The IRS Audit Blog

Archive for October, 2008

Question: what i did was retarded: I need ideas on how to form a letter requesting my W2s from 2002 thru 2005?

am i right in assuming that i should direct it to the payroll dept? should i even both to have the letter of request tracked (in case the IRS calls while i’m waiting)? i procrastinated big time with filing because i owe money. then there was a fire and i lost all of my paperwork so i have to get 6 years of W2s. plus the company was acquired in 2004. woe is me…

Answer: We just had to do the same thing with my husband’s last 3 years of taxes. First, Take a deep breathe and exhale. Second, Contact the IRS. They have a department that keeps ALL records and they can fax them to you no questions asked. Though it typically takes 24-48 hours before they are received. If you don’t have access to a private fax machine they can also mail them to you, but it will take 7-10 business days. Once you receive them take them directly to your tax accountant. If the IRS contacts you (typically through the mail) contact them immediately and explain the situation letting them know that you are on the ball. And since you went through them to get your W2’s they already have proof of it so no sweat on that end. Then once your taxes are prepared, signed and sent in. The government will decide how much you as the amount grows interest daily. Then, if you cannot pay it all in one lump sum, they will make payment arrangements, but will also ask for a big portion up front. Make sure that you pay all payments on time as they can freeze all your accounts and levy any and all of your assets, but keep your head up and take care of business. Hope that this helps!

Economic downturn? Not for these Tampa Bay nonprofit hospital chiefs

Seven-figure salaries are common for bosses at bay area nonprofit hospitals.

Is the Income Tax based on Fraud? Come and hear an IRS whistle-blower in person – Joe Banister

Question: Wise to create an LLC solely for the purpose of holding and trading securities.?

I currently have a personal e*trade account. I would like to create a limited liability company whose sole purpose is to invest my money in securities-stocks, bonds, mutual funds. My personal e*trade account would be transferred to a new business account. Besides the asset protection, what are the other advantages to doing this. And of course, what are the disadvantages? Is this even possible? Legal? I know I should seek a tax attorney or accountant, but just a little advice would help me initially.

Answer: You should really consider establishing a S Corp for that purpose rather than an LLC. With an LLC, you’ll have to pay self-employment tax of 15.3% which goes toward social security and Medicare. And if you’re investing, you may be losing “capital appreciation” tax status in exchange for a less favorable “ordinary income” tax status. However, with a S Corp, you’ll only pay taxes on the salary you pay yourself. The rest you distribute to yourself through dividends since you are the only shareholder. Furthermore, with an S Corp, you have more latitude on the use of losses should you have a negative year. You will find the tax rules of LLCs more stringent when it comes to using losses from trading.

The downside with a S Corp is the formal paperwork. You’ll have to have notes from annual meeting and minutes from quarterly meeting even though it’s just you. I don’t think that it is a big deal for the tax savings. I’ve been a professional trader for 12 years and traded independently through my own S Corp for 6 of those years.

There is another way that might be even better but I know less about it. You can form a LLC and elect to be treated as a S Corp for tax purposes. I however would not attempt this without a very competent accountant.

The best site hands down for tax information for trader is http://www.greencompany.com/Traders/index.shtml

You won’t need a tax attorney – unless you end up suing your accountant because he mis-classified your business or something. It is also unlikely that you’ll be using the asset protection part of the LLC or S Corp structure because it is not likely that you’ll be getting sued as a trader (unless you have clients or investors but if that’s the case, you’ll probably want an arbitration clause).

My best advice is to take a deep look at that link. They specialize in accounting for traders. You’ll become very familiar with their site as you become a seasoned trader. Hope this helps. Good luck.

Me: Professional High Frequency Trader of 12 years.

A.G. Bruning warns of tax refund scam

LINCOLN – Attorney General Jon Bruning today reports a new tax refund scam targeting consumers through email.

Tampa Tax Attorney Shares IRS Help Secrets

Audit Shows Issues At County Treasurer’s Office

A newly released audit shows the San Diego County Treasurer-Tax Collector’s Office improperly withheld about $8 million in overpayments and repeatedly failed to fix problems in how the office is run, it was reported Saturday.

CCH® TeamMate EWP – Complete Audit Documentation System

Question: Recall of Los Angeles Mayor, the District Attorney and Nunez’?

We have been hijacked by 3rd world criminals whose only concern is gathering more photo-ops…

Please give the District Attorney of Los Angeles a phone call, and ask him why he still has a job after ripping off the city, and his wife that drives on suspended license and no insurance…

And the Mayor who marches in the streets demanding RIGHTS for illegals…

I think I need a larger box on my tax return…even though I am single, how do I claim 20,000,000 million illegal dependents?

Answer: Third world criminals? Aren’t they American? Are you saying that all people of Latino descent are from the “third world”, even ones from America? Doesn’t that make America a third world country?

Am I making sense? Neither are you.You should be deported, Mr. Nativist. At least illegal immigrants don’t hate. You know what they come here for. Work. You know what they are escaping. Poverty. Put yourself in their shoes, you closed-minded bigot.

As for rights? Doesn’t every one in the United States, legal or not have human rights? I’m not talking about the UN, which I presume you detest. I am talking about the CONSTITUTION. Ask any constitutional scholar and they will tell you that ANYONE in the United States has constitutional rights. That’s how it should be, Adolf.

Background Note: El Salvador

Geography Area: 20,742 sq. km. (8,008 sq. mi.); about the size of Massachusetts. Cities: Capital– San Salvador (pop. 1.6 million). Other cities –Santa Ana, San Miguel, Soyapango, and Apopa.

Health Care Stakeholder Discussion with Nancy-Ann DeParle

Question: what do i do now? taxes?

I already filed my taxes on-line and today i got this paper in the mail it was a cancellation of debt form 1099-C, what do i do with it and how is it going to affect my taxes ? is the IRS going to come after me if i don’t amend my taxes? it is for a car loan about 3500.00 i read the form and am unclear as to what it means it says something about reporting this as income? i don’t get it, i wasn’t paying on it so i don’t know?????
should i amend now or wait? we need the money to catch up bills! will this delay our return? could i possibly file the amendment next year?

Answer: You have to amend. You don’t want the IRS coming after you because you didn’t include the 1099-C. That is far more of a hassle than amending your return.

Yes, the 1099-C amount is considered income for tax purposes. Think about it this way, imagine you paid that 3,500 that you owed, and then they gave it back to you- that’s income. You were responsible for paying the full amount, so by not having to now, it’s like money in your pocket.

So, when you amend the return, you’ll have to add the 1099-C as other income, which will likely increase your tax liability. If you received a refund, you may have to pay some of it back. If you owed, you’ll likely owe more.

Sorry. :0(

Equifax Reports Fourth Quarter and Full Year 2009 Results

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Taxes on Short Sale, Loan Modification & Mortgage Foreclosure 3 Nov08 Cancellation of Debt Income