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AYARLAW.COM
How to Analyze your Client’s Tax Situation
Presented by: Venar Ayar, J.D., L.L.M. (Taxation)
Venar Ayar, Founder AYAR LAW
Venar Ayar’s expertise is in favorably resolving Federal and State tax problems. He knows the procedural rules inside and out, and how things actually work at the IRS.
Feel free to call or email Venar anytime (no charge) and he’ll be happy to answer any questions you might have, such as:
Some example questions you can ask Venar:– "How do I advise a certain client who has fallen behind in personal or business taxes?"– "What's the best way for one of my clients to deal with an audit?"– "Can I get a client off the hook through a Penalty Abatement or Innocent Spouse Relief?"
Agenda
1. The Analysis Basics
2. The Initial Consultation
3. Financials
4. IRS Transcripts and Compliance Check
5. Final Analysis Review
The Analysis Basics
What is an Analysis?
• First step in a resolution case
• A basic understanding of the client’s tax and financial situation
• Ultimately trying to determine which resolution is best for the client
Main Questions
1. How much do they owe?
2. For what tax years do they owe?
3. Which returns have been filed?
4. Which returns were they required to file and for which years?
5. Why do they owe?
6. Is the debt dischargeable in bankruptcy?
7. Do they qualify for a penalty abatement?
The Analysis Process
Four parts of an analysis
1. The Initial Consultation
• Either phone or in person; first meeting with the client to discuss their tax problem
2. Financial Analysis
• what is the client’s financial situation and ability to pay?
3. Transcript & Compliance Check • Reviewing the relevant IRS transcripts to the client’s tax
problems
4. Analysis Review
Possible Resolutions
• Offer in Compromise
• Installment Agreement
• Currently Not Collectible Status
• Innocent Spouse Relief
• Penalty Abatement
The Initial Consultation
The Initial Consultation
• Meet with the client to talk about their tax problem
• From their perspective, what happened to get them into this situation?
• What do they plan to change to prevent them from getting into this situation again?
• What is their objective or end-goal?
• What made them come in?
• Get the Form 2848 Power of Attorney
• Allows you to communicate on behalf of the client with the IRS
What To Do With a Power of Attorney
• Fill out the appropriate information
• Fax it into the CAF Unit
• Michigan faxes to the Memphis CAF Unit
• (855) 214-7519
• Generally takes 2-3 weeks to process POA
Financials
Financial Analysis
• Three parts to a financial 1. Assets
2. Income
3. Expenses
• Disposable Monthly Income
• Income – allowable expenses = disposable monthly income
• What is the client’s ability to pay?
Financial Analysis
Assets
• Bank Accounts
• Investments
• Real Estate
• Cars
• Recreational Sport Vehicles
Financial Analysis
Income
• Paycheck
• If self-employed, profit & loss
• Social Security
• Pension
• Rental Property Income
• Alimony/Child Support
• Other
Financial Analysis
Expenses • Health Insurance• Auto Insurance • Homeowners Insurance• Life Insurance• Mortgage Payment • Utilities • Childcare • Student Loans• Court Ordered Expenses • Current Taxes
IRS National
Standards for
Allowable Expenses
IRS Transcripts & Compliance Check
Types of IRS Transcripts
1. Tax Return Transcripts
2. Account Transcripts
3. Record of Account Transcripts
4. Wage and Income Transcripts
5. Verification of Non-Filing Letter
How to do a Compliance Check & Order Transcripts
3 Ways to Get IRS Transcripts/Compliance Check
1. Call the IRS
2. IRS E-Services
3. Third-Party Tool
Call the IRS
• Call Practitioner Hotline and speak to an IRS agent about the client’s compliance history
• Practitioner Hotline Number: 866-860-4259
• Get the client’s compliance history and get relevant transcripts
• If you don’t have a secure mailbox, you can order them through the mail.
• You can only order 10 transcripts per phone call
Compliance Summary Sheet
IRS E-Services
www.irs.gov/eservices Transcript Delivery Services (TDS)
Logging In to e-Services
You’ll either have to log-in with an account you already created, or create your account.
Creating Your e-Services Account
Gather the information required to register and click yes when done
Creating Your e-Services Account
Get started once you have the proper information
Two-Step Mandatory Authentication
Once your account is created/you logged in…
• Password
• 6-digit code sent to phone or email
Selecting the Organization
Transcript Delivery System (TDS) Homepage
Product Delivery Options
• Select how you want your transcripts delivered
• Enter your CAF number
• Note: Don’t use the ‘-’ or else your number won’t fit in the space. (Can’t type the ‘R’ either)
Taxpayer Information
• Input your client’s information on this portion of the page
Product Type, Forms, and Years
• Product Type: Type of Transcript you want
• Request Purpose: Federal Tax
• Fill in the correct years and TDS will pull the available transcripts
Third Party Tools
Replacement for the manual summary sheet
Examples
• Pitbull
• Tax Help Software (THS)
• Canopy Tax
Final Analysis Review
Reviewing with the Client
• Review all the information
• Exercise your judgement to determine which options fit within their facts
• What do they qualify for?
• What can they pay?
• Produce a strategy/game-plan
• Talk with your client about the different options
• What you can do for them and what you should charge them
