We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Back Tax CPA accountant discusses preparing back tax returns

Back tax CPA accountants approach each new Client differently since every case has unique circumstances. But, I’ll try to cover back tax basics in this post. Maybe it will show you some common pitfalls. Maybe it shows some potential effective strategies. Maybe it will help you decide if need a CPA to help.

Client receives an IRS Notice

Back tax CPA accountant explains back taxes

Strange but true. Back tax cases sometimes generate a refund. Sadly the IRS only issues refunds for three years. Every back tax CPA has a horror story about clients who lose large refunds. (910) 399-2705.

Most back tax Clients receive an IRS Notice, such as CP2000, that motivates them to find a CPA accountant. This starts the IRS timeline. I’ll write more on these issues below:

  • The demand on the IRS Notice is almost always higher than what an accurate back tax return shows.
  • I’ve seen many back tax cases generate a refund for the Client.
  • The IRS appears to value present and future tax compliance; the IRS isn’t generally punitive in back tax cases, except for the penalties of course.
  • The IRS timeline is generous, but there is timeline.
  • Doing nothing is the worst IRS back tax case strategy, although there are exceptions.
  • Doing nothing leads to an IRS tax lien for the full demand. Followed by an IRS tax levy where they can seize your assets and garnish your wages.

Every type of IRS tax return can be a back tax return case

Common back tax IRS forms I prepare:

  • S Corporation, Form 1120-S, U.S. Income Tax Return for an S Corporation.
  • Payroll tax forms, usually Form 941, Employer’s Quarterly Federal Tax Return.
  • Personal taxes, Form 1040. Sometimes with Schedule C, Profit or Loss From Business.

Is there a “typical” back tax Client?

No, I see Clients cross all demographics. Most back tax clients seem like perfectly normal folks. Even IRS Agents don’t seem judgmental. The IRS seldom takes back tax folks to criminal court. My point? It seems to me the IRS shares my perception that some normal folks just don’t file on time.

What happens if I don’t submit back tax returns

The IRS files a “substitute return” for you. Which almost always renders the highest of tax liability. Why? They base it on their information, most of which is income related. An accurate back tack return includes legitimate deductions and tax credits.

“Don’t just accept the IRS demand. Preparing accurate back tax returns reduces your tax liability and associated penalties.”
– Gary Bode, back tax CPA accountant

The IRS timeline

I think the IRS is generous with their time line. My perception? They have you hooked and can afford to keep you on the line for a while. However, generally speaking, your options decrease with time. Eventually the IRS places a tax lien for the amount they think is right. Followed by a tax levy where they seize your assets or garnish your wages.

“Don’t squander valuable defense time with procrastination. The worst back tax strategy is doing nothing”
– Gary Bode, back tax CPA accountant

There are exceptions of course. In some cases you can run out the clock on the statute of limitations and . This is rare. A common back tax case strategy is asking the IRS for more time.

Assume the IRS looks at back tax returns closely

I try to imagine what a skeptical IRS Agent might want to see for the “good pile, bad pile” decision. So I anticipate red flags and provide explanations and documentation.

Avoid shooting yourself in the foot

Back tax sfolks sometimes accidentally open themselves up to additional IRS scrutiny. Try to keep your case contained.

Be professional with the IRS representatives. Typically your case is just part of the job for them. Don’t make it personal. It never pays to poke the bear.

The bottom line of back tax return cases

Some cases generate a refund. But if you do owe, multiple strategies exist to make that as painless as possible. Examples include an Offer in Compromise, Installment Agreements, putting your account in currently not collectible status etc.

“Make sure the IRS knows you’ll be tax compliant the future. This includes factors like filing on time, making estimated tax payments and tax return accuracy.”
– Gary Bode, back tax CPA accountant

Examples of back tax clients losing legitimate IRS refunds

Every back tax CPA, IRS Agent and State Department of Revenue Officer has stories of clients losing legitimate refunds by not claiming them within the three tax year limit.

A man I respect contacted me on September 20th, 2013, or so, with a back tax case initiated by the IRS. They demanded thousands of dollars for the 2009 return. The Recession was tough on him and he had a rental property short sale in 2009. That meant there was an ordinary loss on the rental property that completely offset his taxable income. That rendered a $16,000 plus refund. But since the 2009 return was beyond the three year limit he lost that.

A professional woman contacted me with  a State initiated back tax case asking for seven years of back tax returns. A messy divorce and associated acrimony meant she couldn’t file her 2006 tax return. Why does the IRS and States take so long to ask for a back tax return? I don’t know. The IRS and State never contacted her until the Notice mentioned above. Her business lost money and she assumed she didn’t have to file. What she didn’t realize was that the divorce changed her IRS filing status form Married Filing Jointly to Head of Household. Her two children qualified for the Earned Income Credit meaning she had legitimate refunds for about $3,000 per year. Even though she never made any tax payments. She lost those refunds beyond the three year limit.

How to keep your back tax CPA costs low

The basic cost of preparing back tax returns is cheaper than if you’d filed year by year. Why? There’s efficiency in preparing sequential returns. But here are some typical factors that increase cost. Personally I don’t like running up charges on things that don’t decrease your tax liability. I even list these in our Letter of Engagement.

  • Obtaining power of attorney with the IRS and State so your CPA can act as your representative. Unfortunately, by the time a back tax case hits a CPA multiple issues exist that wouldn’t occur if you filed on time.
  • Obtaining accurate information for the back tax returns. While there’s no typical back tax client, there are common back tax issues. Sometimes I must help the Client reconstruct tax documentation. Reconstruction is perfectly legitimate but it takes time. Often there are associated costs for obtaining IRS records. Your bank and credit card companies charge for providing statements.
  • Letters and calls with the IRS and State.
  • Preparing the back tax returns out of sequence.
  • Looking to see if your case qualifies for an Offer in Compromise. Maybe the IRS will accept less than what you owe as payment in full. Pretty easy but it runs up a half hour or so of time.
  • Helping to setup IRS Installment Agreements. This includes some cash flow planning. It might include filling out Schedules and working with an Agent or Officer.
  • Dealing with extraneous IRS issues post filing. Things percolate through the IRS systems at different rates. There’s often overlapping Notices and Letters. Not your fault but not mine either.
  • Reviewing the IRS and State calculations after filing.
  • Asking for penalty abatement once the case clears.

Do you need a back tax CPA?

It depends. Here are some factors to consider:

  • Do you understand the tax issues involved for back tax returns?
  • How much tax liability is at stake?
  • Do know the IRS and State procedures for back tax returns?
  • How stressful is the back tax case to you? I know this is subjective. The effects of stress sometime include being irrational during back tax preparation.

I’m a back tax CPA with a virtual office to help Client regardless of where you live. The virtual office developed as this website started drawing Client beyond my geographic proximity. Even local Client find the virtual office more convenient. So if you’re uncomfortable with your back tax preparation consider giving me a call at (910) 399-2705 for a free consult.

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1 comment to Back Tax CPA accountant discusses preparing back tax returns

  • I believe you can limit the amount you wish to exclude on Form 2555. But your tax question might take some time to research. We provide such a service but it’s beyond the scope of a post comment. Hope that helps.

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