Illinois tax attorneyMany of us have been plagued by pesky calls where an individual or a pre-recorded message warns that you owe money to the IRS. Claiming to be collection agents, these ‘representatives’ warn that you could be subject to legal actions, including arrest unless you wire them a significant amount of money immediately. These calls are a scam and if you are up to date on your returns, they may be no more than a nuisance. If you are actually behind in filing taxes or are dealing with other types of IRS issues, they are likely to cause genuine worry and concern. As this has become an increasing problem in our area as well as in other states, the IRS recently provided a list of ways taxpayers can tell the difference between a scam and a real call.

How to Spot IRS Collection Scams

Since late August of 2017, Illinois has been plagued by an increasing number of fraudulent credit collection calls. According to the Illinois News Network, these calls are often made by individuals posing as Internal Revenue Service (IRS) agents, demanding immediate payment for back taxes and threatening legal actions.

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Illinois tax lawyerAs an independent contractor or small business owner, staying on top of your tax obligations should be a top priority. This can be challenging when you do receive a W2 form and have to rely on your own understanding of local, state, and federal tax rules and requirements. To avoid IRS tax issues such as audits or having to pay back taxes and penalties, the following are five common mistakes you need to be aware of:

1. Not reporting all income. According to an April 2017 USA Today report on small business taxes, the IRS is well aware of how easy it is not to report income. If your business is cash heavy, you may face an increased likelihood of an audit. Likewise, if you get payments from any source totaling $600 or more, be aware that it will be reported to the government. To avoid penalties, make sure to include these amounts as income.

2. Going overboard with deductions. In order to reduce your tax liability, there are a generous amount of business expenses you are entitled to deduct. At the same time, claiming excessive amounts could put you on the Internal Revenue Service’s radar. Make sure you are familiar with the IRS rules for business deductions and keep separate accounts to avoid mixing personal expenditures with those of your business.

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debt collection agencies, Tinley Park bankruptcy attorney, creditor harassment, credit collection protection, debt solutionsThere are few things worse than dealing with constant harassment from debt collection agencies. In their quest to secure payment for companies who hire them, they will often resort to unsavory or even illegal practices, such as calling you at all hours or making threats. When dealing with these companies, it is important to be aware of your rights. As these calls will generally only increase in frequency, you also need to know the steps you can take to address the situation.

Harassment from Creditors

When you fall behind and fail to make payments on loans and credit cards, creditors do have the right to contact you in order to collect on the debt. They often contract out with debt collection agencies, who earn a percentage on any outstanding balances that are paid.

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IRS issues, Tinley Park tax lawyers, debt collection, delinquent tax debts, tax lienIf you owe money as the result of IRS issues such as failing to pay your taxes, having past tax debts, or having years of un-filed tax returns, it is vitally important to pay close attention to any notices you receive. The IRS will generally warn you before taking collection actions, providing you the opportunity to address the situation, either by paying your debt or making payment arrangements, and to dispute the amount owed.

IRS Debt Collection Actions

The IRS is required by law to provide written notice of any collection actions they intend to take, and to allow you time to settle the debt. Failing to respond to these notices, which are an important part of the IRS collection process, could result in the following actions.

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Cook County tax law attorney, small tax errors, IRS issues, business tax mistakes, reporting taxesAs a business owner, you have your hands full from the get-go. Regardless of how much help you have behind the scenes, ensuring things run smoothly and efficiently is an ongoing challenge. From recruiting and hiring employees to payroll and marketing efforts, you are responsible for the overall operation and success of your business, and this includes managing the finances and properly reporting taxes to the IRS.

Tax Mistakes That Can Hurt

When it is time to report your company’s earnings and expenses to the IRS, it is crucial to make sure you have all financial affairs in order, otherwise you run the risk of landing yourself—and your entire company—in hot water with the IRS. Consider the following examples of small tax errors that can mean big consequences for your business.

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