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Frequently Asked Questions
What Exactly is an (EA) Enrolled Agent?
An EA is trained and certified to represent clients before the IRS. An EA is typically a tax professional, often with an advanced degree in accounting and/or law, who has successfully passed the Special Enrollment Examination administered by the IRS. Once the EA candidate has passed this exam, a comprehensive background check is initiated by the IRS to clarify issues of morality and character. Successful agents are then certified to handle any type of taxation problem and, if necessary, represent their clients directly before the IRS.
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How can an EA (Enrolled Agent) help me?
Since EA's are certified to represemt clients directly before the IRS, tax issues of delinquent returns, tax liens, garnishments, payroll taxes, overpayment, capital gains, etc. can readily be addressed and resolved in a speedy and appropriate manner. The EA is your direct voice to the IRS. Often a viable solution can be negotiated within days of becoming a client.
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The IRS has levied my bank account and garnisheed my wages. What can I do?
If the IRS has notified you of an impending levy and/or garnishment of wages, typically you have only a few days to respond and work out a reasonable solution. Immediate action is the key in this case. Often, the first step is to contact the IRS to determine the nature and severity of the impending levy and/or garnishment. A trained EA (Enrolled Agent) handles such cases on a regular basis and can often resolve the problem within hours. At the very least, a postponement of action may be negotiated until your case can be thoroughly investigated.
The IRS has filed a tax lien against me. What should I do?
IRS tax liens are very serious matters as they become part of the public record (state, county, municipal) and can impede your ability to get a loan, buy a house, or raise funds for your business. It may also negatively impact your credit rating and in some cases put professional licenses in jeopardy. A competent tax professional such as an (EA) Ennrolled Agent certified to represent you before the IRS is your best bet for resolution and relief. In matters as serious as a tax lien, only the most competent specialist - such as an Enrolled Agent - should be considered for assistance.
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I have not filed my taxes in several years, what should I do?
1. You need a competent tax specialist and advocate who can sort out the maze of issues associated with late and delinquent filing and skilled in sucessfully negotiating such matters before the IRS.
2. You should gather up all pertinent documents (W-2, W-4, pay stubs, child support documents, bank statements, rent receipts, mortgage payments, etc. and if applicable, independent contractor documentation.)
3. After gathering the aforementioned items, you should contact the offices of Michael L. Martin, EA, LPA & Associates as soon as possible to set up an appointment for help and resolution.
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What is EIC and how does it affect my business?
EIC or Earned Incomed Tax Credit is a refundable tax credit that reduces or eliminates the taxes that low-income working people pay (payroll taxes) and also frequently operates as a wage subsidy for low-income workers. (Enacted in 1975 under the Carter administration, EIC was substantially expanded in 1986, 1990, 1993 and 2001.) The size of the earned income credit, as its name suggests, is a function of how much earned income the filer has accumulated over the tax year. "Earned income" is a technical term defined by the Internal Revenue Service in accord with the Federal Tax Codes.
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As a small business owner, I employ Independent Contractors and "temps" several times during the year to help with seasonal work overload, what IRS issues should I be aware of?
The "temp" agency is usually responsible for the state & federal IRS reporting so W-2 or W-4 forms are usually handled by them. The Independent Contractor, however, is another issue.
The IRS has specific considerations for Independent Contractors and indeed has written a special supplement in the IRS Codes to address tax issues relevant to this category of worker. Special forms such as the 1099, 1099-MISC and the 4029 are mandatory filing documents and should not be overlooked. In addition, it is a good idea to consult with the IRS before arbitrarily assuming your workers qualify for Independent Contrator status. Filing IRS form SS-8 is a good way to ensure worker status verification. In recent years, the IRS has conducted serious investigations into this area of employee classification and as a consequence many of the old assumptions have been challenged and litigated. If you have questions or concerns, you should contact our offices as soon as possible to save yourself the headache and misery of having to undergo an investigation or audit because of faulty information or simple misunderstanding.
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See the Article "Independent Contracting - the rules have changed!"
Why is the exact determination of my tax filing status important and how do I determine my IRS filing status?
The 5 (five) IRS tax filing categories are:
- Single
- Married Filing Jointly
- Married Filing Separately
- Head of Household and
- Qualifying Widow (Widower) with dependent child.
The proper filing status is important because it determines whether you are required to file a return, the correct rate at which you should be taxed, and the amount of your standard deduction as well as tax credits and deductions to which you are entitled under the law. An incorrect filing status may be robbing you of significant returns or placing you at risk of an audit or at the least an investigation.
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I have been told my Capital Gains may prompt an audit, is this true and what should I do?
Capital Gains, as defined by the IRS, is the difference between what you paid for an investment and what you received when you sold it. Investments are classified as mutual funds, stocks, bonds, options, precious metals, real estate and collectibles. If you sold an investment for more that what you paid for it, then you have a Capital Gain. If you sold an investment for less than what you paid for it, then you have a Capital Loss. Your capital gains and capital losses are reported on IRS form 1040 Schedule D.
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I think I may have overpaid my taxes but I am not certain, what should I do?
Overpayment of taxes is common but regrettably many people fail to "catch the oversight." Overlooked deductions, forgotten expenses or selecting the improper filing status can all affect your tax liability and, of course, any money due you. Knowing what to do and when is often 9/10th of the solution. Call our offices to review your filings and to determine whether money is owed you.
We recently formed a Not-For-Profit corporation, besides IRS form 1023, what other forms must be submitted?
IRS form 1023 is filed to qualify for federal tax exemption status. It is specific to Not-For-Profits, Trusts and other special entities. For state requirements, it is best to check with the state of incorporation. Each state has a different set of regulations and in some instances the filing dates may differ from the usual dates associated with corporations. Handling tax matters for corporations, trusts and Not-for-Profits is a specialized interest and must be administered with care, knowledge and common sense. Understanding the "rules of the game" is a given and should not be left to amateurs. The accounting firm of Michael L. Martin, EA, LPA & Associates, PC handles such complex issues as a matter of daily course.
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I am broke and cannot pay the IRS, what should I do?
Eventhough the IRS has a reputation for being cold and heartless, they do take relevant matters into consideration - especially when presented in the proper context.
1. Negotiation is one option that is always available. However, negotiation in this arena should be done by extremely competent advocates trained and certified to represent all levels of clients before the IRS.
2. Reduction of debt is a common means of relief employed by competent tax professionals such as EA's (Enrolled Agents). It is a common sense approach to a common problem, employed by uncommon advocates.
3. Determining client status is another means of providing relief and resolution for many clients who have experienced unusual and life altering events that may have significantly impacted their income, health, mental status and ability to work.
There are many other avenues that may be explored to address this situaton. However, you need to take action as soon as possible to work out a solution that is satisfactory to you as well as the IRS.
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I live in the United States but I will be working abroad for the next several years; how can I properly handle my IRS issues and responsibilities?
The office of Michael L. Martin EA, LPA and Associates is skilled in handling complicated tax issues, particularly ones that cross jurisdictions, states or national boundaries. Often such matters may be handled with ease by simply contacting our offices as soon as possible to set up an appointment.
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