Martin Cantu, EA - Tax Consultant - Tax Relief Services Blog

  I’ve spent some time researching Offers in Compromise lately, especially the provision providing for an OIC under the “ Doubt as to Collectability with Special Circumstances” (DATC-SC) provision. As I’ve researched OICs in general and the DATC exceptions specifically, I’ve began to see some parallels with baseball. Stay with me for second. First, and on a purely unscientific basis, my bet is that many tax pros are also baseball fans. Further, I sense a close affiliation with the new baseball metrics and the willingness to wade into the tax code on   regular basis. For those non-baseball fans, the Michael Lewis book and the movie Moneyball demonstrates the value of a baseball grinder versus that of high money free agent that a team will overpay for years and years.   Its about looking at the numbers and not what your eyes tell you. Quoting the Billy Beane, the subject of the book and movie, “We are card counters at the blackjack table, and we’re going to turn the odds...

As the saying goes, "Follow the money". The money in question here is your government stimulus check. #stimuluscheck Think of this as a video game, with the player (you) trying to get home with hard dollars in your hand. Along the way there are several times others will attempt to get those dollars from you, leaving you empty handed by the time you get home. Understanding this problem requires looking closely at a couple of different areas - tax law and Texas garnishment law. Without getting to technical, here is a quick summary: Normally, any government issued dollars are subject to offset by the IRS to pay off a government obligation. The most common is are an IRS debt and a federally insured student loan. The IRS would take any refund earned and apply to those obligations. The current Presidential Order prevents the IRS from making those offsets, at least until August. As with all things there are exceptions. The main exception at this time is a child support oblig...

President Trump signed the massive coronavirus relief bill last week. Money will be distributed to the public by the IRS. So will the IRS offset what I owe against the check? What about my spouse? Here are some specific takeaways that you need to know now, and take appropriate action: 1. The government is using the IRS to distribute the checks only. They will not offset any IRS debts against the checks as this is not an IRS matter. The government is just using their infrastructure. 2. However, the only exception to this rule is child support obligations. If you owe back child support, it will come out of the check. This is the only exception at this time. 3. The only way the IRS will know about you is if you have filed a return in 2018 or for 2019. If you have not filed for 2018, and have not filed 2019, you will not receive a check.  In order to receive a check you must file a return for either of those years.  We love working with taxpayers who are delinquent ...

From the impact of #COVID19 on our daily lives, keeping up with an IRS refund is a must.  The IRS maintains a Where's my Refund Tool that allows taxpayers to track and verify that its headed to the intended destination.  Taxpayers will need three things to use the tool: Their Social Security number Their tax filing status The exact amount of the refund claimed on their tax return Once the taxpayer enters that information the tool will display the progress of their tax return through the following stages: Return received Return approved Refund sent Great information to keep handy as your go through the return process.  #IRS #IRSRefund

Here are some additional tips on Series LLCs that you may want to consider. 1. I copied the exact language of the statute in my formation document: XYZ, LLC is a Series LLC within the meaning of Subchapter M, Sections 101.61 et seq, Texas Business Organizations Code. Refer to the attatched addendum, which is incorporated herein by reference as if set forth in full, for detail notice of the series and the separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations. The attached addendum also includes the names of the series. The debts, liabilities and obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series, whether now existing or hereafter established, shall be enforceable against the assets of that series only, and not against the assets of XYZ, LLC generally or any other series thereof, and n...

During his press conference last Wednesday, President Trump announced that he was authorizing the #IRS to defer tax payments without interest or penalties. "Using emergency authority, I will be instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted,” he said during a prime-time address. “This action will provide more than $200 billion of additional liquidity to the economy. Finally, I am calling on Congress to provide Americans with immediate payroll tax relief. Hopefully they will consider this very strongly.” The tax deadline falls on the traditional April 15 due date, and although the Treasury and the IRS have not yet issued a formal announcement, they have deferred the date in the past, as when the IRS computer servers couldn’t handle a surge of last-minute tax filings. This is a fluid situation, so check back with us periodically for new details. 

The 2017 tax overhaul presented a new set of challenges and questions for taxpayers to deal with in preparing their returns and making financial plans.   Tara Siegel and Ron Lieber of The New York Times wrote a great article on some of the more difficult questions facing taxpayers as a result of that legislation. You can read the article here . I want to add my input to some of the points they raise in a series of blog entries, in no order. The first issue I want to address is that of Qualified Business Income (QBI). It applies to so many taxpayers and in my opinion is the most confusing section of the new tax law. Reviewing the IRS website addressing QBI, you can tell that this area provides fertile ground for future #IRSAudits and adjustments. The key provision from my viewpoint is what is not QBI: A qualified trade or business is any section 162 trade or business, with three exceptions (Specified Service Trades or Businesses or SSTB): 1.    ...

The #IRS will extend the April 15 filing deadline in response to the  #COVID-19 emergency. There is no word from the #IRS at the time, but it is expected that the new date will fall on June 15 or thereabouts. Please contact #Austin-Tax-help for further details.

Just a reminder to be aware of phone scammers posing as IRS agents in the hopes of stealing your money or accessing your personal information. Scammers love to prey on the elderly, so please take extra precautions for those members of your family that are elderly. Keep in mind that any demographic with a land line and that may have contributed or subscribed to a group in the past is more likely to land on a phone list used by scammers. The elderly are more likely to have donated to political or charitable campaign, or receive frequent callers from insurance, medical or other solicitors. Sometimes its easy to get confused. Here are several things the IRS will never do: · Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. · Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested ...

So many investors and entrepreneurs like to use the Limited Liability Company (LLC) format for entity planning.  I refer to LLCs as a Swiss Army Knife because it is so flexible and adaptable to so many situations. Corporations are still a viable and proper choice for many, especially with the flexibility provided by Sub S elections. The Series LLC now deserves special consideration as way to reduce entity costs, both initially and over the long run. Here's why.  What is a Series LLC? Its an LLC that allows you to form multiple series entities via one entity; protect the equity of one series entity against the liabilities of another series entity; and have a different set of owners for each series entity. This is a Swiss Army knife on steroids! Let’s review the most common reasoning behind choosing such a structure. We’ll assume an individual real estate investor, married with 2 children, living in Texas. He owns 3 properties. Property 1 is a small 6-unit apartment...

In this gig economy, many of us receive 1099s documenting the amount of income earned from that gig. The #IRS uses 1099s as a tracking mechanism. Just as an employer documents wages earned by an employee via a w-2, the #IRS uses 1099s to insure that individuals and companies reported all income earned. Its a compliance tool.  So what to do if the 1099 contains an incorrect amount? A bit of background first. The #IRS compares what income and expenses items that are subject to reporting requirements  against what you report on your tax return. Any difference results in a friendly letter from the #IRS with a bill. Occasionally omission results in an #IRSAudit.  Knowing this, your first attempt should be to contact the payer and attempt to get a substitute 1099. Keep a record of your request, and keep a record of how you calculated the correct amount.  Be sure to ask them to file the correction with #IRS.  If the payer fails to correct the amount you'll...

Some taxpayers may benefit from the credit for other dependents Taxpayers with dependents who don’t qualify for the child tax credit may be able to claim the credit for other dependents. The maximum credit amount is $500 for each dependent who meets certain conditions. These, include: Dependents who are age 17 or older. Dependents who have individual taxpayer identification numbers. Dependent parents or other qualifying relatives supported by the taxpayer. Dependents living with the taxpayer who aren’t related to the taxpayer. The credit begins to phase out when the taxpayer’s income is more than $200,000. This phaseout begins for married couples filing a joint tax return at $400,000. A taxpayer can claim this credit if : They claim the person as a  dependent  on the taxpayer’s return. They cannot use the dependent to claim the child tax credit or additional child tax credit. The dependent is a U.S. citizen, national or resident alien. Taxpayers can claim ...

You hopefully read our recent post on the Taxpayer's Bill Rights. Well, the flip side to that coin is the power of the IRS to regulate how taxpayers must report item, or comply with the law. Congress has given the IRS wide latitude in deciding how to enforce reporting and compliance of various items. Like an ambivalent parent, sometimes the IRS says "you (the taxpayers) must report (fill in the blank) in this manner." Just like a parent with a young child, sometimes the requirement is "I mean it", other times its "I really mean it.", and others "I triple mean now!!!".  The lesson here goes back to something we preach over and over - the key to success in an audit is preparation and then more preparation. Don't get into a situation where you are rushed into an audit. Review the document request, speak with the auditor, review the client files. Candidly speak with the auditor about your plans. Consider amending a return if needed b...

I'm now addicted to watching BigBrother #BB16, something I never considered watching until I was at my daughter's house. As I watch the "social game" play out, I thought it would be fun to use the players as examples of the type of people and responses we receive from the #IRS. Here are a couple, just for fun -  Devin - heavy handed and insulting; your worst nightmare; you'll do anything to get your file off his desk. Zack - loud, crazy and not much substance; you'll put up with an hour of ranting to get to one minute of rational thought. Nicole - sweet as pie; she'll bend over backwards to help you out, even though you may not like the result. Cayleb - "beast mode tax man"; my way or the highway, unless you're female. Donnie - dumb as a fox; you better watch yourself with Donnie - I think he has a masters in tax law and is former Navy Seal. Derrick - the perfect combination of smarts and empathy.  All in good fun. I wonder wha...

The dog days of summer are a great time to spend a few minutes with your 2014 tax projections to see how the year is stacking up. Are you making as much income as you anticiapted? Are there any unexpected income or expense items? Are you having enough withheld or paid in as estimated tax? All great questions to be asking yourself now, rather than next April, when it's too late for action. Keep your notes - it makes a last minute look in December all the easier. While you're reviewing your situation, now is a great time to consider a charitable deduction to the 501(c)(3) charity of your choice. With school just around the corner, so many organizations are gearing up to help those in need as we move into a new school year. Their need for funding extends way beyond the end of the year. Our office supports these charities, as we're pleased to highlight them now for the great work they perform in the community.  In San Antonio we support Seton Home . They are a resi...

Here are a couple of things not to do when confronted with an IRS issue: 1. Ignore all those certified letters . Certified letters are the IRS' way of slapping you in the face to get your attention. Continue to ignore those letters and you're sure to anger the IRS. If your looking for a levy or garnishment, then you're headed in the right direction.  2. My accountant/lawyer/spouse/ etc  is responsible for filing my returns . Responsibility for filing returns rests squarely on you - not your spouse, not you accountant, not your lawyer or anyone else. Blame has no role in solving your tax issue.  3. The IRS owes me money, so I won't file . Great strategy, until you realize that the limitations period will run and you will lose that refund. And you know the movie script here - you have several years of taxes due that could be wiped out by a refund you did not claim 6 years ago. Just like any 70's disaster movie you lose. You lose the refund and you owe th...

In a truly Alice in Wonderland moment, the Unites States #TaxCourt issued an order in which the Court says that #IRS guidance "is not binding precedent and that taxpayers rely on same at their own peril." What? Okay, maybe the #TaxCourt meant that you can't rely on something a clerk tells you on the phone or at your local #IRS office. Maybe the #IRS representative was not authorized to issue the guidance, or perhaps they misconstrued the #TaxCode - you might understand how that could happen.  Not the case. The #TaxCourt Order in  Bobrow, Docket No. 7022-11 , dated ironically enough April 15, 2014, warns taxpayers that they can't rely on #IRS guidance. Looking deeper into the case, the advice was actually contained in an IRS publication, Number 590 to be precise. The #TaxCourt stated that reliance on Publication 590 "would not have served as substantial authority for the position taken on their tax returns." The American College of Tax Counse...

The #IRS recently announced two scams that will impact taxpayers and the manner in which they deal with the #IRS. The newest approach involves scammers phoning taxpayers using fake names and IRS badge numbers - brazen acts to further intimidate unsuspecting taxpayers into providing the scammers with sensitive financial data. This method is effective because the #IRS will contact you by phone and the agent will identify himself with name and badge number. Further complicating the situation is that the scammer will threaten the taxpayer with severe consequences if the tax bill is not paid. The scammer may also have stolen an #IRS notice from the taxpayers mailbox, providing the scammer with an amount, a notice number and date, and other valuable information about the taxpayer's actual tax problem. The scammer will make threats, may use rude tones and language, and demand action now. Unfortunately, some agents may use these same tactics, especially when attempting to collect lar...