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Taxes

Tax evasion is squarely in the sites of IRS auditors and the IRS criminal investigation division, especially as it relates to cash-based businesses.  Tax evasion is also called tax fraud.

On September 10, 2020 the United States Attorney’s Office announced the sentencing of Mr. and Mrs. Brocato in a court trial that is a good example of tax evasion relating to “cash skimming,” or “taking cash off the top.”


What is Tax Evasion?  


In February 2020, Dick Brocato, Jr., 68, and his wife, Judith L. Brocato, 65, both of Beaumont, Texas, were convicted by a jury of tax fraud and six counts of submitting false tax returns on both their personal and business for 2012-2014.

According to information presented in court, the Brocatos owned a lawn service company, Superior Lawn Service, which was operated as an S Corporation for tax purposes. The Brocatos were the sole shareholders of the company, and Judith Brocato served as corporate president, maintaining the books and records of the corporation, and signing the corporate tax returns in that capacity.

The Brocatos conspired to evade taxes for years 2012, 2013, and 2014. As part of that conspiracy, they filed false corporate and personal income tax returns for years 2012, 2013, and 2014.

To facilitate the scheme, the Brocatos cashed numerous checks from customers instead of depositing them into the company accounts. They then under-reported the income by failing to report the cash income amount on the various tax returns.

According to the indictment, the under-reported income amounted to $503,281 in 2012, $687,534 in 2013, and $513,498 in 2014. 

Sentencing took place on September 10, 2020.  The Brocatos were each sentenced to 33 months in federal prison. They were also ordered to pay restitution in the amount of $617,762 to the IRS and fines of $15,000 each.


Penalties for Tax Evasion


It should be clear that the IRS is paying particular attention to cash based business, because of the likelihood of fraud and tax evasion.  They know the trick of cashing checks and putting the money in your pocket without reporting the income to the government.  The IRS will pursue and even prosecute anyone who does this.  Therefore, do business the right way.  Keep your nose clean and stay out of IRS trouble.  There are plenty of legal ways to do tax planning that won’t send you to jail.

For a more general discussion of IRS audits of cash-based businesses, see our article on IRS Audits in 2020.



By Gary Massey, CPA

Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, GA serving the needs of small businesses and their owners.  Our services include tax preparation, taxpayer representation and IRS audits.


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Taxes
The IRS audit and the receipt of IRS notices seem to be becoming more and more prevalent among Atlanta taxpayers.

The IRS regularly examines third party documentation to identify income that is missing on tax returns.  Most commonly, this includes 1099’s and W-2’s.  This the cause of millions of IRS notices that go out to taxpayers every year.


IRS Audit Triggers


The IRS has a computer scoring system for identifying taxpayers to audit.  This is called the Discriminant Function System, or “DIF.”  The DIF program gives each return numeric “scores” which identify the red flags among the masses of data on hundreds of millions of tax returns.  The red flags are those deductions that are beyond what the IRS considers to be normal.  This is based on taxpayers with similar jobs and similar income levels.  If the DIF identifies an obvious discrepancy, the chances of a tax audit are much higher.



IRS Audits and the Summons



Another tool that the IRS has to identify non-compliant taxpayers is the “summons.”  The IRS uses a summons to obtain information about a specific taxpayer whose identity is known.  In general, the IRS issues summonses only when the taxpayer (or other witness) will not produce the desired records or other information voluntarily.

In addition, the IRS has an even more powerful investigative tool to track down tax evasion, the “John Doe summons.”  The IRS uses the John Doe summons in a variety of situations where a broad class of taxpayers is the target of investigation.    It is used to obtain the names, requested information and documents concerning all taxpayers in a certain group when the identity of specific individuals is not known.   

John Doe summonses require US District Court approval.  Therefore, the IRS Office of Chief Counsel maintains the files associated with these cases.


Examples of the John Doe Summons



The IRS has used John Doe summons to obtain lists of investors in tax shelters, owners of tax-exempt bonds or account holders at financial institutions.  

For example, in 2016 a federal court in the Northern District of California authorized the IRS to serve a John Doe summons on Coinbase Inc., seeking information about U.S. taxpayers who conducted transactions with virtual currency.   According to a representative of the Tax Division of the Justice Department, “tools like the John Doe summons authorized today send the clear message to U.S. taxpayers that whatever form of currency they use – bitcoin or traditional dollars and cents – we will work to ensure that they are fully reporting their income and paying their fair share of taxes.”

Our firm is aware of a John Doe summons of check cashing companies that triggered a series of recent taxpayer audits.  The purpose of the John Doe summons was to identify those people who cashed checks and for how much.  As a result, the IRS audited these people to determine if they reported the checks as taxable income on their returns. 



Other IRS Audit Tools



IRS examiners utilize a variety of external sources as part of the audit.  Examples include:

  1. Bureau of Labor Statistics
  2. Social Security Administration
  3. Post Office Database (for shipping records and money order purchases)
  4. Department of Motors Vehicles (how many vehicles do you have?)
  5. Social Media (do you highlight a business that the IRS does not know about?)
  6. Google, Yahoo and other search engines
  7. State licensing databases


In short, the IRS has many tools at its disposal to audit taxpayers, as well as to identify non-filers. 

Feel free to reach out to our accounting firm in Atlanta, GA for assistance with audits and IRS tax matters.

For a more general discussion of the IRS audit process, see our article on IRS Audits in 2020.


By Gary Massey, CPA


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, GA serving the needs of small businesses and their owners.  Our services include tax preparation, taxpayer representation and IRS audits.

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Taxes

Click below to watch our NEW video about Home Office Tax Deductions!

Do you run your business from a home office? If so, this video is for you!


Home Office Tax Deductions



In this video, we discuss tax deductions for home offices. First, we explain what qualifies as a home office (for the purpose of the deduction) and the specific rules that apply here. We also share information about the two methods of calculating this deduction and which one might be best for you and your business. Finally, we dive into the types of entities that can claim this deduction when it is time to file taxes. 


IRS Audits and the Home Office



Keep in mind that home office deductions are perfectly legitimate business expenses and may be deducted with confidence on tax returns.  Nevertheless, they are on the IRS radar as a potential area of abuse.  So, be sure that you meet all the rules.  For example, a home office must be a place where you routinely meet clients.  Alternatively, it must be your primary place of business.  In addition, the office space must be solely for business.  However, there is an exception for elder care and day care centers, where mixed use facilities are allowed.

Lastly, be careful that the size of your home office, expressed as a percentage of your entire home, is correctly reported on your tax return.  IRS auditors have been known to visit home offices with a tape measure.  So be exact.


Accountable Plan


Business that are formed as an S corporation, or an LLC with an S corporation election, may create an accountable plan to reimburse the owner-employee for home office expenses.  This is a great method to ensure that the owner, who is also an employee of the S corporation, gets the tax deductions for the home office.  These expenses will be passed through to the owner from the entity via their K-1.  Without the accountable plan, the home office would be deemed to be the personal expenses of the owner-employee and would not be deductible, especially after the elimination of itemized miscellaneous deductions on Schedule A of Form 1040.


If you enjoyed this video, and would like to see more of our tax and accounting videos, please check out our YouTube Channel! Be sure to subscribe so that you see our future videos that could benefit you and your business.

To learn more about the services our CPA firm provides, visit our home page!

If you wish to learn more about getting this deduction, call our office in Atlanta, GA at 678-235-5460 for a free consultation.


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated serving the needs of small businesses and their owners.

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Taxes

What is IRS Notice CP2000?



We have noticed a significant increase in the number of Atlanta taxpayers receiving IRS Notice CP2000 in the mail.  The IRS sends this notice when information from a third party source (such as a 1099 or W-2) does not match the information the taxpayer reported on their tax return.

Notice CP2000, also called a Notice of Underrported Income, is generated by the IRS Automated Underreported (AUR) function.

What You Need to Know


The IRS sends Notice CP2000 when a tax return’s information does not match the data reported to the IRS by third parties, such as banks, vendors or employers.   This data is typically in the form of a W-2 or 1099.

This notice is not a formal audit notification. It is simply a notice to see if the taxpayer agrees or disagrees with the proposed changes.

Taxpayers should always respond to the notice CP2000. Usually, the taxpayer has 30-days from the date printed on the notice to respond. 

The IRS provides a phone number on each notice that they send out. IRS telephone assistants can explain the notice and what taxpayers need to do to resolve any issues.

The IRS will send a follow up notice to taxpayers who do not respond to Notice CP2000, or if the IRS does not accept the additional information provided.   This second notice is called a Statutory Notice of Deficiency.

The Statutory Notice of Deficiency provides detailed information about why the IRS proposes a tax change and how the IRS determined the change. The notice tells the taxpayers about their right to challenge the decision in Tax Court if they choose to do so. It is critical to respond to this notice within the required time period, in order to preserve legal rights.

To conclude, keep in mind that CP2000 mismatch notices are produced by computers and are sometimes incorrect.  Therefore, carefully double check your tax returns with W-2’s, 1099’s and other third party documents before you send in your payment.


Massey and Company CPA represents taxpayers who receive IRS Notices.  To learn more, give us a call at 678-235-5460, or email us at gary.massey@masseyandcompanycpa.com. You can also contact us through our website by visiting the home page.  And you are welcome to visit us at our office in Atlanta!



Founded by Gary Massey, Massey and Company is a boutique, Atlanta-based CPA  firm serving the needs of small businesses and their owners. We handle tax matters, IRS controversy, tax debts, back taxes, bookkeeping, and accounting. Our offices are in the Buckhead neighborhood of Atlanta and we welcome face-to-face visits.

Gary Massey, CPA

Massey and Company CPA

P.O. Box 421396, Atlanta, GA  30342

Massey and Company 

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Taxes
Do you have upcoming travel plans? If you owe significant tax debt, you may be in for a surprise. The State Department can revoke your passport if you owe a significant tax debt to the IRS.  Therefore, taxpayers with tax debts and international travel plans should contact their CPA as soon as possible to protect their passport. 



How Much Debt is Too Much?


The IRS will notify the State Department if a taxpayer has a seriously delinquent tax debt.  As of March, 2020, the amount of tax to be considered seriously delinquent is $53,000 or more.   This amount is adjusted annually. 

Once notified, the State Department may then deny or revoke passport applications and renewals and restrict international travel.

If You Owe Debt, Don’t Wait!


When a passport is denied or revoked, the taxpayer should petition the IRS for the action to be reversed.   Normal processing time for these petitions is 30 days.  However, expedited processing is available under certain circumstances. 

Fortunately, the matter can usually be corrected if the taxpayer cooperates and is able to show a good-faith attempt to resolve their tax debt. For example, requesting an Offer in Compromise or an Installment Agreement is an example of a good-faith effort.


Working with the IRS is intimidating. Therefore, feel free to call our office in Atlanta, GA at 678-235-5460 to discuss your situation.

Check out our YouTube Channel!


Founded by Gary Massey, Massey and Company CPA serves the needs of small businesses and business owners.  The firm handles tax matters, IRS controversy, tax debts, back taxes, bookkeeping, and accounting.  Offices are in the Buckhead neighborhood of Atlanta.

Massey and Company CPA
P.O. Box 421396, Atlanta, GA  30342
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Taxes
IRS audits are seemingly fraught with mystery.  Yet, it is a process that generally unfolds in a routine manner.  It is worth taking time to remove the mystery so people know what to expect and how to deal with it.

A letter from IRS comes in the mail telling you that your tax returns have been selected for audit.  Once you have calmed down from the shock, the first thing to do is call your CPA and then start to prepare.


Preparation for the Audit



Preparation for IRS audits includes gathering three years of tax returns – the return under audit and the returns for the preceding two years.  Give them to your CPA. 

The CPA will review the return to identify red flags that may have triggered the audit.  This is what the IRS auditor will be focused on.  Here are some examples:

  1. Multiple years of losses from a business
  2. Taxable income that a person could not live on
  3. Expensive lifestyle than does not match the income reported on the return
  4. Businesses that use contractors, rather than employees
  5. Significant meal expenses
  6. Missing income from W-2’s or 1099’s
  7. Excessive charitable donations, including gifts of non-cash items to Goodwill and other organizations
  8. Excessive auto mileage
  9. Operating a cash based-business
  10. Using numbers that look like estimates

Keep in mind that auditors are instructed to review Google and social media for taxpayers that they are auditing.  They will be looking for evidence of expensive trips or a lifestyle inconsistent with the tax returns.


Cash-Based Businesses


Cash-based business are a particular focus of IRS audits.  According to the IRS, “cash transactions are anonymous, leaving no trail to connect the purchaser to the seller, which may lead some individuals to believe that cash receipts can be unreported and escape detection.”  Therefore, these businesses will need to be extra-careful to maintain receipts and accounting records which the IRS will ask for in the event of an audit.

In particular, the IRS is looking for skimming cash from sales, stolen cash, stolen goods later used for resale and fraudulent disbursements.

Examples of cash-based business which are on the IRS radar include bail bond companies, beauty shops, car washes, coin operating amusements, convenience stores, mini-marts, bodegas, laundromats, scrap metal businesses and taxicabs.  The IRS is also devoting audit resources to the “underground economy,” which includes used car sales, child care, house cleaning, pet sitting, tree trimming, hauling and construction.

It is also worth mentioning that state departments of revenue are also aggressively auditing cash-based businesses for under-reported revenue on sales tax returns.  If the state catches you, they will happily share the information with the IRS.  


Power of Attorney



Your CPA should ask you to sign a Power of Attorney, Form 2848.  This allows the CPA to speak with the IRS on your behalf.  There is nothing scary about the Power of Attorney.  It only applies to IRS matters and nothing else.


Gathering Documents



Next, your CPA should ask you for supporting documentation for every number on your tax return.  Do this even if the auditor only questions some of the items on the returns.  Nothing will stop the the audit faster than a taxpayer who is prepared with everything.   In addition, some audits start small and later expand in scope. 

A good place to start is with third party documentation.  Be sure that the income reported on your tax returns agrees with W-2’s and 1099’s.  Deposits on the bank statements should match reported income, unless you can explain why not.  Same with the Point of Sale (POS) records.

You will need receipts for charitable deductions, medical expenses and other deductible items, which are frequently the subject of audits. 

If you had stock sales, get copies of the brokerage reports.  If you sold a home, get copies of purchase and sale documents, as well as proof of improvements made to the home over the years.

Do you have foreign accounts?  If so, the auditor will want to know if interest and dividend income from those accounts is consistent with reported income on the tax returns.

In the case of a business, confirm that gross receipts on the sales tax returns match total sales on the income tax returns.   This is one of the first things that an auditor will ask to see.

In addition, you will need the back up of expenses for businesses and rental properties.  For example, you will need to provide your accounting records, including an Income Statement, Balance Sheet and Trial Balance. The auditor will be checking for accounting irregularities, including unreconciled bank accounts. The auditor will also be looking to see if  the expenses of the business are consistent with industry norms. 

In short, you want to assemble back up for everything.  If you need more time to gather information, your CPA can request an extension of time to respond.  Auditors generally agree to this, especially if you show you want to cooperate. 


Missing Documentation



If receipts are missing, check to see if you can get a copy from a third party.  For example, charitable organizations may be able to give you proof of donations.  If donations were paid by check or credit card, it may be possible to get proof from the bank.  

If 1099’s and W-2’s are missing, get copies of the IRS transcripts.

When it is impossible to find receipts to support the deductions on your tax return, your CPA may be able to reconstruct records. This IRS will often accept reconstructions, at least for some expenses, provided that the reconstruction method utilized is reasonable.


Be Careful What You Say


The taxpayer should generally not speak with the auditor. Let the CPA handle communications.  That is what the Power of Attorney is for.

Also, the taxpayer should not comment on the audit on Twitter, Facebook or elsewhere on social media.  Be careful what you say and keep your nose clean.


Audit-Proof Your Tax Return


To conclude with a word to the wise, the best way to audit-proof a tax return is to adopt a cloud-based system for storing and organizing receipts.  We have written about this previously with respect to DropboxQuickBooks Online has a receipt capture feature that does this as well.  Expensify is another popular option.  Whichever system you use, the ability to easily put your fingers on receipts for your expenses will resolve many IRS audits.




By Gary Massey, CPA


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, GA serving the needs of small businesses and their owners.  Our services include taxpayer representation for IRS audits.

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Taxes

If you are a business owner, you know how important it is to track your expenses. You are probably also aware that keeping track of your money is becoming more and more difficult in our fast-paced digital world. The online receipt capture feature by QuickBooks Online makes this as easy as possible.

When it comes time to filing taxes, you need to be prepared with an organized expense record for your business. This has been a difficult task in the past. However, with QuickBooks’ new online receipt capture feature, this task has changed. Now, keeping a current record of your expenses has never been easier!





“Audit-Proof” Your Business with the Snap of a Picture

QuickBooks Online has always given you the option to sync your bookkeeping records to your bank accounts, credit card accounts, Paypal and Square.  What’s new is that you can now take pictures of your receipts on your smart phone, using the QuickBooks app.  The pictures are attached to your transaction inside QuickBooks and saved forever.  No more paper.  And your books are now audit-proof, in case the IRS ever comes knocking.

And with the ease of the QuickBooks App, you can audit-proof your business from virtually anywhere! 


The Best Part – No Extra Fees!


The best part of this new feature is that it comes with no extra cost for users of QuickBooks Online.

This feature could change the way you run your business, and make your life easier.  Think about what it will be like to eliminate years of paper receipts with the click of a button!  Plus, imagine going to sleep at night without worries of the IRS challenging your expenses in an audit.

We can show you how Receipt Capture works.  Feel free to give us a call at 678-235-5460, or shoot Gary an email at Gary.Massey@MasseyandCompanyCPA.com.  You can also contact us via our website.

For information on our services related to IRS audits, check out our article here.

Visit our firm’s YouTube Channel!



Founded by Gary Massey, Massey and Company is a boutique, Atlanta-based CPA  firm serving the needs of small businesses and their owners. We handle tax matters, IRS controversy, tax debts, back taxes, bookkeeping, and accounting. Our offices are in the Buckhead neighborhood of Atlanta and we welcome face-to-face visits
Gary Massey, CPA
Massey and Company CPA
P.O. Box 421396, Atlanta, GA  30342
Massey and Company

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Taxes

With the job market in tatters in 2020, small business are popping up all over Atlanta.  However, The hobby loss rules are a trap for new business owner.   Fortunately, there is a lot that the new business owner can do to stay out of IRS trouble.


The Basics


The IRS expects businesses to make a profit.  Nevertheless, if a business operates at a loss, the loss is generally deductible to the owners of the business.  However, businesses that generate losses year after year are red flag to the IRS.  What is the IRS thinking?  That you may be operating a hobby for personal enjoyment, rather than running an actual for-profit business.

The IRS expects businesses to earn a profit for at last three out of every five years.   A business that does not meet this profit threshold is presumed to be a hobby.    Profits from hobbies are taxable, just like any other income.    However, losses from hobbies are strictly limited by the “hobby loss rules.”


Do You Have a Hobby?


What is the difference between a hobby and a business?  According to the tax code, people own businesses to make a profit.   On the other hand, hobbies are for fun or entertainment.  There is no profit motive in a hobby.

The following factors are evidence of a business, rather than a hobby:

  1. The owner maintains complete and accurate books and records.
  2. Time and effort is put into the activity to make it profitable.
  3. The owner depends on income from the activity for a livelihood.
  4. Losses are due to circumstances beyond the taxpayer’s control.  Alternatively, losses are normal for the startup phase of the business.
  5. Methods of operation are alternated as necessary to improve profitability.
  6. The owner has the required knowledge to carry out the activity as a successful business.
  7. The taxpayer was successful in making a profit in similar activities in the past.
  8. Whether the activity makes a profit in some years and how much profit it makes.
  9. It is reasonable to expect a future profit from the appreciation of the assets used in the activity.


Losses and Expenses


The hobby loss rules prohibit taxpayers from deducting net losses generated by a hobby against wages and other income.

Prior to 2018, expenses from a hobby were allowed as a miscellaneous itemized deduction on Schedule A of a personal tax return.   Currently, deductions for hobby expenses are no longer allowed at all, even to offset hobby income.


Strategy for The Side Gig


New businesses often have losses in their early years.  Taxpayers should not worry about deducting losses from their business in the first two years.  Losses are normal and expected.  However, if losses continue into year three and beyond, the IRS may challenge these deductions as hobby losses. 

The taxpayer with a side gig that is hemorrhaging money needs to evaluate if it is going to turn the corner any time soon and start making money.  If not, the business may not be viable and it may be better to shut it down.  Or,at the very least, cut back on expenses so the business makes a modest profit.  Don’t be overly aggressive.   Especially in year three of a new business.  Otherwise, the IRS may disallow the losses from the business as a hobby loss.

Keep in mind that the hobby loss rules due not apply to losses from rental properties.  


5 Tips to Turn Your Hobby Into a Business


If you want to turn your hobby into a business, you need to run it in a business-like manner to avoid the hobby loss rules.  An appropriate goal is to make a profit by year three.

Here are 5 practical tips to keep you and your new business out of IRS trouble:

  1. Open a separate bank account
  2. Keep accurate accounting records. QuickBooks Online is a popular software used by millions of small businesses.
  3. Make sure to pay your taxes quarterly.
  4. Keep receipts
  5. Track your auto mileage.  MileIQ is a great app that you can use.


Massey and Company CPA in Atlanta has the resources and experience to help taxpayers report their income correctly. 

By Gary Massey, CPA


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, GA serving the needs of small businesses and their owners.


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Taxes

Hiring family members can be a great planning strategy for any small business.   It allows the family and the business to save money on taxes.  And, it offers loved ones the opportunity to share in the success of the family business.  There are several different scenarios to discuss while considering this valuable planning strategy.


Hiring Your Children (Under 18)


Hiring your children under 18 is often valuable strategy for both tax and non-tax reasons.    Wages paid are deductible to the business.  Income earned by the child is not taxable if it falls below the standard deduction, which is $12,400 for 2020.  In addition, hiring a minor child to work in a family business teaches responsibility, business skills and useful life lessons.  

Additionally, minors are not responsible for paying their share of Social Security and Medicare taxes.   LLCs or partnerships are not liable for the employer’s portion of Social Security and Medicare taxes when the employee is a minor child.  In contrast, S-corporation or C-corporation employers are responsible for these taxes.    

Another consideration when hiring your children under 18 is determining reasonable compensation.  Their wages must match the job they are performing.  For instance, it would be unreasonable to pay a minor $30 per hour to shred paper or make coffee.


Hiring Your Children (Over 18)


When hiring your children over 18, it is very similar to hiring any other employee or contractor.  The employer pays them reasonable compensation. The wages are deductible.  The business issues a W-2 or 1099.   The children are responsible for filing a tax return and paying income taxes (if over $12,400).  Both the child and the employer will pay their share of Social Security and Medicare taxes.   However, any tax is typically at a lower tax rate due to lower tax brackets.


Hiring a Spouse


While hiring a spouse generally does not provide a direct tax savings, there are a few ways that this may be beneficial.   For example, hiring a spouse offers the ability to contribute to a retirement plan, such as a 401(k) or SEP.   Typically, maximum contributions are based off of W-2 wages.  These contributions are generally deductible.    However, Social Security and Medicare taxes are still due on this income. 

Additionally, W-2 wages also determine allowable contributions to fund an HRA (Health Reimbursement Arrangement), which is another valuable tax savings tool.


Hiring Other Family Members


Hiring other family members outside of your spouse or children (such as grandchildren or other relatives) can be beneficial in other ways.   The process is identical to hiring traditional employees or contractors, with a few points to consider.   

If you are considering helping a family member in need, think about putting them on the payroll rather than giving a gift of cash.  This allows you to deduct the amounts paid as a business expense, which you cannot do with a gift.



The benefits and tax implications of hiring your children, spouse, and other family members vary among situations.   Call our office in Atlanta today to discuss a strategy that best suits your needs and the needs of your family and business!  We can be reached at 678-235-5460.

Article by Austin Bell


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


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Taxes


This is the second in a series of articles on the topic of payroll taxes.  If you prefer a video format, click hear to watch our YouTube video on resolving payroll tax problems 


Businesses hold Trust Fund Taxes on behalf of the government.   Trust Fund Taxes include payroll taxes withheld by the employer from the wages of employees.  


Trust Fund Recovery Penalty



The IRS imposes a Trust Fund Recovery Penalty when a business fails to submit Trust Fund Taxes.  The penalty is 100% of the tax.  Imposition of the penalty is mandatory.  The amount of the tax does not matter.

The IRS will impose the Trust Fund Recovery Penalty on anyone who willfully misuses payroll taxes.  In addition, they must also be a “responsible party.”   The IRS has the power to levy bank accounts, IRA’s and other assets from responsible parties in order to collect the penalty.  Responsible parties have joint and several liability for the penalty.  In other words, the IRS may collect the penalty from any and all responsible parties.  There is no requirement on the IRS to collect from the employer first.


Who is a Responsible Party?



The IRS and the courts define “responsible party” broadly.  The term includes owners, partners, bookkeepers and key employees. In addition, accounting firms, parent companies and purchasing companies may be responsible parties as well.  In the case of nonprofit organizations, the IRS may consider charitable volunteers to be held liable for the Trust Fund Recovery Penalty if they are responsible parties.

For this purpose, responsibility is primarily the ability to decide who gets paid.  Signature authority over the bank account is the primary proof.  Above all, it is is critically important to restrict signature authority over the bank account whenever possible.

Processing payroll without signature authority over the bank account is considered an administrative function.  It is not indicative of responsibility for purposes of this test.


Strategies



Consider these strategies when dealing with the IRS on Trust Fund Taxes:

  1. Obtain copies of IRS interview Form 4180.  This shows what individuals said regarding the responsibilities of key employees.
  2. Get copies of cancelled checks and bank signature cards to identify signature authority.
  3. Interview former employees regarding responsibilities.  Obtain affidavits with the assistance of an attorney.
  4. Consider closing the business if it is no longer viable.  This reduces the total tax liability to the Trust Fund portion.  The owners may be eligible for an Offer in Compromise for their share of the penalty.

Criminal Cases



In conclusion, it is important to note that the IRS is aggressively pursuing criminal employment tax cases.  Repeated misuse of payroll taxes suggests criminal activity.  Likewise, lavish lifestyles, expenses homes, boats, planes and exotic cars will often be held against the responsible party if the case goes to trial.



For more information on the topic of the Trust Fund Recovery Penalty and resolving payroll tax issues, please see our YouTube video on the topic.  Click here for the link to the video.

For more general information, click here for our introductory article on payroll taxes This too is available in video format.  Click here for the introductory video.


By Gary Massey, CPA



Founded by Gary Massey, CPAMassey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes
Taxpayers are entitled to independent representation.  However, divorces or other situations with competing points of view often result in conflict of interest.  A conflict of interest occurs when the advice of the CPA may provide a benefit to one spouse at the expense of the other spouse.   Sometimes a second CPA must be hired to ensure independent representation of both parties.  While the added expense is unfortunate for the taxpayers, there may be no choice.

Divorcing taxpayers should expect their CPA to be concerned about a conflict of interest if the following are true:
  1. One spouse’s interests are directly adverse to the other spouse’s interests;
  2. There is a significant risk that the services to one spouse would be materially limited by the responsibility to provide services to the other spouse; or
  3. The CPA’s objectivity is impaired because of the relationship of the spouses to the CPA

Examples of Conflict of Interest



Here are some examples that illustrate potential conflicts of interest:

Example 1:  A CPA represents a married couple for years.  Now they want a divorce.  However, both parties want to continue to use the same CPA.    Conflict of interest may arise if the returns contain a tax position that benefits one spouse and hurts the the other spouse.  For example, prior to the finalization of the divorce, one spouse may want to file a joint tax return and the other spouse might prefer to file separately.  Or, the CPA may be asked to disclose information that is confidential with respect to either party.  

Example 2:  A CPA represents a married couple in a tax collection case.  As a result of the representation, the IRS deems the the couple to be currently not collectible.  The IRS puts the tax on hold and stops all collection activity.  Later, the couple divorces.  Here too, both parties want to continue to use the same CPA.  A conflict of interest may arise if the CPA helps one spouse to successfully negotiate an Offer in Compromise with the IRS after the divorce.   The other spouse will then become responsible for the balance of the tax, to which they may object.  

Example 3:  The result is similar in a business context.  It is common, for example, that a CPA represents both a business and its owners.  However, a conflict of interest may result if there is a dispute among the owners.  In such case, the CPA may represent the business, but each owner should hire their own CPA to represent them individually.


Conflict of Interest Waiver



A CPA may represent both parties when there is a conflict of interest, as long as the parties are aware of the conflict and agree to waive their concerns.  This waiver should be done in writing.  If both parties refuse to sign the waiver, the CPA will have to withdraw from the engagement.

Importantly, the CPA must also believe that he or she can perform the service with objectivity, competence, diligence and integrity.  Otherwise, the CPA may not represent both parties.  When in doubt, the CPA should withdraw from the engagement.


Taxpayers in Atlanta and beyond, give us a call at 678-235-5460 to discuss your tax situation related to divorce or business conflict.


By Gary Massey, CPA

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Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes

Reasonable compensation is a critical tax issue that owners of S-corporations must consider. 


What is the problem?


Owners of S-corporations are both shareholders and employees.  Businesses compensate them in two ways:

  1. The business pays distributions to the owners.  Distributions are subject to income tax, however, not Social Security or Medicare taxes.
  2. The business pays wages to the owners.  Wages are subject to both sets of taxes. 

The IRS requires that wages, at a minimum, meet the standard of “reasonable compensation.”  However, the calculation of this standard is frequently subject to debate.


In practice, S-corporation owners prefer to be paid through distributions.  This will minimize their tax burden.  In contrast, the IRS prefers that S-corporation owners be paid through payroll.  This will maximize taxes.  Therein lies the conflict.


IRS audits of S-corporations


Shareholder compensation is frequently the subject of IRS audits. Auditors will ask if the company paid sufficient wages to the owners to meet the reasonable compensation standard.  This standard hinges on replacement cost, fair market value, job title and location.

An unsuccessful audit results in additional taxes, interest and penalties on businesses that fail to meet the reasonable compensation test.  This is a risk that few business want to bear.


Therefore, we recommend that our S-corporation clients carefully calculate owner compensation in order to meet the IRS standards.  Also, we ask clients to proactively maintain a “reasonable compensation file.”  This file can be brought out in the event of an audit.  


Additional considerations for reasonable compensation


Finally, maximum contributions to retirement plans are based on wages.  If wages are too low, the business owner may miss out on valuable tax deductions and retirement planning.

Give us a call today to discuss a compensation plan that best suits your needs and will keep you out of IRS trouble!

By Austin Bell and Gary Massey


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes


Click above to watch our YouTube video on issues relating to joint tax returns.  Or read on for more details!


Filing a Joint Return


Filing a joint tax return allows married taxpayers to enjoy favorable tax rates. However, this benefit comes with a cost. The cost is that spouses who file a joint tax return have joint and several liability for the tax on their returns. This means that the IRS can collect the tax from either spouse, even after a divorce. It does not matter which spouse earned the money.

For spouses who are undecided about joint or separate tax filing, they do have the option to use married filing separately status and then amend the return later to file a joint return.  However, it does not work the other way.  Spouses may not amend a joint return in order to file two separate returns.  


Divorce Decree is Not Binding on The IRS


Divorce decrees sometimes stipulate that a particular spouse is liable for the tax liability on a joint return.  However, the IRS is not bound by this stipulation.  The spouses remain jointly liable for the tax, despite what the divorce decree says.  However, the spouses do have the option to sue each other for the tax, if they want to go down that route. 

The most challenging issue on the topic of joint returns is whether or not a return is even considered to be jointly filed.  This matter comes up when one spouse wants to avoid joint liability.  The argument often relates to forged or missing signatures on returns.

The IRS and the courts will ask if the couple intended to file a joint return.  Clearly, a signed return shows proof of intent.  This can be a signed paper return (the type we mail at the post office) or signatures on Form 8879, the authorization form to e-file a tax return.


Express Consent


Sometimes there is an issue with a signature.  For example, the signature could be missing or forged.  In that case, the IRS looks to see if there was express consent.  This refers to the situation where one spouse expressly authorizes the other spouse to sign the return.  This will be considered to be a valid joint return.


Tacit Consent


In addition, the IRS and the courts also look for tacit consent.  This refers to the situation where one spouse agrees to the filing of a joint return without actually saying so.  Returns filed with tacit consent are deemed to be valid joint returns.   Examples of tacit consent include:


– A couple files returns without both signatures for years. Are they objecting now just because there is a tax due?

– The objecting spouse earned income and must have known that a return was required even if they never signed it or their signature was forged.

– A spouse participated in the preparation of the returns

– A couple wanted the return filed for a non-tax reason, such as a mortgage application



Lastly, returns signed under duress are not valid returns.  However, a spouse has to pass difficult tests to prove duress.   They have to prove that they were unable to resist the demands to sign the return.  And, they have to prove that they would not have signed the return had they not been forced to do so.

When all is said and done, if a joint return was in fact filed and both spouses are liable, the next step is to look at Innocent Spouse Relief.  Please check our video and blog posts on the Innocent Spouse for details as to how that works.  Our video on Innocent Spouse Relief


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes
Stimulus checks and the injured spouse.  This is a cutting edge tax issue brought to us by Covid-19.  We see this in Atlanta, GA, our home town – and it is cropping up around the country as well.

There are two types of tax relief for spouses, innocent spouse relief and injured spouse relief.  Innocent spouse relief eliminates all or part of a liability from a joint tax return if various conditions are met.  Injured spouse relief is different.  It does not eliminate or reduce the tax on a joint return.  Rather, injured spouse relief allows one spouse to receive a portion of a joint tax refund taken by the government to offset a pre-existing debt of the other spouse.   

For example, injured spouse relief applies where the IRS applies all or part of a joint tax refund to pay the past due child support obligation of the other spouse.  

What happens when the IRS takes stimulus checks to pay past due child support of a current spouse?  The CARES Act provides stimulus checks to assist Americans needing relief due to the Covid-19 pandemic.

The National Taxpayer Advocate recently confirmed that injured spouse relief is the mechanism to use to fix the situation of stimulus checks taken to offset past-due child support.  The Advocate also remarked that the IRS is developing an internal procedure to reissue stimulus checks in these cases. 

Action to Take



Form 8379 if the form to use for injured spouse relief.  If you have filed a Form 8379, there is nothing you need to do.  The IRS will issue the injured spouse’s portion of the the stimulus check in the coming weeks. If you are eligible for injured spouse relief but have not filed a Form 8379, you should do so to have your portion of the stimulus check reissued

For further information, check out our blog post and video on innocent spouse relief.

For more information about injured spouse and innocent spouse tax relief, IRS issues, or other tax and accounting matters,  give our Atlanta office a call at 678-235-5460.   If you would like to learn more about the services we provide, visit our Home Page!

You are welcome to visit our YouTube Channel to watch our videos on Tax and Accounting topics.


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes


Georgia Sales Tax Exemption: Extended to Food Banks



The Georgia sales tax exemption is indefinitely extended to food banks, according to a bill signed by the Governor on August 5, 2020.

A food bank qualifies for the exemption if the food bank is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.  In addition, it must operate primarily for the purpose of providing hunger relief to low income persons residing in Georgia.


Letter of Authorization



To make tax exempt purchases, a qualified food bank must present a valid Letter of Authorization (“LOA”) to the seller.   The seller must retain a copy of the LOA for audit purposes.  Sellers are permitted to deliver food and food ingredients purchased with an LOA to any location operated by the food bank. 

To receive a refund of tax paid on food or food ingredients, a food bank must hold an LOA that is valid for the period in which the purchase was made.

To obtain an LOA, food banks must apply online through the Georgia Tax Center.  The  application requires the following information for the prior year:  Firstly, the applicant indicates the total number of clients served.  Secondly,  the applicant reports the total pounds of food donated by donors in the business of selling food.  Thirdly, applicant indicates the total dollar amount of exempt purchases made by the food bank. 

Taxpayers must apply for a new LOA annually.  LOA’s expire on June 30 each year. 

Please note that an LOA does not relieve food banks of the responsibility to remit sales tax on retail sales.


For more information about sales tax, non-profit organizations, IRS matters, or other tax and accounting matters,  give our Atlanta office a call at 678-235-5460.   If you would like to learn more about the services we provide, visit our Home Page!

You are welcome to visit our YouTube Channel to watch our videos on Tax and Accounting topics.


Founded by Gary Massey, CPA, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes
If you are an Atlanta, GA taxpayer with a tax bill you are unable to pay, this article is for you! There are two key steps that you should keep in mind if you have an IRS tax bill you are unable to pay. 

1. Tax Compliance



The IRS will agree to negotiate with you only if you compliant with their rules.   This is referred to as “tax compliance.” Tax compliance relates to both filing tax returns and making tax payments.

The IRS will consider you compliant if the the past 6 years of tax returns have been filed. 

Suppose you are an employee, you are compliant if you pay sufficient taxes through withholding from your paycheck. If you are a business owner, you are compliant if you have paid your required quarterly estimated tax payments.  If your business has payroll taxes, you are compliant if you have made all your payroll tax deposits and filed all of your payroll tax returns throughout the year. 

In the event that you cannot afford to pay your taxes, do not make the mistake of thinking that it would be better to not file at all. The IRS will not negotiate with you if you have not filed your tax returns.  Additionally, if you do not file the tax return, penalties, plus interest, will be added to your tax bill.  Penalties for missing returns are 5% per month, up to a maximum of 25%.   

Therefore, if you owe taxes for multiple years, we recommend that you pay your most recent tax bill first to show compliance. Then go back and resolve the older tax years with the IRS.

2. Options Available to You 



The second step to consider when you are unable to pay a tax bill is to identify which of the available options is best for you. There are generally three options available when dealing with the IRS.  Each option has its own set of requirements

The first option is to get the IRS to considered you “non-collectible.”  This temporarily stops all IRS collection activity until your situation changes or the statute of limitations on your debt expires.

The second option is to request an Installment Agreement.  The terms of the agreement will depend on your facts and circumstances.  

The third option is to make an Offer-In-Compromise.   The offer is always lower the amount of the tax owed – if you qualify.

For more information about the options and resources available to you, give our office a call at 678-235-5460.   If you would like to learn more about the services we provide, visit our Home Page!

To watch our YouTube video on this topic, click here!



Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


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Taxes

Whether your business is small and just starting out or it has grown into a thriving success story, receipt retention and proper documentation is of paramount importance to protect your business and allow for continued service to your clients.  

As a planning strategy to help mitigate the risk involved in the case of an audit, we recommend retaining all business receipts in a manner that is easy to access and update. There are several very effective and easy to use tools that you can use to accomplish this. These include Dropbox, Quickbooks Receipts Tool, and Expensify.


Dropbox


“Dropbox” is an online storage system. This system is free up to a certain amount of storage with budget friendly upgrade options. With Dropbox, you can organize receipts into folders by month and year to facilitate easy retrieval if ever needed. You can name individual receipts in a manner that readily identifies their purpose. These items then become searchable within the files to eliminate the need to dig through a bunch of receipts. There is also a mobile app that will allow you to snap a picture of receipts on your phone and upload directly to your files.

QuickBooks


Alternatively, Quickbooks offers the capability to upload receipts and pair them with transactions. You can do this via direct upload or through the mobile app and easily integrate with your existing systems. Additionally, this is completely free if you are already a Quickbooks subscriber.

 

Reach out to our office today to discuss a strategy that best fits you and your business!

Article by Austin Bell


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.



 

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Instruction, Taxes

Currently Not Collectible (CNC) status can be used to halt IRS tax collections!  Check out our video to find out how!

This video covers the basics of Currently not Collectible status.  The IRS stops collection activity on tax debts for anyone deemed to be not collectible.  However, this status does not prevent the imposition of tax liens.

Firstly, to qualify as Currently not Collectible, the taxpayer must present financial statements to the IRS.  The financial statements show available net equity in assets.  Secondly, the financial statements also present gross monthly income.   Then, the taxpayer subtracts allowable expenses from monthly gross income. 

The taxpayer combines net available equity in assets and net monthly income.  The sum is the amount that the taxpayer is deemed to be able to pay the government for back taxes.  If the number is zero or negative, the taxpayer is not collectible.  As a result, IRS collection activities will then cease. 

It is important to note the Currently not Collectible status is temporary.  The IRS will revisit the taxpayer’s financial position every year or two, to determine if the taxpayer is able to resume making payments on his or her tax bill.

Please feel free to call our office in Atlanta, GA at 678-235-5460 if you have any questions. For more information on personalized help, visit our Home Page.

To watch more of our YouTube Videos, click here!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in Atlanta, Georgia serving the needs of small businesses and their owners.



Featured image: Photo by Brad Huchteman on Unsplash

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Taxes



In this video, you will learn how to use the Installment Agreement program offered by the IRS to help taxpayers who cannot afford to pay their tax bill.

Here are the payment agreement strategies covered in the video:

First, you will learn how to utilize the Automatic Agreement program for those with less than $10,000 in taxes owed.  

Next, we explain the Streamlined Agreement. This has been expanded from $50,000 to $100,000 for 2020.   We also suggest a simple strategy to take advantage of the benefits of this great program.

Then, we talk about how the Regular Installment Agreement works.  This requires the preparation of financial statements.

Lastly, we discuss the Partial Pay Installment Agreement.

The video concludes with practical tips to avoid accidentally defaulting on your Installment Agreement. If you default, the IRS will void your agreement and you have to start negotiations with the IRS all over again.


To watch more of our firm videos, visit our YouTube channel! Please subscribe so that you don’t miss our future videos. 

For more information about the services we provide, please visit our Home Page.

Call our office at 678-235-5460 for a free consultation.


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


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Instruction, Taxes


Payroll Taxes



This is the first in a series of videos on the topic of payroll taxes. Anyone with a business that has employees should find this series of videos to be useful and important. There will be many actionable items relating to payroll tax matters discussed throughout the series.

Payroll taxes are one of the more common reasons that businesses fail. We discuss why this is the case and, similarly, what business owners may do about it.

In this video, we begin with an overview of the magnitude of the payroll tax issue.

Then, we move on to a discussion of how payroll taxes work, including forms required. We also talk about the differences between FICA tax, Medicare tax and the withholding of employee income taxes, including their calculation.


Trust Fund Taxes



One of the critical areas covered in this video is the importance of Trust Fund taxes. These are the payroll taxes the employer holds in trust for the government. The penalties for the misappropriation of these funds are very high and can be imposed on the company, as well as the owners and certain key employees. This is known as “personal liability.”

Additionally, we go on to discuss the EFTPS system, which mandates the electronic payment of payroll taxes by almost all employers.

Finally, we conclude the video with a summary of three penalties.  These can be imposed on the employer, in addition to the Trust Fund penalties already discussed.


If you enjoyed this video, and would like to see more of our tax and accounting content,  subscribe to our YouTube channel!

For more information about the services our firm provides, visit our Home Page


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We dedicate ourselves to serving the needs of small businesses and their owners.



0

Taxes

 


Watch our new video to learn about IRS tax appeals!

In this video you’re going to learn about IRS Tax Appeals and, additionally, how Appeals can be used to save yourself from a painful situation with the IRS.

We cover three types of Appeals: Collection Due Process (CDP) Appeals, Equivalent Hearings and Collection Appeals Process (CAP) Hearings.

A taxpayer’s appeal rights are triggered after receiving a Notice of Federal Tax Lien or a Final Notice of Intent to Levy.

The first type of appeal that we discuss is the Collection Due Process Hearing (CDP). This is the most powerful type of appeal and offers the most protection and rights to the taxpayer.   In addition, a request for a CDP Hearing must be made within 30 days.

The second type of appeal that we review is the Equivalent Hearing. This offers fewer rights than a CDP Hearing, but it is more flexible in terms of timing.   A taxpayer may request an Equivalent Hearing for up to one year.

The third type of appeal that we discuss is called Collection Appeals Process (CAP). This is used primarily to untangle administrative errors relating to cases, such as levies issued to the wrong taxpayer.

Lastly, we discuss what an actual Appeal looks like and what you need to know to be successful at an Appeal Hearing.


If you enjoyed this video, and would like to see more content visit our YouTube channel!

To learn more about the services we provide, call our office at 678-235-5460, or visit our Home Page!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

0

Taxes

 


Click below to watch our new video on bankruptcy, taxes and the IRS!



In this video you’re going to learn the truth about whether or not taxes may be discharged in bankruptcy.

Generally, taxes are not dischargeable. However, if taxpayers meet a number of key exceptions in a bankruptcy proceeding, then their tax bill will be discharged.

Here are the rules that I cover in the video:

First, you’ll learn that taxes may be discharged only if they relate to a return prepared by the taxpayer or their representative. Taxes from a return prepared by the IRS (the “Substitute for Return”) may not be discharged.

Second, I’ll explain that trust fund taxes may not be discharged. Trust fund taxes are taxes that are collected on behalf of the government, such as sales taxes and payroll taxes. Only income taxes may be discharged

Third, I talk about how civil or criminal fraud invalidates a tax from being discharged.

Finally, I conclude with three different time-related tests that apply to taxes in the context of bankruptcy. Careful scrutiny of a taxpayer’s tax history is required to identify which tax liabilities pass these tests.  IRS tax transcripts are critical to make this analysis.

Examples are provided to clarify how these rules work in different situations.


To see more of our videos, please check out our YouTube Channel!

If you would like to learn more about the services we provide, please visit our home page!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


0

Taxes
Watch our new video to learn how to get an IRS Offer in Compromise!  The Offer in Compromise, or OIC, is the most asked about program at the IRS.  Let’s find out what it is all about.  

In this video Gary covers the basic IRS requirements for an Offer in Compromise! We will also go into the types of Offers, the calculations behind an Offer, and the Statute of Limitations.  

By the time you get to the end of the video, you will have a handful of tested strategies that you can use to improve your chances of reducing your tax bill by getting your Offer accepted by the IRS.


If you enjoyed this video and would like to see more of our videos, please check out our YouTube Channel! Be sure to subscribe so that you don’t miss out on our future videos!

For more information about the tax and accounting services we provide, visit our Home Page! If you would like a free consultation, be sure to give our office a call at 678-235-5460! 


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated to serving the needs of small businesses and their owners.

0

Taxes
Watch our new video to learn how to handle an IRS tax levy, including wage garnishments! A tax levy is where the government seizes a taxpayers property. The levy generally occurs because the taxpayer is not cooperative in IRS correspondence. As you can imagine, this is a stressful situation, but we are here to help!

This video covers the topic of tax levies and discusses how a taxpayer can go about handling them. Gary Massey, CPA explains the different types of levies, and how or in what way they may impact someone. In addition, this video provides the information on how to get rid of an IRS tax levy.


If you enjoyed this, and would like to watch more of our YouTube videos, visit to our channel! Be sure to subscribe to our channel so that you do not miss future videos.

To get more information about the tax and accounting services our firm provides, please visit our home page!
If you would like a free consultation, please give our Atlanta office a call at 678-235-5460. We are happy to answer your questions!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated to serving the needs of small businesses and their owners.

0

Taxes

Watch our new video to learn the three ways you can get rid of an IRS tax lien!  

In this video, we go through the ins and outs of IRS tax liens.  They are horrible, scary and wreck your credit score. And they make it harder to sell your house.  Here we learn exactly how to get out from under an IRS tax lien.

We start with an introduction to how an IRS tax lien works. Topics include what triggers the lien, the impact of lien on credit scores, appealing a lien, and when tax liens expire.


Strategies


We cover three strategies to deal with an IRS tax lien:

First, we explain how to discharge an asset from under a lien. This simple strategy allows the taxpayer to sell their house, even if the IRS has a lien on their property.

Second, we talk about loan subordination. By subordinating a loan, the taxpayer is able to refinance their debts, including a mortgage. The IRS agrees to allow another creditor, such as a bank, to take priority on a debt. Therefore, the debt is refinanced and the taxpayer uses part of the proceeds to pay off the back taxes owed to the IRS. Once the tax is paid, the lien goes away.

Third, we review the process to have a lien withdrawn. This is a great solution for those with $25,000 or less in tax debt.

We conclude the video with a discussion on foreclosures of tax liens. This may be the unfortunate result for those taxpayers who ignore their tax liens, along with repeated warning letters from the IRS.   As a result, these people can end up losing their house to pay back taxes.


To watch more of our tax and accounting videos, subscribe to our YouTube channel!

For more information about the services we provide, visit our Home Page! 


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


0

Taxes
Tax and divorce.  If you are going through a divorce, there are 7 key tax questions you should ask.

What if all of My Tax Returns Have Not Been Filed?



The divorce court will want you to have tax returns filed and up-to-date. There are two reasons for this: to tie up the loose ends, and to provide the financial information needed for alimony and child support calculations. 

Is it better to files returns jointly or separately? In the case of Married Filing Jointly, both you and your spouse are jointly liable for the tax debt, which is frequently a cause for concern in a divorce setting. With this in mind, it may be better to opt for Married Filing Separately, even if that means you must pay some extra taxes now.  Also, keep in mind that you cannot amend a return to switch from Married Filing Joint to Married Filing Separately.

What if you don’t know if your ex-spouse filed all the tax returns? In this case, you can contact the IRS to get your IRS transcripts which will show what, if anything, is missing.   IRS transcripts also provide details of 1099’s and W-2’s, which sometimes go missing during a divorce.


How Will the Tax Responsibilities be Divided?



If you file a joint tax return, both spouses are equally responsible for the taxes.   This is called joint and several liability.  The IRS will go after either party for unpaid taxes. If the divorce decree says that the husband or wife is responsible for the taxes, that is not binding on the IRS.   If one spouse claims that they he or she had no knowledge of the income activities of the other spouse, the objecting spouse may request relief under the Innocent Spouse Rules.



What If I Do Not Trust Previously Filed Tax Returns?



If you do not trust the previous filed tax returns, then you can file amended returns, provided that your spouse agrees.


What If I Do Not Trust Our Current Accountant?


Does your accountant play golf with your ex-spouse? If so, you may want to find a new accountant. Look for someone who is independent and will represent your interests.


What If the Tax Returns Show Substantial Tax Debt and Penalties?


It may be time to start negotiating with the IRS for a resolution.  Options include Penalty Abatement, Offer-In-Compromise, Installment Agreement, or Currently Not Collectible Status.   


Can I Sell Marital Property That has a Tax Lien on It?


Yes, the IRS will work with you to discharge or subordinate a lien so that you can sell the property pursuant to a divorce. The IRS would rather you be able to sell the house and pay off some or all of your tax debt, rather than leaving you stuck with both unpaid taxes and an unwanted house.


Are There Any Negotiation Points Related to Taxes That I Should Be Aware of When Dealing with My Spouse?



You or your accountant should prepare a tax projection that shows the after-tax cost of several financial matters relating to your divorce. These are:

1. Alimony, which is no longer taxable to the recipient and no longer deductible to the payee. 
2. Who is Going to Claim the Children?   While children no longer provide dependency exemptions, there are child tax credits and earned income credits which need to be considered.  
3. Head of Household Filing Status – You will want to run a projection that shows the after-tax benefit of this filing status post-divorce.

If you need additional answers to your tax-related questions, please give us a call at 678-235-5460.

To watch our YouTube video on this topic, click here!

For more information about the services we provide, visit our Home Page!


Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


0

Taxes
Check out our new video about the 10-year Statute of Limitations on IRS Tax Collections!


The IRS has 10 years to collect a tax debt.  This is the Collection Statute of Limitations, or CSED.  However, once the Statute expires, the tax is unenforceable.

In this video we discuss the mechanics of the Statute of Limitations.  We also discuss the events that freeze, or toll the statute.  Tolling of the statute means that the IRS has more time to collect on a tax.  Various events toll the statute.  These events include bankruptcy, filing an offer in compromise and requesting an installment agreement.  For example, filing a bankruptcy claim freezes the statute for the period that the taxpayer is in bankruptcy, plus six additional months.

It is generally in the taxpayer’s best interest for the Statute to continue to run, hastening the date when the tax becomes unenforceable.

The IRS creates a tax return for an uncooperative taxpayer who does not submit their own return.  The return created by the IRS is called a Substitute for Return or SFR.  The SFR triggers a tax assessment.  In addition, it also causes the Statute of Limitations to begin to run.


Planning


We conclude our video with a discussion of the interplay between the Statute of Limitations and tax planning.  In particular, we discuss how the Statute of Limitations impacts the primary resolution options available to taxpayers who are faced with a tax debt.  These options are the Offer in Compromise, Currently not Collectible Status and the Installment Agreement.

If you liked this video, please subscribe to our YouTube channel for more tax and accounting advice!

For more information about the services we provide, visit our Home Page!


Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


0

Taxes

Do you or someone you know need to make a deal with the IRS?   Check out our video on the first steps you should take to best negotiate with the IRS!

 

In this video, we explain what a taxpayer must do to be considered in tax compliance. We also explain how being in tax compliance is a crucial aspect of making a deal with the IRS.

In addition to this, we lay out the steps an individual can and should take to be able to negotiate a deal with the IRS.  In order to negotiate a deal with the IRS, you will need to prove that you are a good tax citizen. 

Contact us

If you are interested in learning more about the tax and accounting services our firm provides, visit our Home Page!  Call our office at 678-235-5460 for a free consultation. We would love to hear from you!

If you enjoyed this video, and would like to see more of our tax and accounting videos, check out our YouTube Channel! Be sure to subscribe so that you don’t miss future videos!


Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated to serving the tax needs of small businesses and their owners.


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Taxes
If you are an Atlanta taxpayer who owes taxes to the government, you can stop IRS collection activity by being deemed Currently Not Collectible. Once you obtain this status, the IRS will stop sending you nasty letters about your tax debt.  And most importantly, the IRS will not be able to seize your assets.  The IRS will, however, file a lien on your property.  This will hurt your credit rating and will make it harder (but not impossible) to sell your property.

For the IRS to consider you not collectible, you will have to provide your financial statements to the IRS.  There is significant work required to prove that you are not collectible. However, the effort is often worth it, given the right facts and circumstances. Furthermore, there is planning that you can take advantage of to improve your numbers, such as maximizing allowable expenses. 

The Math Behind Being Not Collectible



First, calculate net equity in assets (home, car, investment portfolio, etc.). Second, calculate gross monthly income, less allowable expenses. If these calculations show no funds available to pay the tax, then you will be deemed not collectible. 

You can use current income numbers for purposes of the calculation. This helps your case if you have recently lost your job or had a recent decrease in earnings (such as during the Covid pandemic).     

You may obtain not collectible status if you have “dissipated assets” (assets disposed of in the past several years). However, dissipated assets are a problem if and when you apply for an Offer-in-Compromise. 

If banks will not let you borrow against the equity in your assets, that equity may be excluded from the net available equity in assets  calculation. This exception is not allowed in the case of an Offer-in-Compromise.
 


How Long Does Currently Not Collectible Status Last?


It is important to note that Currently Not Collectible status is temporary. The IRS will check in with you every year or two to see if your situation has changed. With that said, the 10-year statute of limitation will continue to run during the period that you are not collectible. With good planning, the statute of limitations may expire while you are not collectible.  If so, the IRS will write-off your tax debt in full, and the tax debt will simply go away. 

If you would like to learn more about how our firm can help represent you before the IRS, visit our Home Page.

Click here to watch our YouTube video on this topic!


Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


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Taxes
Divorce is hard.  Taxes make it harder.  Watch our latest video on the 7 key tax questions for Atlanta taxpayers to ask before getting a divorce!

Check out our video on taxes and divorce.   Here are the questions that we address:

  1. What to do if tax returns are missing?  What will the divorce court do about missing taxes?  Should we file married or separately?
  2. How will tax responsibilities be divided?  What is the significance of a joint tax return?
  3. What if I don’t trust previously filed tax returns?
  4. Is our accountant impartial?
  5. Are there options to deal with significant unpaid tax debts, interest and penalties?  What is an Offer in Compromise?
  6. Can we sell marital property if it has an IRS tax lien?
  7. Are there any negotiation points related to taxes that I should know?


If you would like to watch more of our videos, click here!

If you would like to learn about Innocent Spouse Relief, which often becomes important in divorce situations, click here!

For more information on the services we provide, visit our Home Page!



Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes

Watch our newest video to learn about the types of Innocent Spouse Relief!


What do we mean by the term “Innocent Spouse?” In the tax world, this happens when a couple files a joint return and one spouse feels that they should not be responsible for the tax. There are three types of relief for the innocent spouse:


1. Traditional Innocent Spouse


This happens when there is an understatement of income on a tax return and the innocent spouse did not know, or have reason to know, about the understatement.   It is inequitable to hold the innocent spouse responsible for the tax.  He or she must, however, request relief within two years of the start of IRS collections.  The tax liability is allocated between the spouses, with the income at issue allocated to the other spouse.  


2. Separation of Liability


This happens when there is an understatement of income on a tax return.   The two spouses must have been divorced, or legally separated, for at least 12 months.   In this case, they must request relief within two years of the start of IRS collections.   The ex-spouses involved will be treated as married filing separately. The tax debt will be allocated based on who earned the income, or who owns the assets that are the source of income.   Usually, this provides the better answer for our clients. 

 


3. Equitable Relief 


This happens when there is an understatement of income on a tax return, or the tax is correct but unpaid.  In this case, there is no requirement to file for equitable relief within two years.   Given all the facts and circumstances, it is simply inequitable to hold the spouse responsible.  The IRS will also consider marital status, economic hardship, knowledge or reason to know, abuse, physical or mental health and financial dominance in the case of Equitable Relief.   Tax liability will be allocated between the spouses. 


 

There is also relief for the Injured Spouse. This situation occurs when the couple files a joint tax return and some or all of an expected joint refund is taken to pay the other spouse’s tax liability. For example, the IRS takes part of a joint tax refund related to child support from a previous marriage.   The IRS will then give you your share of the money back. 

If you would like to watch our YouTube video on this topic, click here!

To learn more about the services we provide, visit our Home Page!



Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

 

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Taxes
Late tax returns?  Maybe you are due a refund?  Atlanta taxpayers, if you are behind in your tax filings by months or even years, this article is for you!

You have three years (from the date the tax was due) to claim your tax refund. For example this means you have until July 15, 2020 to get refunds for 2016 tax returns. Therefore, 2016 tax returns need to be prepared and filed in the next month to secure a refund.


Notice CP516 


The IRS is looking for missing tax returns. The IRS uses Notice CP516 to request a missing tax return. If you receive this letter from the IRS, it means that the IRS knows of your missing return and it needs to be prepared and filed as soon as possible.  

If you do not file missing returns, you are subject to a Failure to File penalty. This penalty is 5% per month, for 5 months-Up to 25% of the tax due. Even if you cannot afford to pay the tax right away, file the tax return as soon as possible to stop the penalties from adding up. 


Substitute for Return


If you fail to file a tax return, the IRS will prepare a return for you. This is called a Substitute for Return. The Substitute for Return is almost always bad for you as it means the highest tax rates, and no deductions or exemptions. In other words, a Substitute for Return generally results in a large, unexpected tax liability. 

 

If you have missing or late tax returns, the best thing you can do is get them prepared and filed as soon as possible. 


If you would like to watch our YouTube video on this topic, click here!

For more information about the tax services we provide, visit our Home Page.


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes
If you work out of a home office, then this article is for you. There are three key factors that go into getting the home office tax deduction. These are:
  1. Determining what qualifies as a home office.
  2. Calculating the tax deduction.
  3. The type of business you have.

Let’s take a closer look at these components. 


1. What Qualifies as a Home Office? 

For your at-home workspace to be considered a home office, it must be used regularly and exclusively for your business. 

“Regularly” means that the space is used consistently and often.  In other words, using the space occasionally, or briefly on an inconsistent basis is not considered regular use. 

“Exclusively” means that this space must serve only as a workspace. Your kitchen, for example, does not qualify, because it is used for purposes other than your business. A desk in the corner of a room is acceptable.  However it is important to ensure that the space is not used for things other than work.

Essentially, in order to qualify, the home office needs to be the principle place of business. Either you need to spend most of the working day there, or it needs to be the place where you handle all of your administrative and management work. For example, if you are a plumber and drive to jobs throughout the day, you would use this space to handle office matters. 


2. Calculating the Tax Deduction


There are two methods to calculate the home office tax deduction.
  1. The Ratio Method – This method involves a ratio of the square feet of your office, compared to the square feet of your home, multiplied by utilities, rent, real estate taxes, mortgage interest, telephone, internet, and insurance.
  2. The Simplified Method – Simply, use $5 per square foot, for up to 300 square feet.

If you are not sure which method is right for you, feel free to call our firm at 678-235-5460 for more information.


3. Type of Business


The final element to consider is the type of business you have. Each of the following business types are eligible for home office tax deductions:

  1. Limited Liability Company, or LLC
  2. Partnerships (The partners can deduct home office expenses on their personal tax returns)

Owners of S Corporations are employees and may not use this tax deduction. The solution to this is for them to adopt an accountable plan. This way, the owner can be reimbursed tax free and the business takes a deduction for the related expenses.  Give us a call to learn about adopting an accountable plan.


To watch our YouTube Video on this topic, click here!

To learn more about our firm, Visit our Homepage


Founded by Gary Massey, Massey and Company is a boutique CPA firm in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes

How Do You Challenge a Tax Bill?

Incorrect tax bills are actually fairly common. Why is this? It is because the IRS is relying on automated systems more and more to deal with taxpayers. For example, 75% of all IRS audits are done by computers. The IRS uses computer systems to create substitutes for tax returns, where they are missing them. As a result of this automation, many Atlanta taxpayers are receiving letters in the mail from the IRS that contain tax bills with incorrect tax amounts.





I hear of folks who write to the IRS about a bad tax assessment, and they experience the frustration of their paperwork getting lost in the system. As a result, bad tax assessments go unchallenged and appeals are not made. Individual taxpayers then find themselves battling with IRS Collections for money that they do not owe. These individuals may even be subject to a tax lien, which makes it nearly impossible to get approved for a mortgage. 

But fear not! Fortunately, there are ways to challenge an IRS tax bill.

1. Request for Audit Reconsideration

   We can get the audit reopened and re-examined.

2. Doubt-as-to-Liability Offer

    This is a type of Offer-in-Compromise that challenges the underlying liability itself.

3. Collection Due Process Hearing (CDP)

    During the hearing, the tax bill can be challenged.

4. Innocent Spouse Relief 

    We ask the IRS to adjust the amount of tax due, by allocating the tax between the spouses or former spouses.

5. File an Amended Return

    If the taxpayer does not receive anything in 6 months, then they can bring a litigation suit.


6. Bankruptcy

The issue can be challenged through bankruptcy


Which of these is the right one for you? The answer depends on an analysis of your facts and circumstances. Gary does this for our clients. If you are facing a tax bill, send me a message to discuss which strategy is right for you.




If you would like to watch our YouTube video on this topic, click here. Feel free to call our office at 678-235-5460 for more information!

Visit our Home Page


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes

Watch our new video below to learn about the different strategies to challenge a tax bill!

How Do You Challenge a Tax Bill?

An incorrect tax bill is actually fairly common. Why is this? It is because the IRS is relying on automated systems more and more to deal with taxpayers. For example, 75% of all IRS audits are done by computers. The IRS uses computer systems to create substitutes for tax returns, where they are missing them. As a result of this automation, many Atlanta taxpayers are receiving letters in the mail from the IRS that contain bills with incorrect tax amounts.

I hear of taxpayers who write to the IRS about a bad tax assessment, and they experience the frustration of their paperwork getting lost in the system. As a result, bad tax assessments go unchallenged and appeals are not made. Individual taxpayers then find themselves battling with IRS Collections for money that they do not owe. These individuals may even be subject to a tax lien, which makes it nearly impossible to get approved for a mortgage. 

But fear not! Fortunately, there are ways to challenge an IRS tax bill.  Here is out list:

1. Request for Audit Reconsideration

   We can get the audit reopened and re-examined.

2. Doubt-as-to-Liability Offer

    This is a type of Offer-in-Compromise that challenges the underlying liability itself.

3. Collection Due Process Hearing (CDP)  – challenge the tax bill

    During the hearing, the tax bill can be challenged.

4. Innocent Spouse Relief 

    We ask the IRS to adjust the amount of tax due, by allocating the tax between the spouses or former spouses.


5. File an Amended Return

    If the taxpayer does not receive anything in 6 months, then they can bring a litigation suit.


6. Bankruptcy

The issue can be challenged through bankruptcy

If you have questions about a tax matter, call our Atlanta office at 678-235-5460. For more information, go to our website home page!

Subscribe to our YouTube channel!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.

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Taxes
Click below to watch our most recent video about what to do if you cannot pay your taxes. If you are unable to pay your IRS tax debt, this video is for you!


In this video, we discuss what options a taxpayer may have if they cannot afford to pay their tax bill. In addition, Gary explains the importance of being in tax compliance when making a deal with the IRS. Similarly, he provides the various steps a taxpayer will need to take in order to be considered in tax compliance. Above all, it is important to remember that not filing a return is NOT a solution, and it will only make the situation worse. 

Finally, Gary discusses the options available to the taxpayer to negotiate with the government.


If you enjoyed this video, check out our YouTube channel to see more of our tax and accounting videos! Be sure to subscribe to see future videos that could benefit you or your business.

For more information about the tax and accounting services we provide, visit our Home Page. If you cannot pay your taxes, call our office today for a free consultation at 678-235-5460!


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated to serving the needs of small businesses and their owners.

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Taxes

Click here to watch our most recent video to learn how to get IRS tax refunds for late or missing returns! If you have missing tax returns (especially if you feel you are due a refund), this video is for you.

As Gary discusses in this video, it is important to note that you have three years from the date a tax return was due to claim the refund. In order to get the tax refunds from a late or missing tax return, you will have to get them filed.

Remember that if they are not filed, the penalties and interest will quickly add up. Don’t wait!



Did you enjoy this video? If you would like to see more of our tax and accounting content, please check out our YouTube channel! Subscribe to see future videos that might benefit you and your business.

For more information about the services we provide, please visit our Home Page!

If you would like assistance preparing late or missing tax returns, call our office in Atlanta, GA at 678-235-5460 for a free consultation.


Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia. We are dedicated to serving the needs of small businesses and their owners.

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Taxes

The IRS knows that there are over 7 million individuals and businesses with unfiled tax returns. A significant percentage of that number constitutes taxpayers who have not filed returns for multiple years. The IRS is beginning an initiative to target these “non-filers.”

If you come into our Buckhead CPA firm to resolve the problem of missing tax returns for you or your business, we will be sure to discuss with you three key strategies for non-filers:

1.) How Many Years to File?
– No matter how many years of returns have not been filed, the IRS only requires you to file six years of missing tax returns.

2.) How are You Going to File? – If you can’t afford to pay your back taxes, consider filing separately from your spouse, followed by an Offer in Compromise. This may save you thousands of dollars, depending on your fact pattern.

3.) Which Returns to File First? – Supercharge your Offer in Compromise for back taxes by filing your state returns first. This, too, may save you thousands of dollars, depending on your facts and circumstances.

Unfiled tax returns are an urgent matter. Especially if you want to stay out of trouble with the IRS.

For an appointment, please call our office at 678-235-5460, or send Gary an email at Gary.Massey@MasseyandCompanyCPA.com.

Click here to view our recent post!

Founded by Gary Massey, Massey and Company is a boutique CPA firm in located in Atlanta, Georgia serving the needs of small businesses and their owners.


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Taxes
Audit RatesAccounting Today recently published an article, “Ten Major Trends in IRS Audits,” examining how IRS audit rates have changed over the past several years. This article provides useful information for taxpayers, especially those who own a business.


IRS Audits of Business Entities



Partnerships and S Corporation are less likely to be audited. According to the article, “The IRS continues to struggle to audit S corp and partnership returns. This situation is likely to get worse as the more experienced IRS business auditors continue to retire. Audit rates for S corps and partnerships are both 0.22 percent – or, put another way, one in every 455 passthrough entities were examined in 2018. It is no wonder that the number of S corporations have increased by 38 percent from 2005 to 2018 (3.5 million in 2005 versus 4.85 million in 2018).” This is an important factor to consider when thinking about making an “S election” for your business.

In addition, audit rates have dropped overall in the last decade. “Most taxpayers envision Internal Revenue Service audits as intrusive investigations resulting in criminal sentences. Today, nothing could be farther than the truth. The IRS’s auditing power has been greatly diminished in the past decade. Congress reduced IRS audit resources by 28 percent in the last decade. And audits are down  from 0.9 percent in 2010 to o.5 percent in 2018. In fact, the number of IRS audits in 2018 (991,168) dropped by almost half compared to 2010 (1.735 million).”


IRS Audit Targets



Nevertheless, there are situations where the IRS consistently audits companies or individuals. According to the article, audits are especially popular among the wealthy. “In 2011, one out of every eight taxpayers who earned more than $1 million in income were audited. In 2018, the number dropped to one in every 31 taxpayers. However, those who earn more than $1 million are still among the most popular audit profiles.”



Article References
Accounting Today, “Ten major trends in IRS audits.” By Jim Buttonow. Click here to read the original article.



Founded by Gary Massey, Massey and Company CPA serves the needs of small businesses and business owners from their office in Atlanta, GA.  They handle tax matters, IRS controversy, tax debts, back taxes, bookkeeping and accounting.  Offices are in the Buckhead neighborhood of Atlanta.   The firm welcomes face-to-face visits.

Gary Massey, CPA

Massey and Company CPA

P.O. Box 421396, Atlanta, GA  30342

Massey and Company 

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Taxes
The IRS urges taxpayers to act now to avoid “tax-time surprises”and ensure smooth processing of tax returns. It is never too early to start preparing.  For this reason, we have arranged four tips to help people file taxes on time.


1. Adjust Withholding; Make Estimated or Additional Tax Payments


“Tax Withholding Estimator” enables individuals to perform a paycheck checkup.  This IRS tool is important for individuals who received a smaller refund than expected or owed an unexpected tax bill in the past.

If the Estimator recommends a change, employees make adjustments to their withholding taxes.  In such case,  employees submit a revised Form W-4 to their employer.   Note that employees should not send these forms to the IRS.

The calculation of quarterly tax payments is especially important for independent contractors and business owners.  Massey and Company calculates quarterly taxes upon request, using sophisticated tax projection software.


2. Gather Documents and Organize Tax Records


We strongly suggest that all taxpayers utilize a tax record-keeping system. Whether electronic or on paper, this system keeps all the important information in one place.   Many of our business clients use QuickBooks for this reason.  Please note that taxpayers should keep copies of filed tax returns and all supporting documents for at least three years. 

To avoid refund delays, be sure to gather all year-end income documents before filing a tax return. Filing too early, before receiving key documents, often means a taxpayer must file an amended return to report additional income or claim a refund.   Furthermore, it can take up to 16 weeks to receive a refund from an amended return.
 File taxes
Remember to also notify the IRS of address changes.  Also, be sure to notify the Social Security Administration of legal name changes to avoid refund delays. 


3. Renew Expiring Tax ID Numbers


An ITIN (Individual Taxpayer Identification Number) is a tax ID number used by a taxpayer who does not qualify for a Social Security number. Taxpayers with expiring Individual Taxpayer Identification Numbers can get their ITINs renewed more quickly and avoid refund delays next year by submitting their renewal application soon.

Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. With nearly 2 million taxpayer households impacted, applying now will help avoid the rush as well as refund and processing delays.


4. Be prepared to File Taxes Electronically; Use Direct Deposit for Refunds


Electronic filing is the easiest, safest and most accurate way to file taxes. Direct deposit combined with electronic filing offers the fastest, easiest way to get a refund.   Furthermore, direct deposit eliminates the worry of lost, stolen or missing refund checks.

Direct deposit is easy to use.  Taxpayers select it as their refund method through tax software or tell their tax professional.    As an added benefit, direct deposit is less costly to the IRS, saving taxpayer dollars.  

Massey and Company offers electronic filing and direct deposit to all its clients.


Something to Keep in Mind


The IRS cautions all taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns, especially those that are paper-filed, require additional review and take longer to process.

To get a jump-start on taxes, contact the firm today at 678-235-5460.  

Our YouTube channel!



Founded by Gary Massey, Massey and Company CPA serves the needs of small businesses and business owners.  The firm handles tax matters, IRS controversy, tax debts, back taxes, bookkeeping, and accounting.  Offices are in the Buckhead neighborhood of Atlanta.

Gary Massey, CPA

Massey and Company CPA

P.O. Box 421396, Atlanta, GA  30342

Massey and Company 

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