Andrew Samaniego | Tax Resolution Blog | CA

Archives for July 2024

Why Tax Transcripts Can Be Your Best Friend in a Tax Battle

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Fresh off a double celebration—my birthday and my son Kainalu’s four-month milestone—we kicked back in sunny Coronado. Nothing like a bit of sun and pool time to recharge, right? And right in the midst of all this, we had our bi-annual board meeting with our business ally, Tax Debt Consultants, discussing big moves like licensing and the launch of my upcoming e-book on Amazon. Exciting times!

Now, let’s dive into something crucial I cover in the first section of my soon-to-be-released book: the power of IRS Transcripts in your tax battle. If you’ve been out of the tax filing loop for over three years, you’re going to want to lean in close for this one.

The Unsung Hero: IRS Transcripts

Think of IRS Transcripts as the all-knowing oracles of your tax history. These documents are records of your past filings, non-filings, payments, and every official interaction that could affect your current tax situation. In the chaos of tax troubles, they’re your beacon of truth. Here’s why they’re indispensable:

1. Uncovering the Unknown

First off, if you haven’t filed taxes in years, there’s a good chance there are some murky waters in your financial history. IRS Transcripts shine a light on these unknowns. They provide a detailed record of what the IRS knows about you—which may be more or less than you expect. Before you can even think about strategizing, you need to know where you stand, and these transcripts lay it all out.

2. Identifying Errors and Opportunities

Errors in IRS records aren’t as rare as you might think. Sometimes, payments are misapplied, or previous filings are inaccurately processed. By reviewing your transcripts, you can spot these discrepancies early, potentially saving you a significant headache and cash. Plus, they can reveal opportunities for claims you might not have considered, like overlooked deductions or credits.

3. Strategic Planning

Armed with knowledge from your transcripts, you can plan your next moves effectively. Whether it’s filing back returns, amending incorrect ones, or negotiating a payment plan, knowing your history allows you to build a compelling case and approach the IRS with confidence.

4. Streamlining Resolutions

When you understand your tax history thoroughly, you streamline the resolution process. This isn’t just about fixing past problems—it’s about paving a smoother road for your financial future. With clear insights, you can quickly decide the best course of action, whether it’s setting up a payment arrangement or challenging an incorrect IRS decision.

Conclusion

As we gear up for the release of my new e-book, remember this: Knowledge is power, especially when it comes to dealing with the IRS. Tax transcripts are a powerful tool in your arsenal, helping illuminate both past mistakes and paths forward. They’re not just pieces of paper—they’re your strategic advantage in the often-intimidating arena of tax resolution.

So, whether you’re a seasoned taxpayer or just getting back on track, make IRS transcripts your first port of call. Stay tuned for more insights from my upcoming book, and let’s turn those tax battles into victories!

Looking to dive deeper into your tax strategy? Keep an eye out for my e-book on Amazon, and visit crushirsanxiety.com for more expert tax advice and tips.

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com

Going for Gold Blocked by the IRS? How Olympians and You Could Lose Your Passport Over Taxes

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Hey, sports fans and tax dodgers alike! Today marks the electrifying start of the 2024 Olympic Games, and as the world tunes in to the opening ceremony, bursting with pomp and patriotism, there’s a less discussed, but crucial angle to consider: How could our celebrated Olympians possibly be stopped in their tracks by none other than the IRS?

You heard that right. Imagine training your whole life, pushing past every imaginable limit, only to be sidelined not by an injury, but by the IRS. Sounds far-fetched? It’s not. Here’s the lowdown on how the IRS could potentially revoke or deny your passport, leaving dreams of Olympic gold hanging by a thread.

The IRS and Your Passport

Under the Fixing America’s Surface Transportation (FAST) Act, the IRS was given the authority to certify taxpayers with “seriously delinquent tax debts” to the U.S. State Department, which can then deny, revoke, or limit the ability of these individuals to use their passports. This isn’t just for the high rollers or the big-time tax evaders—this can affect anyone who meets certain criteria.

What Qualifies as “Seriously Delinquent”?

A seriously delinquent tax debt is one where the taxpayer owes more than $55,000 (this threshold is adjusted annually for inflation), and where the IRS has:

  1. Filed a Notice of Federal Tax Lien and the period to challenge it has expired, or
  2. Issued a levy.

Why Olympians?

Think about it. Olympians, though not always rolling in endorsement dough, often have complicated financial lives. Training costs, travel expenses, equipment—much of it can be deducted, but these deductions must be properly documented and filed. Miss a few details (or tax returns), and suddenly those deductions are moot, and you’re in the red with the IRS.

The Road to Reinstatement

If an Olympian—or anyone, for that matter—finds themselves flagged by the IRS, all is not lost. There are several steps you can take to resolve the issue:

  1. Pay the debt in full: The simplest, though not always the most feasible solution.
  2. Set up an installment agreement: This allows you to pay off your debt over time.
  3. Offer in Compromise: Settle your debt for less than the full amount owed, if you can prove paying in full would cause financial hardship.
  4. Prove that the certification was erroneous: If the IRS made a mistake, proving it can get your passport restrictions lifted quickly.

Don’t Let This Happen to You

Whether you’re gunning for gold or just trying to stay afloat, the key takeaway here is simple: Don’t mess with the IRS. Filing your taxes correctly and on time, every time, is the only surefire way to avoid the messy business of tax liens, levies, and the potential loss of your passport.

For those who haven’t filed in over three years, consider this a wake-up call. The last thing you want is to be gearing up for the trip of a lifetime—or a shot at Olympic history—only to find you’re grounded due to unresolved tax issues.

Need help getting back on track? Head over and get my free E-Book for more detailed advice on dealing with back taxes, or consult a tax professional who can help you negotiate with the IRS effectively. Remember, when it comes to the IRS, an ounce of prevention is worth a pound of cure—or in Olympic terms, a stitch in time saves nine…hundredths of a second off your sprint time.

Let the games begin, and may your tax troubles be few and your victories sweet!

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com

Streamlined Agreements: Are You In or Out?

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Exactly one year ago today, my life took a sharp turn towards an adventure I hadn’t planned yet—one that made my heart swell bigger than I thought possible. I arrived home, expecting the usual end to a workday, only to find a small blue gift bag casually sitting on the dining room table. Birthday approaching, I figured my wife was setting up early. But the real surprise wasn’t the timing; it was the content. Not a gift for me or even for our beloved golden retriever, Cooper, but a tiny onesie announcing a new title I was about to take on: Daddy.

Now, as I watch my son, Kainalu, gearing up each day with endless curiosity, it strikes me how life’s big moments often require us to step up, streamline our approach, and prepare for the future. This isn’t just true for personal milestones but also for handling something as intimidating as back taxes. That’s where IRS Streamlined Agreements come into play.

What Are Streamlined Agreements?

Streamlined Agreements are like the baby onesies of tax relief—designed to simplify, clarify, and give you a fresh start. They’re part of the IRS’s effort to help taxpayers who’ve fallen behind but are ready to rectify their back taxes without the usual hassle. This program cuts through the bureaucratic red tape, making it easier for eligible taxpayers to get back on track.

The Sweet Spot for Streamlined Agreements

You might be wondering: Am I eligible? The criteria are straightforward:

  1. Debt Limit: You owe $50,000 or less in back taxes.
  2. Tax Returns: You must be up-to-date with all tax return filings.
  3. Repayment Period: You agree to fully repay your owed taxes within 72 months (or by the collection statute expiration date, whichever comes first).

It’s a clean and clear way to settle your debts, much like figuring out those first steps of parenthood—daunting yet doable with the right framework.

Why Consider a Streamlined Agreement?

1. Simplicity: No exhaustive paperwork or needless hurdles. It’s the IRS’s way of saying, “Let’s fix this efficiently.”

2. Predictability: With fixed monthly payments, you know exactly what you owe each month, helping you budget better—key for anyone managing new family expenses or, say, baby supplies.

3. Peace of Mind: Regularizing your tax status lifts the weight of uncertainty and lets you plan your financial future without looming IRS issues.

Are You In or Out?

Choosing to step into a Streamlined Agreement is much like deciding to embrace a new role in life. It’s about not letting past mistakes define your future but rather taking proactive steps to improve your situation. Just as I embraced fatherhood, you too can embrace the chance to reset your tax responsibilities.

Fast Forward to Action

Just as my son is ready to explore the world at four months old, you too can start fresh. If you’re dealing with back taxes and meet the criteria, a Streamlined Agreement might just be your best first step towards financial stability. Don’t wait for the situation to escalate. Like picking out that perfect onesie for your next big life chapter, picking out the right tax relief option can set you up for success.

Still feeling unsure about diving in? Visit [your website] to grab my free e-book on navigating back taxes and IRS negotiations. Whether you’re a first-time tax filer or getting back on track, it’s never too late to streamline your tax strategy and secure a brighter, more stable financial future.

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com

Which IRS Installment Agreement Fits You Best?

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Hello, tax warriors! Guess what’s back in San Diego, and it’s not something we’ve missed—yup, the flu. My household’s been in the trenches with it; my wife’s down for the count, and I’ve been juggling dad duties with our little trooper, Kainalu, while keeping our home fortress secure.

Amidst all this chaos, I haven’t let up on battling another formidable beast—the IRS (and let’s not forget the FTB) on behalf of folks like you who haven’t filed taxes in over three years.

Speaking of battles, let’s talk strategy, specifically about navigating the murky waters of IRS installment agreements. Finding the right plan can feel like choosing the right weapon for battle—each has its advantages depending on the fight (or debt) you’re facing.

Understanding IRS Installment Agreements

First off, what exactly is an IRS installment agreement?

Think of it as a peace treaty with the IRS. It allows you to pay your tax debt over time instead of all at once. This can be a lifesaver if you’re drowning in back taxes and can’t cough up the full amount immediately. But not all installment agreements are created equal. There are several types, each with its own set of rules and qualifications.

1. Guaranteed Installment Agreement

This is the lightweight fighter of the bunch—quick, nimble, and easy to handle if you owe $10,000 or less. You can typically set this up without much fuss as long as you agree to pay off your debt within three years. No detailed financial statements required, no disclosures of your spending habits, just a straightforward monthly payment plan.

Best for: Those with relatively low tax debts looking for a quick and easy resolution.

2. Streamlined Installment Agreement

Stepping up in weight class, we have the streamlined installment agreement. This one’s for debts up to $50,000, and you get up to 72 months to pay. You’ll need to have all your tax returns filed, and you must commit to monthly payments, but the IRS won’t poke around in your financial life too much.

Best for: Individuals with moderate tax debts who can handle a steady payment plan over a few years.

3. Non-Streamlined Installment Agreement

Now we’re in heavyweight territory. If you owe more than $50,000, things get a bit more complex with the non-streamlined installment agreement.

Here, you’ll need to provide the IRS with a Collection Information Statement. This document lays bare your financial soul—your income, expenses, assets, debts, the works.

Negotiations might be tougher, and you’ll want to strap on your best armor (aka, possibly get professional help).

Best for: Those with substantial tax debts who need a tailored payment plan and are prepared for some financial disclosure.

4. Partial Payment Installment Agreement

Finally, for the battle-worn, there’s the partial payment installment agreement. This plan acknowledges that you might never pay off the full amount based on your financial situation. You make smaller monthly payments over time, and the IRS might forgive some of your debt at the end of the agreement period.

Best for: Taxpayers who cannot realistically pay off their entire tax debt given their current and projected financial situations.

Choosing Your Battle Plan

Deciding which installment agreement fits best isn’t just about how much you owe; it’s about understanding your financial capacity, your future income prospects, and how much you can handle monthly without capsizing your financial ship.

While I’m over here being super dad and nursing my better half back to health, don’t hesitate to reach out if you need some backup with your IRS issues. Whether it’s setting up the right payment plan or negotiating tougher IRS seas, I’ve got your six.

Stay strong, stay healthy, and let’s keep those tax battles as painless as possible!

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com

The Cohan Rule: How This 100-Year-Old Case Still Saves Taxpayers Today

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Do you know what grinds my gears more than a mandatory sprint? Bookkeeping. Just yesterday, after panting through my annual Physical Readiness test (which I absolutely loathe), it struck me how similar my feelings are towards keeping meticulous financial records. But like running, it’s a necessary evil, especially if you’re a business owner gearing up for tax season.

However, let’s face it—sometimes life throws a wrench in our plans. Documents get lost, receipts fade away, or, heaven forbid, a disaster wipes out all our meticulous records. What then? Do we just roll over and let the IRS have its way with us? Not quite, thanks to a century-old lifesaver known as the Cohan Rule.

What is the Cohan Rule?

Cast your mind back to 1920s America. George M. Cohan, a legendary Broadway figure (you might know him from the song, “Give My Regards to Broadway”), found himself in hot water with the IRS. Despite his success, Cohan was no fan of detailed record-keeping. When audited, he lacked the documentation to support his claimed business expenses.

But instead of folding, Cohan fought back, and his case went all the way to the United States Court of Appeals. In a landmark decision, the court ruled in favor of Cohan, essentially stating that when a taxpayer can convincingly show that qualified expenses occurred, the IRS should estimate the allowed deduction rather than deny it outright just because specific records are missing.

Why Does the Cohan Rule Matter to You?

If you’ve skipped filing your taxes for the past few years and are now in a scramble to get your affairs in order, the Cohan Rule could be your unsung hero. Here’s why:

  1. Flexibility in Deductions: The Cohan Rule allows for tax deductions based on reasonable estimates if you can demonstrate that you genuinely incurred the expenses. This means that even if your record-keeping was less than perfect, you might still salvage significant deductions.
  2. Reducing Tax Liability: By enabling you to estimate and deduct legitimate business expenses, the Cohan Rule can substantially decrease your tax liability. This is crucial if you’re piecing together back tax returns and find yourself short on documentation.
  3. Empowering Negotiations: Knowing about the Cohan Rule arms you with valuable information that can be leveraged in discussions with the IRS. It shows that you’re informed and proactive, qualities that can influence the outcome of tax disputes.

How to Use the Cohan Rule Wisely

While the Cohan Rule is a powerful tool, it’s not a free-for-all. Here’s how to use it effectively:

  • Be Reasonable: Your estimates must be plausible. Wild guesses won’t fly with the IRS.
  • Show Evidence of Effort: Demonstrate that you’ve made a genuine attempt to track and document expenses, even if the records are incomplete.
  • Consult a Professional: Navigating the complexities of IRS rules can be daunting. A tax professional can help you make the most of the Cohan Rule and ensure your estimates are defensible.

Conclusion

Just like how I’d rather run laps than do bookkeeping, sometimes we must tackle the less pleasant aspects of life head-on. If you’re dealing with back taxes and missing records, remember the Cohan Rule. It might just be the lifeline you need to turn a potential financial disaster into a manageable situation.

Need more insights or help applying the Cohan Rule to your tax situation? Dive deeper into tax strategies and solutions on my blog or reach out for personalized advice. Don’t let the fear of imperfect records keep you from taking control of your tax destiny.

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com

How to Use State Tax Debt as a Bargaining Chip with the IRS

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What a whirlwind of events this weekend! From the highs of launching my YouTube channel and visiting the Temecula vineyards, to the unsettling news of an attempt on Former President Trump’s life—a figure whose speeches I admired during my time at the US Naval Academy. It’s times like these that remind us to stay resilient and focused, no matter the chaos.

Amidst all, let’s shift gears back to something we can control: navigating the treacherous waters of tax negotiation. Particularly, how you can use your state tax debt as a cunning leverage point in negotiations with the IRS.

The Art of Leverage

In the world of taxes, knowing how to maneuver can make or break your financial health. One less known but effective strategy is using your state tax liabilities as a bargaining chip with the IRS. Here’s why this works and how you can apply it:

Understanding the IRS vs. State Tax Boards

The IRS and state tax authorities, like the California Franchise Tax Board, often seem like they’re cut from the same cloth. However, they operate under different rules and have different levels of flexibility when it comes to debt settlement. States, especially California, are notoriously rigid in their negotiations. They often do not budge much on the amount owed.

Step 1: Assess Your Total Tax Liability

Firstly, get a clear picture of what you owe both to the IRS and your state tax board. This will be your starting point in understanding the scope of your negotiations. Remember, knowledge is power—particularly when it involves figures the IRS might be interested in.

Step 2: Approach the IRS

When you negotiate with the IRS, point out your significant state tax liabilities. Here’s the kicker: since the state is less likely to negotiate down the debt, you can argue that a significant portion of any resources or payments you can muster will need to go towards settling your state tax debts.

Why This Appeals to the IRS

The IRS is keen on collecting as much as possible but understands they are in line with other creditors, including state tax authorities. If they see that the state will take a substantial part of your payment capacity, they might be more willing to negotiate favorable terms on the federal tax debt to ensure they receive something rather than nothing.

Step 3: Propose a Payment Plan

Armed with the knowledge that you have substantial state debts, propose a payment plan to the IRS that considers your total debt load. This plan should aim to balance payments realistically between state and federal liabilities. Demonstrate good faith by proposing a structured payment schedule that prioritizes both debts.

Step 4: Documentation and Professional Help

Back up your negotiation with thorough documentation. Show clear calculations of your income, existing debt obligations, and potential payments. In such complex negotiations, it is prudent to seek the guidance of a tax professional who can strategically present your case to the IRS.

Wrapping Up

While the realm of taxes often feels daunting, strategic approaches like using your state tax liabilities as leverage in IRS negotiations can provide surprising relief. Just as we keep our spirits up and resilience ready in the face of national events, so too should we tackle our financial obligations with strategic foresight.

Remember, navigating these tricky waters doesn’t mean you’re alone. Consult a tax professional who can provide you with the arsenal you need to make the most of every negotiation with the IRS.

Andrew Samaniego, EA, CTRC, MSCTA

Andrew Samaniego Tax Planning & Resolution

(619) 268-1084  |  AndrewSamaniego.com