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 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

Free Consult

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.

Pay Your CPA

Enter $ Below



Other Amount:



Your Email Address :



IRS Letter 566(CG) CPA offers Information on IRS Correspondence Tax Audits | IRS Notice CP2000

IRS Letter 566(CG) CPA

Gary Bode, CPA: you don’t always need a CPA to deal with Letter 566(CG) or Notice CP2000. But if you do, consider calling us for a free phonce consult at (910) 399-2705.

IRS Letter 566(CG) and IRS Notice CP2000 arrive by non-certified US mail. Both mark the start of an IRS correspondence audit. Correspondence audits are low-key and about two-thirds of them ask for additional tax. The average demand is about $1300. Sometimes they arrive a few years after the tax year they’re issued for. Don’t panic, most correspondence audits are straight forward. But conversely, an IRS tax audit is an IRS tax audit. The IRS automates correspondence audits, and both Letter 566(CG) and Notice CP2000 are computer generated. It may list an IRS Agent but that’s a ruse; generally no IRS Agent with that name works at listed IRS Center. I’ll try to provide tips I’ve learned as an IRS Letter 566(CG) CPA over the years.

Cut to the Chase for Letter 566(CG) and Notice CP2000

  • Don’t ignore them. The IRS seems slow and ponderous but they won’t forget about you. Don’t waste valuable defense time. Some new Clients call me a few days before a final deadline.
  • Don’t expand the scope of the IRS audit. Every CPA sees Clients who shot themselves in the foot.
  • Leave emotion out of it. You’re essentially dealing with an IRS computer.
  • If it’s a few dollars, maybe it’s easier to just pay the IRS. I’ve seen Clients who stand on principle for $60 or so. As a CPA, I like to be cost effective.
  • The IRS will contact your State. If you have a State income tax requirement remember to deal with them proactively.
  • Understand your Letter 566(CG) or IRS Notice CP2000.
  • Do you have same issues in another tax year? Maybe you’ve consistently made errors on your returns. Sometimes it’s easier to address multiple years simultaneously.
  • Ask for penalty abatement.

“Here are some tips on IRS Letter 566(CG) and Notice CP2000. Many correspondence audits resolve without CPA help.” 
– Gary Bode, IRS Letter 566(CG) CPA

The IRS assumes Letter 566(CG) and Notice CP2000 are correct

You or your CPA must to prove them wrong. Sometimes that’s easy.

The IRS isn’t always right; refunds are possible

The IRS bases its demand, on Letter 566(CG) and Notice CP2000, from data they have on file. If you think about it, the IRS mostly receives information on income like W2s, Form 1099-MISC, Form 1099-C etc., all of which incur income tax. Generally deductions and tax credits aren’t in their calculation. Often just supplying them with a complete picture of the tax year clears up the issue. So often the amount you’ll have to pay is usually less than the first demand. Refunds are even possible.

Understand the year in question

Both Letter 566(CG) and Notice CP2000 often arrive late. Clients report wasting time researching a different tax return! Find the tax year on both documents.

Understand the tax issue involved

Many clients don’t understand IRS Letter 566(CG) or Notice CP2000. Call the IRS and ask for help. Many issues are simple and easy to deal with.

They’re trying to politely get your attention – accurate information can lower the initial IRS demand

CPAs that deal with correspondence audits think the IRS doesn’t expect to get the amount demanded on IRS Letter 566(CG) and Notice CP2000. I think, based on years of experience, that they just want an accurate tax return for that year.

You must reply – the worst tactic is to ignore IRS Letter 566(CG) and Notice CP2000

Some cases present to CPAs because the client procrastinated in dealing with the correspondence audit. No reply initiates a string of escalating IRS letters and notices. Some appropriate responses include:

  • Just paying the IRS what they want. Sometimes they’re right. Sometimes it’s easier to pay them than mount an offense over a few dollars despite the principle involved.
  • Providing the IRS additional requested information.
  • Amending a prior return.

The IRS is generous with time frames. But they eventually lose patience. Don’t squander response time without a good reason.

If you send information, arrange it logically

We always send a cover letter that explains the situation clearly and succinctly. Don’t get emotionally involved. We always figure the IRS employee has to deal with 80 or so cases a day and we have 20 seconds to make our case.

Don’t expand the audit

This is the biggest pitfall of the entire process, at least in my opinion. Client often open up another can of worms.

Know when to punt

Consider calling us or another IRS tax audit CPA when:

  • The amount is large. No sense spending money to fight $120 tax bill.
  • If you feel there might be bigger issues that might come up later. See below.
  • When the tax issues aren’t cut and dry.
  • If the IRS isn’t something you can deal with.
  • If you feel that your case might require a professional, even if it is just to get that CPA signature on your case.

IRS Letter 566(CG) example

Our client received the above letter which noted she sold a piece of real estate a few years earlier. They assessed income tax on the entire sale amount, about $100,000. That’s scary. Ordinarily we’d resolve that just from ascertaining her basis in the property (what she bought it for). In this case, because of the recession, she sold it at a loss. So, no taxes were due. But Gary noted she sold it at a loss (short sale) and the bank forgave the outstanding balance. So he suspected the bank might have issued a 1099-C. Cancelled debt (Form 1099-C) becomes taxable unless you can exclude it. So we pulled her IRS files and sure enough there were two Form 1099-Cs listed. So we amended the return to include the basis of the sale and Form 982 to show she was insolvent when the building sold. No additional taxes (!) and no other issues to come forward later. And yes, in this case, Letter 566(CG) didn’t tell the whole story. Without question the Form 1099-Cs would eventually come up.

Notice CP 2000

Our client had a car repo and the bank forgave the loan. He didn’t report the Form 1099-C (cancelled debt), probably because he never received it. But the IRS did and wanted to tax him on that amount. Gary spoke with the client for a while and noted he switched jobs and moved in the tax year under audit. He started receiving rent on his house the following year. But, he didn’t report rental expenses in the tax year under audit. Yes, there can be expenses before you receive income. So we amended that return. The rental expenses were a passive loss under $25,000 which easily wiped out the legitimate Form 1099-C issue and generated a refund.

We’re an IRS Letter 566(CG) and Form CP2000 CPA firm with a virtual office to serve you and/or your company regardless of where you live. Yes, we have international and long distance clients. Sometimes just our free phone consult clears up the matter. (910) 399-2705.

 

Leave a Reply

  

  

  

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>