FILING BACK AND DELINQUENT TAXES: What You Should Know

Nobody wants to run afoul of the Internal Revenue Service, but it can be unnervingly easy to do. Mistakes and oversights can happen. The IRS may be sending you notices or you may just be digging your way out of some past troubles and trying to avoid any future problems.

You might be surprised to learn that filing your tax returns can be the quickest way out of any back tax issues, but you'll have to protect yourself in the process.

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Here are some steps to follow to take control of your back taxes.

GATHER ALL YOUR TAX DOCUMENTS

When was the last year you filed? Do you have a copy of that tax return? Do you still have W-2s and other tax documents for the years you didn't file? You can request copies of your tax documents from the Internal Revenue Service for free if you are missing anything, or contact your employer or the institution that would have sent them to you.

Keep in mind that they may not still have them on file, however, or at least they may not be easily accessible. There might be a fee if you choose this option.

PREPARE THE TAX RETURN OR HIRE A TAX PROFESSIONAL

Be sure to use reliable and easy-to-use software if you're going to prepare your tax returns yourself. Plan on spending about two to three hours on each tax return you need to file. Call Advance Tax Relief (713)300-3965 for assistance.
When filing yourself, make sure you are set for the appropriate tax year.
Regulations vary by tax year and the settings can be critical for compliance as well as your liabilities or refund on the bottom line.

In some cases, you might do better with an experienced tax professional, however, because he can help you with compliance and also help you to deal with the IRS down the road, if necessary. Often, the best way to find a tax pro is to ask your friends. Look for someone with significant experience in preparing back taxes. If you need advice on how to handle incomplete tax documentation or an advocate who will negotiate with the IRS on your behalf, a tax professional is the way to go.

PROTECT YOUR TAX REFUNDS

Believe it or not, many late filers are entitled to tax refunds. There are strict time limits for refunds, audits, and debt collection. In most cases, you have three years from the date your tax return was due before your refund "expires." But if you owe other tax debts, such as because you have a balance due from another year, your refund will typically be applied to that debt.

PAY OFF YOUR TAX DEBTS AND REQUEST TAX FORGIVENESS IF YOU QUALIFY

Create a plan for paying off your tax debts if it turns out that you owe the IRS money. You may also need to plan on how to protect yourself from an IRS investigation, assessment, lien, or possibly a levy, and this is where a tax professional can be helpful.

Your plan of action might be as simple as setting up an installment agreement with the IRS for a monthly payment plan or asking for an offer in compromise. Depending on your circumstances, an installment agreement can give you up to 72 months to pay, but you must owe the IRS $50,000 or less to qualify. Simply file IRS Form 9465, the Installment Agreement Request, with your tax return. You might also be able to establish an installment agreement online (click here to apply). If you owe less than $10,000, your request should most likely be automatically approved.

An offer in compromise is a bit more complex. It involves reaching an agreement with the IRS to pay less than your full balance due. An offer in compromise is typically only used if you are unable to pay through an installment plan. You will usually need the help of a professional for this, and it may be noted on your credit report.

For an offer in compromise, you must establish that you cannot pay your balance through an installment agreement or by any other means. Either way, address the situation as promptly as possible. Ignoring the IRS can get you into big trouble very fast as they can take action to place a lien or levy on your assets which may include bank accounts, your home, or your car.

PLAN AHEAD

Your next plan of action should be to focus on the future. It is a good opportunity to review your overall tax situation and to come up with strategies for reducing your taxes and achieving your financial goals. Again, a tax professional can help.

If you think you might owe the IRS next year as well, consider making estimated tax payments in advance. They are generally required for independent taxpayers not taking withdrawals from a payroll. Making quarterly estimated tax payments can also help you to avoid penalties on your annual tax return.

THE TAX LAWS YOU REALLY NEED TO KNOW

Sometimes the IRS will take an educated guess about what your tax liability might be. The IRS will then send you a notice of proposed assessment, or even file a return on your behalf. You can reduce or eliminate the IRS’s proposed assessments by filing your back tax returns. The IRS can and will impose penalties and interest on tax liabilities that aren't paid in full by the deadline for the tax return. As mentioned, they can also place a lien or levy on your assets.

Your tax information is absolutely and completely confidential. A tax professional is ethically and legally obligated not to share your information with anyone—not even with the IRS—unless he or she has your explicit authorization.

SOME TIPS ON FILING DELINQUENT BACK TAXES

Late tax returns must be filed on paper and mailed to your local IRS Service Center. You can use tax software to prepare your returns, but then you must print them out and mail them in. You cannot file late returns electronically.

Mail your tax returns in separate envelopes and send them by certified mail. This way you'll have proof that the IRS received each individual return. Mailing them in separate envelopes will also help prevent the IRS from making any clerical errors in processing them.

You can also hand-deliver your tax returns to your local IRS office if time is of the essence. Make extra copies of page one of each return and take the copies with you. Ask the IRS representative to stamp the copies as received. These receipts will provide evidence of what you filed, when you filed, and where you filed.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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WHAT IS IRS BACK TAXES AND HOW TO SEEK RELIEF FROM THE IRS?

DEFINITION OF BACK TAXES:

Unpaid back taxes can be a serious issue for many taxpayers who don’t have the means to pay them. The Internal Revenue Service (IRS) has recently turned over the collection of unpaid back taxes to a private collection agency. Taxpayers who lack the means to repay taxes may often negotiate a lesser settlement via an offer in compromise with the IRS either directly or through a tax attorney

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What is Back Taxes? and How to Negotiate Back Taxes With IRS?

The IRS is aware that taxpayers continue to struggle years after the U.S. economy sunk into recession.The slow recovery means that many people still struggle to generate income, but they also owe taxes from past years.The IRS may be more willing than ever to work with delinquent taxpayers, given the widespread financial pain felt by so many. But taxpayers who want extra consideration need to abide by requirements to contact the IRS to let them know what is happening and to file formal paperwork on time

With the way the economy has been over the last half-decade, one of the most common questions I hear is “I owe the IRS years of back taxes, what are my options?” Many taxpayers gravitate towards the Offer in Compromise (OIC) program, possibly falling victim to the late night television commercials that claim “we can get you a settlement for pennies on the dollar.”

No reasonable person would pass up the opportunity to settle their IRS debt for “pennies on the dollar,” but the reality is those types of resolutions are few and far between. While an OIC may work for some, it certainly does not work, or make sense, for all. The good news is the IRS has many other options available to alleviate an individual’s back taxes. If you cannot pay the IRS taxes you owe, the IRS will encourage you to charge the extra amount on your credit card. This may be a bad idea, because the interest on your credit card will probably be a lot higher than the interest and penalties the IRS will charge if you reach an agreement with them.

ALWAYS FILE YOUR TAX RETURNS

If you owe the IRS an amount that you cannot pay in one lump sum with a return, it is important to file the return anyway.

“This will reduce some of the penalties,” he explains. “Occasionally clients tell us that they did not file a return because they were unable to pay the tax due. This usually causes them to pay penalties that are significantly greater than they would have paid had they at least filed the return.”

IRS PROBLEMS GET WORSE WITH TIME

It is always best to deal with these issues up front and in a proactive manner. “The IRS will not immediately pursue you for delinquent tax penalties and interest, “In many cases it will take months before the IRS begins collection efforts.”

At first, collection efforts can seem benign, consisting of only computer generated letters. At some point, however, the IRS will begin very aggressive collection tactics, including wage garnishment in which the IRS contacts your employer advising that you have delinquent tax liabilities and that any wages that would be paid to you should be paid to the IRS.

GO FOR AN INSTALLMENT AGREEMENT

I am always surprised to find out how few taxpayers consider entering into an installment agreement to pay off their IRS back taxes, especially considering it is often the best option for a variety of reasons. The IRS labels a taxpayer in an installment agreement as compliant, which reduces the amount of IRS letters and phone calls in the short-term while showing a taxpayer’s willingness to cooperate in the long-term.

When To Use. The easiest way to answer this question is to list when an installment agreement should not be used, which is when another option is far superior. For example, if a taxpayer has a large balance owed to the IRS and can only afford to make minimal installment payments another resolution option is more desirable because the taxpayer would barely be paying off the principal of their debt. That being said, the fact remains that an installment agreement should always be considered, even if only as an interim solution while considering other methods.

PROS. Will make the IRS content and prevents the IRS from taking further collection action; flexible; almost always available.

CONS. Interest continues to accrue; could take years to pay off tax debt; must remember to make payments or else default (not an issue if utilize the direct debit option).

MAINTAIN YOUR MONTHLY PAYMENTS

Do not fail to make your payments on time to the IRS. If you violate the terms of your payment arrangements, the IRS will attach and seize property that you own, including bank accounts and even the mortgage on your home. However, if you speak with them in the event that you are having problems making your payments, you should be able to work through it.

GET PROFESSIONAL HELP

A professional representative can usually be of significant help in negotiating the most favorable possible compromise or installment agreement. That said, beware the “pennies on the dollar” firms or 1-800 number firms that advertise on late-night television,  “In many instances these firms will simply take a client’s money and perform no or minimal services,” “Many of these firms have been prosecuted in their states of origin for unlawful and deceptive business practices.” If you are interested in obtaining representation, interview two or three potential firms in your city,” . Make sure that IRS tax controversy and IRS collection resolutions are the backbones of their practices. Many attorneys and Certified Public Accountants (CPAs) do tax planning but rarely interface with the IRS. It’s important that your representative has deep experience negotiating with the IRS in back taxes payment cases.

If you haven’t filed your taxes in a few years, you may be wondering what options you have. You may be surprised to learn that filing your tax returns can be the quickest way out of tax trouble. But you need to protect yourself. Call Advance Tax Relief today at 713-300-3965

Above all, the one thing you shouldn’t do is to do nothing.  Taxpayers who don’t take action will find themselves embroiled in the IRS collection process.  Did you know? The IRS can levy your wages and bank accounts, or even place a Federal tax lien on your property! If you’ve received an IRS notice about a levy or lien, it’s still not too late to get tax debt help.

Nobody is saying that the federal government is getting all warm and fuzzy about late tax payments. However, the IRS does offer more programs than ever before for Americans to get back on track with their taxes. The key is to act quickly and find a resolution as soon as possible.

The possibility of losing wages or property is very real. You should take all IRS notices seriously because even if they are the ones who made an error, you are the one who will be paying for it until/unless it’s addressed. You may even want to consider hiring a Certified Public Accountant (CPA) to help you deal with back taxes.  

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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DECEASED FAMILY MEMBERS - Getting Information from the IRS

Some or all of the information you need may be in the decedent’s personal records. If you need to request information from the IRS, all the IRS needs to know that you are authorized to receive it. To establish that you are properly authorized to receive tax information of a decedent or their estate, submit the following with your information request:

1) The decedent’s complete name, address and social security number
2) A copy of the death certificate, and either
3) A copy of Letters Testamentary approved by the court, or
4) IRS Form 56, Notice Concerning Fiduciary Relationship, if there is no court proceeding

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Letters Testamentary is a document issued by the court during probate of a decedent’s estate. In some states, they may be called Letters of Administration or Letters of Representation. The document grants the estate administrator, executor or personal representative of the deceased, authority to manage the affairs of the decedent and their estate. In addition to resolving tax matters, you may need Letters Testamentary to gain control of the decedent’s assets.

Form 56, Notice Concerning Fiduciary Relationship, notifies the IRS of the existence of a fiduciary relationship. A fiduciary (trustee, executor, administrator, receiver or guardian) stands in the position of a taxpayer and acts as the taxpayer. Proper documentation showing authority to act on behalf of the decedent, such as a will, should be attached to the Form 56.

For a copy of the decedent’s tax return(s) use IRS Form 4506, Request for Copy of Tax Return. There is a fee for each return requested. The IRS can also provide a Tax Return Transcript for many returns free of charge. A transcript provides most of the line entries from the original tax return and may provide income information from Forms W2, 1099, or 1098 if requested.

You may request a transcript by mail using IRS Form 4506-T, Request for Transcript of Tax Return, and have it mailed to your address. See Form 4506-T for instructions on where to send your request. The estate administrator must attach the authorization to handle the decedent’s affairs in order to receive this information. If you request a transcript online it will be mailed to the decedent’s address of record (see Change of address below).

You may learn that the decedent owes individual income tax (Form 1040 tax) from IRS correspondence in the decedent’s records or from a Notice of Federal Tax Lien reflected on credit reports or in public records. If the decedent owes individual income taxes, for the year of death or preceding years, you can request payoff information by visiting the nearest Taxpayer Assistance Center, you will need to provide the authorization to represent the decedent to receive information. For options to submit payment, see Make a Payment.

Change of address
As an estate administrator, it may be necessary to change the decedent’s address of record in order for you to receive IRS correspondence regarding the decedent and/or their estate. To change the address of record use IRS Form 8822, Change of Address. Use separate Forms 8822 for the decedent and their estate.

If you are a tax representative or estate administrator filing the change of address for the decedent, attach your power of attorney or other proper authorization. See Form 8822 for instructions on where to file the change of address.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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IRS AUDITS AND POSSIBLE TAX FRAUD: DON’T TRY TO DO IT YOURSELF

Criminal investigation, IRS Appeals, IRS audits

If you are being audited, and have concerns that the IRS may discover that you committed fraud your tax return, don’t go at it alone.  

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The stakes have become high – here are guidelines to help you make a decision on the best way to proceed:

Whatever you do, don’t represent yourself – hire a professional – whether a tax attorney, enrolled agent or C.P.A. – who has experiencing in defending potential IRS tax fraud cases.   A significant benefit to hiring a tax attorney is the attorney-client privilege – your communications with your attorney – telephone calls, emails, meetings – discussing your case, developing the facts, formulating a defense strategy – are confidential and cannot be disclosed to the IRS.

You have the right to have your attorney handle all negotiations with the IRS for you.  All calls, conversations, negotiations, route directly through your attorney, not you.  You take a backseat in the negotiations.  You are no longer dealing directly with the auditor.  All conversations route through your attorney, who relays the information to you, with discussions to formulate responses.  No knee-jerk responses in potential fraud cases.

If you have already met with the auditor, stop, and hire counsel.  It’s not too late.

In potential fraud cases, it is best to distance yourself from the investigation.   The IRS would not mind if you, alone, gave testimony.  That is not recommended.  Going at alone allows you to make misstatements of facts – even if with good intentions – that can be difficult to go back on.  Nerves, anxiety, an over-eagerness to comply with the IRS – not too mention an unfamiliarity with the process – is a dangerous mix.   Adding untruths to a fraud investigation fuels the IRS’s fire.

You have a Fifth Amendment right not to incriminate yourself.  That means you do not have to testify to the IRS, or provide them any firsthand information.  This is a tricky situation – you have the right to remain silent, but if you exercise it, the IRS often becomes more interested, more aggressive – something is clearly being hidden.  Sometimes, it is better to talk – but that is a determination that has to be carefully reviewed, with all the facts considered.

Maybe we should fully disclose and admit to the problem, immediately.  The disclosures are made by your attorney, not you.  Chances are, the IRS is auditing your return because something on the return did not look right to them – remember, your tax return presents a financial portrait to the IRS.  The audit letter you received likely already identified the trouble areas.  The IRS already senses something is wrong – many times, the right amount of straight talk works with an auditor – and is appreciated.   I have found that there is a lot to be said for taking the edge off, coming forward and disclosing the obvious – auditors want to close cases, and often appreciate their work being done for them.  It is often the “a-ha” moment of auditor discovery that can doom a fraud case and turn it into more than negligence.  This strategy is fact specific – but usually will result in a reduction of charges to negligence – no fraud.

If you already made misstatements on your tax return, don’t try to get around it with more creative accounting or explanations during the audit.  Making a mistake on a tax return can be explained away as negligence (which does not equate to fraud) – but lying to an auditor cannot.  Don’t pile it on.

You are not necessarily going to jail.  There are different types of tax fraud – civil vs. criminal.  Civil tax fraud is money only, no jail, no criminal investigation.  The penalty is steep – 75% of the tax owed – but that beats a criminal investigation.

Your case may be simply negligence – where the penalty is 25% of the tax owed.   The IRS has different standards of proof for tax negligence, civil tax fraud, and criminal tax fraud. Negligence is not fraud, and has no criminal repercussions.  Here’s the level of proof for the IRS, from highest to lowest:  (1) Criminal fraud, (2) civil tax fraud, (3) negligence.  You may have done something wrong, but it may not amount to criminal charges – it could be simply negligence, which is money damages only.

IRS criminal indictment statistics are public record – and are instructive to the civil vs. criminal tax fraud concerns.  In fiscal year 2014, for example, the IRS initiated 2,015 criminal investigations, which resulted in 1,663 recommendations for prosecution.  1,590 of those recommendations resulted in prosecution.  The point:  IRS is very selective in how it uses its resources to prosecute tax crimes – 2,015 investigations is serious, but a very small number spread over the population base.  Few are prosecuted – the facts have to dictate the allocation of IRS resources.  Many IRS criminal investigations are specific programs – employment tax fraud, return preparer fraud, money laundering/related criminal activities, and abusive tax schemes.  But those who are prosecuted are usually convicted – IRS wants to win its criminal cases, and make them count.  Criminal tax fraud is extremely serious, but your facts have to be put into perspective with what the IRS is looking for.

And I say this often:  It is important to remember that an IRS audit is the beginning of a process, not an end.  If there is disagreement with the IRS audit results, you have rights to an administrative review of the audit with the IRS Office of Appeals.  If we cannot reach resolution in appeals, there are more rights – to file a petition to U.S. Tax Court, where a judge, independent of the IRS, will review our facts and law, compare to the IRS’s position, and give you an unbiased decision that is binding on the IRS.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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SELF-EMPLOYED? DON’T FORGET ABOUT ESTIMATED TAX DEADLINES

Self-Employed? Don’t Forget About the Estimated Tax Deadline

The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes, which you will file by the April 2020 deadline. Learn more about tax reform here.

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If you’ve taken the plunge into self-employment, congrats on being your own boss! Whether you’re working as a contractor or making money in the fast-growing sharing economy, don’t forget you may need to pay quarterly estimated taxes. The last estimated tax deadline for the tax year 2019 is January 15, 2020.

Are you prepared? If not, don’t worry – we’ve got the info you need to know!

Who is Subject to Estimated Taxes?

In the United States, we have a “pay as you go” tax system. That means the government expects to receive most of your taxes throughout the year. Because of this, employees have a certain amount of taxes automatically withheld from their paychecks.

On the other hand, if you are self-employed as a freelancer, contractor or home-based entrepreneur, you most likely don’t have taxes withheld from your pay throughout the year and are instead subject to quarterly estimated taxes. In general, you are expected to pay estimated taxes if you expect to owe $1,000 or more annually for your taxes.

For the 2019 tax year, quarterly estimated taxes are due by April 18, 2019, June 15, 2019, September 17, 2019, and January 15, 2020.
Remember, you don’t have to make your 2019 4th quarter payment if you choose to file your full 2019 tax return by January 31, 2020, and pay the entire balance due with your return.

However, if you skipped making a quarterly payment or pay late, you may be subject to a penalty. If you earn your self-employment income unevenly during the year, you may be able to use annualized installment method at tax time and avoid a tax penalty for not paying estimated taxes every quarter due to fluctuating income.

When Are Estimated Taxes Due?

The good news is the IRS has a schedule to help you figure out when you need to pay. Here’s the schedule for 2019 taxes:

1st Quarter (January 1 – March 31): April 18, 2019 (This takes into account the one-day extension to file taxes)
2nd Quarter (April 1 – May 31): June 15, 2019
3rd Quarter (June 1- August 31): September 17, 2019
4th Quarter (September 1 – December 31): January 15, 2020

If the 15th falls on a weekend or a holiday, then the due date is the next weekday. Don’t forget that the final fourth quarter payment for your 2019 taxes is January 15, 2020.

How Can I Figure Out My Estimated Taxes?

You can use QuickBooks Self-Employed to track your income, expenses, mileage, and figure out your estimated taxes year round. The program does the math for you and helps you figure out your estimated taxes so you can easily make the estimated tax deadline.

At the end of the year, we use the information to prepare your taxes.

This will help us reflect the new Tax Reform Law passed at the end of last year so estimates will take into account the new 20% qualified business income deduction provision in the new law.

How Can I Pay Estimated Tax Payments?

Now that you know what you owe, it’s time to get your payment in. Fortunately, you have a few options:

QuickBooks Self-Employed allows you to electronically file your quarterly estimated tax payments to the IRS. E-filing is fast and results in fewer errors because you won’t have to re-enter information into your checkbook or the IRS computer system.

You can pay your taxes using the Electronic Federal Tax Payment System (EFTPS), to pay your estimated taxes. Besides making instant payments, it’s also free.

You can mail in your payment. The IRS has specific mailing addresses based on the state where you live. Please be aware that your payments should be postmarked by the due date to avoid penalties.

Tips on Making Your Quarterly Tax Payments Easier

Forget filling out handwritten forms: When you use QuickBooks Self-Employed for your business, the program will figure out your estimated taxes for you.

Keep a record of all your estimated tax payments: You will need to enter estimated taxes you paid when you file your taxes.

If you have questions as you are filing your taxes, feel free to contact Advance Tax Relief by calling (713)300-3965

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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WHAT THE DIFFERENCE BETWEEN AN IRS TAX LIEN AND A TAX LEVY?

WHAT THE DIFFERENCE BETWEEN AN IRS TAX LIEN AND A TAX LEVY?

IRS levies and property seizures, IRS Seizures, Tax liens

The IRS has two ways to collect back taxes:  a Federal tax lien and tax levy. A tax lien is different from an IRS levy – the lien does not result in the IRS taking your property from you.  That is done by levy.

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You have rights to defend the filing of a lien, and prevent the issuance of a levy.  To be able to assert your rights and protect your property, it is important to understand and recognize the tools the IRS uses.

Here is what you need to know about the IRS tax lien and IRS tax levy:

IRS TAX LIEN

An IRS tax lien protects and secures the IRS’s rights to your property.  The lien attaches to property you own when it is filed, and property you purchase later.  A Federal tax lien most commonly impacts real estate.

If you own a house, and the IRS files a tax lien against you, the lien would give the IRS an interest your home similar to that of your mortgage company.

Example:  Your house is worth $120,000, and you have a mortgage of $95,000 on it.   There is $25,000 of equity in your house. Before the IRS filed its tax lien, that equity would be yours.  Now that the lien has been filed, the equity belongs to the IRS. If you want to sell your house, the IRS gets your equity at closing, not you.

The IRS usually files its Federal tax lien with county recorder or clerk of courts in the county where you reside the property is located.   For the tax lien to affect real estate, it must be filed in the county where the property is located. It would then encumber all of your real estate in that county.  A federal tax lien does not name the property it attaches to – it automatically encumbers all your real estate in the county it is filed and all of your other personal property.

If the IRS files a lien against you, you have a 30 day window to file an administrative appeal to request reconsideration of the filing.  This is called a collection due process appeal.

The lien expires when the IRS statute of limitations on collection expires – in most cases, 10 years.

IRS TAX LEVY

The purpose of an IRS levy is to take your property.  An IRS levy is the same as a seizure, or garnishment. The IRS can levy on your wages, bank accounts, subcontractor pay, accounts receivable, even retirement accounts.  The IRS can seize your house, car or your business equipment (although those are rare). For most people, it is the levy, not the lien, that hurts.

There are only a few things the IRS cannot levy  – these “exemptions” are listed in Internal Revenue Code 6334.   The exemptions you can claim include the right to keep unemployment benefits, workers compensation, most household goods and some tools of your trade from the IRS.

Before the IRS can levy on your property, they must first send you a Final Notice of Intent to Levy.  This is your notice of that the IRS intends to start enforcement against you. After you receive the Final Notice of Intent to Levy, you have 30 days to file an appeal of the proposed IRS collection action. If you file the appeal, the IRS is prevented from taking action until your hearing is completed.  The purpose of the hearing is to reach a resolution to levy action before it occurs – offer in compromise, installment agreement, uncollectible, for example.

The IRS does not need to file a Federal tax lien as a prerequisite to levying your wages, bank accounts, etc. – just the Final Notice of Intent to Levy.

In the rare cases of seizure of a house, the IRS must get court approval first.  To do this, the Department of Justice will usually file a lawsuit against you in Federal District Court seeking approval to foreclose and take your house.  Again, this is not a preference of the government.

The Federal tax lien and tax levy gives the IRS different rights against you – the lien as to security in your property, the levy to take it.  Together or apart, the lien and levy are powerful tools for the IRS.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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#OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

HOW DOES THE IRS FIND MY WAGES AND BANK ACCOUNTS TO GARNISH AND LEVY?

Automated Collection Service, IRS Financial Statements, IRS levies and property seizures, Revenue Officers

Is the IRS getting ready to levy your bank accounts and wages?

If they are, how do they know where you bank and work?

In most cases, your bank or employer tells them.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965

Sometimes, the information the IRS has to levy was supplied by you.

If you have a bank account that pays you interest, that interest is reported to the IRS on Form 1099 INT, along with the name of your bank.  Your bank isn’t reporting the information to the IRS because they want to, they are doing it because they have to. 

Tax laws require banks to tell the IRS the amount of money that they pay you.  The reason is to permit the IRS to make sure that you are reporting all of your income on your tax return.  But that information is also used by IRS collections to identify where you bank to levy your accounts.

The same is true of where you work.  If you are self-employed and work as an independent contractor, tax laws often require your customers to report the amount that they pay you to the IRS on Form 1099-MISC.  Again, the IRS uses this information as a match against your tax return to ensure that all of your income is on it. 

But the IRS database that contains the name and address of customers who paid you is also available to an IRS Revenue Officer or IRS Automated Collection Service employee to use to levy your pay.

An IRS levy on subcontractor pay is only valid on what you are owed at the time; they are not ongoing and continuous on future pay.

However, if you are employed and are paid wages, an IRS levy is continuous on every paycheck until the levy is released.  And your employment is reported to the IRS on Form W-2, and is made available to IRS collection personnel.

It is possible that you may have previously paid the IRS with a check, either as part of a prior installment agreement, or to pay the tax due on your tax return when you filed it.  Presume when you pay the IRS, they retain the banking information you provide them with your payment, and can use that to levy you.

Bear in mind the information that the IRS has about your bank accounts and wages is not absolutely, 100% current.  The IRS has the information from your prior years’ income and tax returns.  If they IRS wants to levy you in 2014, for example, they will be relying on information in their database that was reported to them on your 2013 taxes.  If you are no longer banking or employed at the same place you were previously, an IRS levy could go to an empty source.


Alternatively, you may have told the IRS where you bank or work.  If you call the IRS at their Automated Collection Service to discuss your tax debt, one of the first questions they will ask you is where you bank and work.  The purpose is to update their database and to ensure accurate forms of enforcement, if necessary.

The voluntary disclosure of where you bank and work is not necessarily a bad thing – many IRS collection cases require the full disclosure of your accounts and income for resolution.  Full cooperation is often necessary to get the bear off your back.  But if you disclose this to the IRS, and they did not previously have it, and you can’t come to an agreement, you have just given them ammunition to levy you.

Clients have reported to me that they have seen IRS inquiries appear on their credit report, and Internal Revenue Manual 5.19.4.3.5 permits the IRS to pull credit reports to secure levy sources.

It is possible that the IRS may not know where you bank or work, and can’t find it on their own.  You may not have a bank account, or maybe have one but it is not interest bearing. Maybe your customers do not report your income to the IRS.  Or the information the IRS has on your employment is no longer current.

Knowing who you are dealing with at the IRS also factors into an understanding of what the IRS can do with the information they have, and how they can acquire more information about you.  The IRS has two primary sources of collection enforcement:  Automated Collection Service, and local field collection personnel, known as Revenue Officers.

When you owe the IRS money, it is important to have an understanding of what the IRS already knows about you, and to understand the benefits and risks of telling them more. Benefits include an offer in compromise settlement, a payment plan, or even uncollectible status, where the IRS agrees that you cannot afford to make any payments and they do not levy to avoid creating a financial hardship.  Either way, it is good to know going in whether the degree of risk you face from what the IRS already knows.


GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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#OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

HOW CAN I TELL IF MY BUSINESS IN TAX TROUBLE?

Employment taxes, IRS Collection Problems, Trust fund recovery penalty, Unfiled returns

Entrepreneurs justifiably take great pride in their business.  But this pride often gets in the way of a clear understanding of the risk of continuing to operate into a storm of IRS trouble.  The IRS comes down hardest on businesses with tax troubles, and owners and management are usually implicated as well.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

Here are a few warning signs of tax troubles:

USING EMPLOYEE TAX WITHHOLDING MONEY TO PAY OTHER CREDITORS

Falling behind on employment taxes is a vicious circle, with interest and penalties causing the liability to increase substantially to the point of making a planned repayment difficult.  Additionally, ownership and management can be held personally responsible for the unpaid taxes (this is called a trust fund recovery penalty). If the business can’t repay the taxes, the IRS will seek to collect from the personal assets of the individuals.

FAILING TO MAKE QUARTERLY ESTIMATED TAX PAYMENTS

Many business owners, especially those that are self-employed, are responsible to account for their own income tax payments.  Employees have a withholding mechanism; owners often do not. The cash crunch from the business impacts the ability to pay personal living expenses, resulting in income taxes being left out of the household budget. Groceries and mortgages need to be paid, but the IRS is delayed.  The IRS is as important as the mortgage; after all, what good is it to pay your mortgage while giving the IRS a claim on your house?

DELAYING THE FILING OF TAX RETURNS

If you can’t pay, not filing is not the answer.  The money is still due, and filing late only adds penalties to the amount owed.  It also puts off addressing the problem, compounding the issue. And the IRS tracks unfiled returns, especially in employment tax cases.  Not filing is a great way to get the attention of the IRS and have them assign a local Revenue Officer to investigate.

PUTTING YOUR RETIREMENT MONEY INTO YOUR BUSINESS, AND NOT USING IT TO FOR PERSONAL EXPENSES

The hope is that tomorrow will be better.  And it might be. But the creditors that are being paid with the retirement money (suppliers, etc.) have no claim to it – in most situations, retirement money is an asset that no creditor can reach.  Except the IRS.

HIGH CREDIT CARD DEBTS.

Before the retirement money goes into the mix, credit cards are often maxed out.  Stop at this point; the situation is already unmanageable. Do not dip into the retirement money.  And do not pay the credit cards before paying the IRS. The credit cards are at the bottom of the barrel – they can be eliminated in bankruptcy, and many times they will end up writing off the account.  Not paying credit cards is uncomfortable, but not as uncomfortable as the IRS can make things.

These are tough situations.  A failing business brings the stress of obligations to employees and personal family members.  But the longer it goes unchecked, the deeper it gets.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#TaxDebtProblems #FilingBackTaxes #TaxReliefPrograms #IRSDebtForgivenes #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes

#OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES