“When the people fear their government, there is tyranny; when the government fears the people, there is liberty.”
As I sit at my desk watching the stock market plummet, I can’t help but wonder what I can do to help. People are being hit hard by the government for more money. Sometimes it is a direct hit. For example, our city government is raising property taxes because it feels its needs are greater than our own.
Other times it is an indirect hit, such as the U.S. government adopting policies that were intended to help pay for out of control spending but actually have generated an economic downturn. But no matter how we look at it, our government is being run by people who place their needs above our own.
So what can I do to help?
Here’s my plan. I want to provide an insider’s view of three tax matters and offer tips that may help some of us save tax money.
Challenge audit results: The federal tax law allows the IRS to audit our tax returns. Anyone who has been through an audit will remember how expensive, time consuming and intimidating it was. Often it ended with a harsh result — taxes were owed and penalties and interest were added.
Here’s an insider’s view: IRS auditors are frequently poorly trained and abusive. Their opinion is often times irrelevant — management makes the decisions. Since an auditor spends so much time on a case, management often feels it must propose a large tax liability that often is unwarranted.
But this actually works against them. When the case is sent to appeals or to IRS attorneys, their shoddy audit work is often scrutinized and rejected.
So here’s my tip to try to help: don’t be afraid if you are audited. Stay out of it completely. Have your accountant or attorney represent you and avoid the intimidation. Don’t be swayed by the threats or other abuse by the agent, and don’t settle until you speak with an attorney who is experienced at the appeals and litigation levels. The goal here is not to pay more than you owe — and always to eliminate penalties.
Challenge tax debts: If we owe taxes, the IRS can seize and sell our assets, including our homes and retirement plans, even our wages and Social Security payments.
Here’s an insider’s view: the federal tax law contains a number of relief provisions to help people and businesses who cannot pay their taxes, and to remove penalties and interest that should not have been imposed. Knowing which relief program to use, in what circumstances and when and how to apply for relief is critical.
So here’s my tip to help: Don’t be afraid if you owe taxes you cannot pay. There are numerous programs that can help solve your problem. Get help from an experienced tax adviser and pay the IRS only what you can afford — and not one dime more.
Hire a good tax representative: The federal tax law is complex, often too complex for Turbo Tax and other do-it-yourself tax software. I urge you to hire an accountant and pay them a fair price to prepare your return and defend it if audited.
So there you have it, my three tips to save taxes from an insider’s point of view. I hope they help.
El Paso lawyer David Leeper may be reached at 581-8748, by email at DPLeeper@aol.com or visit davidleeper.com.