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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.

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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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CPA Accountant discusses IRS Tax Form 9465 Installment Agreements | IRS payment plan

IRS payment plan tax form 9465 IRS installment plan

Use tax Form 9465 to setup an IRS Payment Plan. (910) 399-2705.

CPA accountants work every legitimate tax angle. But sometimes the Client owes tax and can’t immediately pay it. Tax Form 9465 is the IRS installment agreement application and sets up an IRS payment plan. I think many folks file Form 9465 themselves, so here’s some background and potential strategies.

Prevention

The IRS tries to prevent collection situations through their “pay as you go” system: including with holdings on your wages and mandated estimated taxes. And of course, the IRS requires filing a return every year, so, ideally, the taxpayer can’t fall too far behind. But what happens when the process breaks down and you don’t have the money to pay your taxes? In many cases, you can make IRS monthly payments through their Installment Agreement program via tax Form 9465.

Non Filing

“It’s better to at least file your tax return, even if you can’t immediately send the IRS the taxes due. Always file a correct return before entering into an IRS monthly payment plan. Why? A correct return almost always results in less tax due.”
Gary Bode, CPA accountant

The IRS has non filing penalties. Their sophisticated revenue matching program assures they will call for your return, eventually.

Examination of Notices: Do you actually owe what the IRS is Demanding?

The first step is examining all the IRS notices.  The IRS is usually correct in their demands, at least using the information they have.  But sometimes they have missing or incorrect information.  Three demand components usually exist: (1) the actual tax, (2) assessed penalties, and (3) accrued interest.  Sometimes, penalties can be abated with a good enough excuse.  Interest depends on the amounts and how long they were outstanding.

Buying Time

Buying time is the next step. The IRS can tax lien property and perhaps even seize assets.  Garnishing wages – ouch!  The CPA needs time to help the taxpayer into IRS acceptable compliance. Usually, a polite letter from the CPA achieves a temporary stay of their processes.

Lowering the IRS Demand: Preparing Un-Filed Returns because the Initial IRS Demand is Usually too High

When the IRS calculates taxes due on non filed returns, they use few deductions or credits. They call it preparing a “substitute return.” And their calculation is usually high. Why? They don’t factor in legitimate deductions and tax credits. I think most CPAs would agree this is a negotiating ploy to encourage the taxpayer to prepare the non filed returns. As part of the tax preparation, the CPA obtains the IRS account transcript on the taxpayer for the given tax year(s). Inevitably, in cases with un-filed tax returns, preparing the return reduces the actual tax, as originally demanded by the IRS.

Looking to see if Partial Payment Might Suffice: Offer in Compromise: IRS Form 656

Do you even have to pay the entire amount due? Qualifying for an IRS Offers of Compromise, the pennies on the dollar technique, is easier since the Recession. After all, collecting anything is better than collecting nothing.

“During the recession, the IRS is more accepting of Installment Agreements.”

Installment Agreements: Form 9465

Unlike the Offer in Compromise touched on above, Installment Agreements require the entire amount of taxes, penalties and interest, as calculated by the CPA and agreed to by the IRS, to be repaid over time.  Accomplished through IRS Form 9465.  There are setup fees ranging from $43 to $102. They prefer drafting your checking account. Interest wise, the IRS Installment Agreement is usually better than borrowing the cash against a credit card.  But there are reasons you may want to borrow the money elsewhere. And the IRS encourages you to do so, stating that external loan interest may be less than their own penalties and interest.

The IRS is a powerful creditor. They can lien your property, garnish your wages, and empty your bank account. An Installment Agreement usually means the IRS will forego a tax lien. IRS tax liens kill your credit rating. If your Installment Agreement request is more than $25,000, the IRS requires you to complete a Form 433 F which discloses your complete finances.  And let’s face it; even at less than 25K, they know your property holdings and bank accounts.

Installment Agreement Tactics: Form 9465

In my experience, as a CPA accountant, folks want to pay off the IRS ASAP:

  • By making a high down payment. Better to go as low as possible.
  • By higher than required monthly payments. Again, better to start low.
  • Paying extra amounts as they go. Better to put the extra amounts in a reserve until you can off the Form 9465 Install Agreement in full.

You don’t buy any goodwill with the IRS with these good deeds. Think about the possibility you may be short on cash for a few months. Your IRS monthly payment is still due regardless of your past payment history. I don’t think the IRS will seize your house over a missed payment. But once you’re in their grasp, they’re not an agency to fool around with. I usually recommend a low, comfortable monthly figure and then paying it on time every month.  Then accumulating extra money on the side until you can prepay the balance in full.

For a free phone consult call (910) 399-2705. We’ve got a virtual office to serve long distance clients.

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