Category Archives: Blog

March 2017 Newsletter: Happy St. Patrick’s Day!

And Yet Another New Scheme; The Latest Tax Scam

Issuing an alert to tax professionals and taxpayers, the Internal Revenue Service is warning them about a new fake tax scam involving fake CP2000 notices. CP2000 notices are sent as part of the IRS’s Automated Under-Reporter Program when income reported from third party sources, such as employers or 1099’s does not match the income reported on a tax return. It is always sent to the taxpayer through the U.S. Postal Service. In the new scam, the fake CP2000 notice is sent as an attachment to an email, stating there is additional unpaid taxes owed relating to he Affordable Care Act. The notices appear to be issued from an Austin, TX address and includes the request that a check be mailed to an Austin post office box. The email also has a “payment” link within the email.

If you get a questionable notice feel free to call or email Lothamer at 517-484-1040, toll free at 1-800-619-8277 or

Continue reading →

How to Avoid Tax Preparer Fraud

Every tax season, someone will fall victim to a tax preparer fraud scheme. Most incidents occur towards the end of tax season and in low-income neighborhoods. The most common schemes are: inflating personal or business expenses; false deductions or income; and unallowable credits or excessive exemptions. Tax preparer scammers will use these schemes as a way to inflate your refund and keep the money for themselves. Continue reading →

Five Things to Look for When Hiring a Tax Attorney

Many Americans are faced with an IRS problem every year.  If you happen to fall into this situation, it is important that you seek the help and advice of a qualified tax attorney.  While there are many reasons to hire one attorney over another, here are five important things to look for when hiring a tax attorney for your case. Continue reading →

Missing 1099’s ???

Now that tax season has arrived, we are all patiently waiting to receive our tax forms in the mail.  While many will receive a W-2 from our employer, some may receive a 1099 for work performed or other reasons.  Some common 1099 forms are for interest income, retirement accounts, real estate or broker exchange transactions, merchant card payments, or just miscellaneous income.  As with W-2s, any 1099 should be received by January 31st of the following year.  Here are three things you can do if you do not receive them: Continue reading →

How Well is the IRS Handling Taxpayer Phone Calls?

For the past few filing seasons, the IRS has been under difficult workplace circumstances. The IRS has had to deal with low funding, fewer employees, and lack of motivation to answer customer’s calls. This affects the IRS’s ability to give proper customer service to taxpayers. In a report by Head Taxpayer Advocate Nina E. Olson, statistics on the IRS’s poor phone service performance was noted frequently. Continue reading →

Discharging Taxes in Bankruptcy

Most people don’t realize that income taxes can be discharged in bankruptcy. However there are rules that must be followed in order to determine whether or not a particular year can be discharged.

The basic rules are as follows:

  1. At the time of the filing of the bankruptcy the tax debt must be at least three years from the date the tax return was due for that year.
  2. At the time of the filing of bankruptcy it has been at least 2 years from the date the tax return, on which the balance is owed, was filed.
  3. At the time of the filing of the bankruptcy it has been at least 240 days since the IRS last assessed the tax.
  4. There was no fraud or willful tax evasion in connection with the tax debt looking to be discharged.

 

Even though there are 4 basic rules to discharging income tax, there are other events that can add time to the calculation of when a tax debt becomes dischargeable. Those events include, but are not limited to, requests for a collection due process hearing, the time in a prior bankruptcy, and the filing of an Offer in Compromise.
At Lothamer, our attorneys and CPAs have the ability to review IRS transcripts and determine whether or not the taxes you owe are dischargeable in a bankruptcy. Lothamer clients have saved hundreds of thousands of dollars over the years by utilizing the bankruptcy process to either eliminate or greatly reduce their tax debt.

If you are contemplating a bankruptcy, call Lothamer today to schedule a initial consultation.

Does Your Business Owe Taxes?

Does your business owe taxes that it can’t pay?

Have you recently received correspondence from the IRS indicating that your business owes past taxes? If you have found yourself in a situation where your business is not able to pay the balance in full, you will need to establish resolution on the balances.

Much like individual income taxes, the IRS offers various resolution options for businesses. In some situations, the business may be able to request an In Business Trust Fund Express Installment Agreement. This agreement allows the business to pay its tax debt in full over 24 months.

If a business cannot make this payment or otherwise does not qualify for this agreement, it will need to complete a form 433-B, Collection Information Statement for Businesses. The form 433-B provides the IRS with a comprehensive view of business income, expense, assets, and liabilities in order to better determine the businesses ability to pay.

When completing a form 433-B, you will need the following information: the basic information for the business (address, EIN, entity type); information regarding officers/members; bank account information; receivables and liability accounts; asset information including real property, vehicles; and equipment owned by the business; and monthly income and expenses of the business.

Although completion of a 433-B may seem rather straight forward, there are issues that you need to be aware of when completing the form. For instance, a seasonal business needs to determine what monthly income to report, as there may be large fluctuations from month to month. Also, a business that just received a large payment may show excess money in the business bank account, although that money may be needed to support other expenses of the business.

The best advice when dealing with the IRS to set-up an installment agreement on your business is to hire a Tax Attorney or CPA to represent you, especially if a Revenue Officer has been assigned to your case. The IRS will first review your business to determine if it is viable. They will make a determination as to whether your business is capable of meeting tax obligations and still having a profit and whether your business should continue to operate. The IRS may also deny expenses claimed on your tax return, such as depreciation, when determining your business’s ability to pay.

For most people, their business is their livelihood. Therefore, it is essential that it gets into and remains in compliance with the IRS, continues to operate, and the payment plan is something that can be afforded by the business. A Tax Attorney or CPA can help you to navigate the IRS forms and can represent you before the IRS to achieve the best possible results.

How to Protect Your OIC from Being Revoked

Congratulations!! Your Offer in Compromise (OIC) has been accepted by the IRS. Now that you have an accepted Offer, you must take steps to prevent it from being revoked.

Pay the Offer Amount by the Due Date
The amount of your offer generally must either be paid within five months of acceptance or under a 24 month payment plan. The exact details of your payment can be found on form 656. You must meet the payment terms of your Offer or it will be revoked. You should receive a letter confirming that the payment terms have been met.

Remain in Filing Compliance with the IRS
One condition of the Offer is that you must remain in filing compliance with the IRS for five years. This means that you must timely file all returns by the date they are due (or by the extension date if a valid extension has been filed). Failure to timely file your returns during this five year period may result in your Offer being revoked.

Not Accruing Additional Balances with the IRS
Once you have an accepted Offer, you cannot accrue any additional balances with the IRS. This includes any additional assessments on prior returns, as well as any new balances on future returns. If you file a new return and there is a balance, you must pay it in full with the return. Any unpaid, additional assessments may result in your OIC being revoked.

If you receive notice from the IRS that your Offer is at risk of being revoked, DO NOT IGNORE IT. You need to respond to the notice and take steps to correct the issue. If your OIC is revoked, all balances that were written off due to the Offer will be put back on your account, along with the additional interest and penalties.

To find out if you qualify for Offer in Compromise, please contact us at 877-829-2455 to schedule a initial consultation.