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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@ayarlaw.com

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

248-262-3400

Venar@ayarlaw.com

THANK YOU!