oxide capture equipment or are an offtaker, chances are you could be entitled to a tax credit if you feel you meet the qualifications. While each situation is different, the Law Office of Lance R. Drury may be able to help you obtain what is yours.Contact one of our offices today (Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.), so you can learn more about your rights regarding the carbon oxide sequestration tax credit.
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]]>Tax Season 2021, What You Should Consider Read More »
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]]>The year 2020 was unique in several ways, and while we’re all ready to put it behind us, there is one pressing issue we still have to face: taxes. While tax season brings the same old issues with it, some new things came up for consideration for the 2021 tax season.
You need to understand what some of the biggest changes have been if you are to be successful in filing your taxes. First, with the date that the IRS began accepting returns being pushed back to February 12, the deadline to file all federal taxes has been pushed back from April 15 to May 17. This gives you more than a month of extra time to get the job done.
Second, there was an increase in the standard deduction. Single filers have a standard deduction of $12,400, while those with a married filing jointly status have a deduction of $24,800. Those who are married filing separately also have a $12,400 standard deduction, and head of household filers have a standard deduction of $18,650.
In preparation for the 2021 tax season, you’ll want to know details about deductions and credits. First off, what are they?
Next, you should strive to understand what the different deductions and credits are. Claiming these on your 2020 tax return could help you save money and even get some back. A handful of those includes the following.
Last year saw a lot of people start working from home, but not all of them can claim the business deduction. It only applies to those who are self-employed. Expenses you could claim are the home office deduction, travel expenses, and other ordinary but necessary costs. If you were just told to work remotely from the corner of your bedroom, but you’re still employed by someone else, you can’t claim this deduction.
Last year also saw a lot of extra giving. People were helping others in communities around the world who suffered greater losses due to a variety of issues that swept the globe. The CARES Act states that you can deduct up to 100% of your AGI if you plan to itemize deductions. If you’ve decided on the standard deduction, there’s good news for you as well. Up to $300 can be written off for other cash contributions you made.
Good news for families with children! While it may have been a difficult economic year, up to $2,000 can be claimed per qualifying child, which is a refundable credit. Looking ahead to next year’s taxes, this number is set to increase to $3,000 or $3,600 depending on how old the child is.
As a small business owner who has employees, you may qualify for the Employee Retention Credit. This allows you a 70% credit of up to $10,000 for each qualifying employee’s quarterly wages. This means the maximum credit would be $7,000 per quarter per employee.
The medical industry was hit hard over the last 14 months. If you or someone in your family was a patient that contributed to that, you could have a medical expenses deduction above 7.5% of your AGI.
If you were eligible but did not receive an Economic Impact Payment, you could claim a Recovery Rebate Credit. You could also claim this credit if you received a payment, but it should have been larger than what the check was for.
There were three serious changes recently to retirement plans, and they may affect your taxes. They include:
Unfortunately, with all of the changes and all of the negative events from 2020, some people have begun to realize their tax situation is messy. For example, several people lost their jobs and became eligible for unemployment benefits. Unemployment income has to be reported on your taxes, and not many people realize that. Something else they may not realize is taxes are not automatically taken out of an unemployment check. This could be a problem if all of that income was already spent, and now the individual owes taxes.
Did you get your stimulus check? If so, you don’t have to pay taxes on it, confusing many taxpayers. If you haven’t received a check yet, you can claim the Recovery Rebate Credit discussed previously. The IRS is actually recommending that individuals who don’t normally file taxes but who have not received any stimulus cash should file and claim the Recovery Rebate Credit.
As you can see, the 2021 tax season has been stressful for a lot of taxpayers. At the Law Office of Lance R. Drury, we want to help ensure you are compliant with tax laws and don’t lose money that you overpaid on taxes during the last year. Whether your tax return is delinquent, you’re facing an IRS audit, you unlawfully avoided paying taxes, or you need help with a refund claim, we can help. Contact us today to discuss your specific needs and so you can get through this tax season with as little stress as possible.
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]]>What is an IRS Revenue Officer? Read More »
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]]>It’s not common for people to deal with these officers directly, but they could if the IRS finds that they cannot collect debts from you through the Automated Collection System. If you owe over $100,000, you’re more likely to have to deal with the IRS Revenue Officer.
In the Internal Revenue Service, there is a person called a revenue officer. People who have the IRS revenue officer title have a few abilities including:
These officers are not allowed to arrest you. They can, however, forward your case to the IRS Criminal Investigations Division (CID), which may be able to pursue a criminal case against you in some instances.
The IRS Revenue Officer does have authorities that surprise some people or make them worry, but if you have not been intentionally fraudulent with your activities, then you shouldn’t have much to be concerned about. Their job is to try to get the taxes you owe to the government, not necessarily to forward you on to the CID.
If you’re going to be talking to an IRS Revenue Officer, it’s important to talk to your attorney. Your attorney can help you prepare for that meeting and assist you with any concerns that you have.
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]]>Get Help With Tax Preparer Mistakes Read More »
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]]>But what if the Internal Revenue Service or the state revenue department finds a problem. Who’s responsible?
If there’s an error that resulted in you not paying enough in taxes, you will need to make up the difference. As for penalties and interest that are charged because of that error, who pays those depends on who was responsible for the error or omission. If you neglected to tell your tax preparer about an additional source of income, you’d be responsible. If you gave them all of the correct information and they neglected to report it or did so incorrectly, you can and should ask them to cover the additional expenses.
Whether they will take responsibility, however, is another matter. Look at the contract you signed with them to see what it says. Some tax preparation services will cover the costs, even if their contract doesn’t require them to, in order to keep your business.
If you suspect some kind of misconduct on the part of your tax preparer, that’s an entirely different issue. The IRS has forms for reporting suspected misconduct whether it impacted your return and the amount you paid or not. Some examples of what the IRS considers misconduct are:
If you find yourself facing legal ramifications because of the negligence or actions of your tax preparer or if you are considering taking legal action against that preparer, an experienced attorney can offer valuable guidance.
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]]>Padding Your Deductions Could Lead to Audits & Fraud Charges Read More »
The post Padding Your Deductions Could Lead to Audits & Fraud Charges appeared first on The Law Firm of Lance R. Drury, P.C..
]]>People can write off business-related expenses both incurred as part of a job for an employer and expenses they have to cover as someone who runs their own business or who is self-employed. It is also possible to write off medical expenses, educational costs and even charitable giving.
Some people will exaggerate or pad their deductions in order to minimize the taxes that they pay. Doing so can put that person at risk of legal consequences.
There isn’t a tax trick that you can think of that someone else hasn’t already attempted. The IRS routinely adjusts and tweaks its code specifically to avoid manipulation and abuse. They also carefully review filings for signs of fraud.
Substantial deductions that drastically alter your tax liabilities could be a red flag that leads to an audit. If you don’t have the necessary financial paperwork and receipts to validate those deductions, you could very well wind up owing the IRS quite a bit of money. You will have to pay the taxes you owe, as well as penalties that could be as high as 20% of the inappropriately claimed deductions.
In some cases, they might pursue fraud charges against individuals who intentionally abused deductions for financial gain. Fraud charges can mean that the penalty you pay goes up to 75%. If you face an audit or accusations of misusing deductions to reduce your tax liabilities, getting help early in the process to make a big difference in the consequences you face. For questions about Deductions that could lead to Audits & Fraud Charges, contact The Law Office of Lance R. Drury.
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]]>The Odds Of An IRS Tax Audit Read More »
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]]>Does the fear of a tax audit sometimes haunt your dreams or keep you up at night? If so, you’re not alone. Nobody really wants to deal with an audit, especially since even a simple mistake can expose you to fines, interest and other penalties.
Well, this may be welcome news: The Internal Revenue Service has been forced to cut way back on the number of audits it does each year. The odds of being selected for an audit have been steadily declining over the last decade, largely because the IRS doesn’t have the staff or the budge to keep up with so many.
In 2010, roughly one out of every 90 taxpayers could expect to have the taxman at their door with an audit. In 2019, just one out of every 220 taxpayers suffered through an audit.
None of this means, naturally, that it’s “open season” for tax evasion. There are still a lot of red flags that can trigger an audit, especially inconsistencies between reported income with your investments or pensions and what shows up in the IRS records. You don’t want to take chances.
You also don’t want to assume that any audit you do face will be easy. The fact that the IRS has reduced its number of audits means that they’re also more likely to aggressively pursue collection efforts, fines and other penalties against anybody that is audited when they can find mistakes or unreported income.
If you’re facing an audit, find out what steps you should take next. Contact one of our offices online today or give us a call (Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.)
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]]>Overpaid Taxes – What To Do Read More »
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]]>Did you know that you are able to request a refund if you overpay on your taxes? You may find it a little confusing to do so, but your tax attorney can help you correct your tax return and seek the refund that you deserve.
There can be multiple reasons for overpaying on taxes, from paying too much in taxes through your employer or not accounting for the loss of a second job when you make your estimated tax payments in advance. Even having a new child could impact your taxes and lower what you owe, but if you don’t adjust what you pay to the IRS, you could end up paying out too much.
In most cases, the IRS will return any overages paid to you as soon as they notice that you overpaid. However, if you overpaid because of a problem on your tax return, you may want to work with your attorney and accountant to change the return and update it appropriately. Then, you can request your refund directly so that you can get it sooner rather than later.
Overpaying usually isn’t a serious problem, but it may be complicated to get that money back. Our site has more on what you should do to start the process of getting a refund of the taxes that you overpaid to the government. Contact one of our offices online today or give us a call (Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.)
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]]>