DO YOU NEED TO FILE FORM 1040 TAX RETURNS?

Shortly after the New Year rolls around, taxpayers experience the dread of tax season. April may seem far away, but the tax return deadline comes in the blink of an eye for the majority of us who wait to gather and submit our critical documents to the IRS. Whether it’s due to procrastination or downright avoidance, every year hundreds unfiled tax returns go neglected—but not without notice. 

If you have unfiled taxes, whatever the case may be, the IRS knows and will sooner or later come after you to collect what they’re owed (if they haven’t already). This post answers some insightful questions for those who are considering not filing a return this year, who failed to file tax returns in the past, or who are in desperate need of unfiled tax return help. Let’s take a look at the consequences and see what you could potentially stand to lose.

Is Not Filing a Tax Return Illegal?

Yes, if you’re required to submit an income return to the IRS and fail to file, your unfiled taxes are considered a crime in the eyes of the law ever since the tax bill was passed within the 1913 Sixteenth Amendment. It states that “Congress shall have the power to lay and collect taxes on incomes, from whatever source derived…” and both federal and state agencies enforce “tax code” compliance. Not everyone is subject to the same requirement, however, as your tax obligation is based on:

Your filing status

Your gross income

Your age

Generally speaking though, most adults with earned income are subject to tax codes, and by failing to file your tax return you subject yourself to a host of consequences.

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PENALTIES FOR NOT FILING A TAX RETURN

The first of your concerns is an IRS failure to file penalty: as of 2017, this fine is normally assessed at 5% of the amount due on your unpaid taxes for each month or portion of a month your taxes remain unfilled.

UNFILED TAX RETURNS 

If you have an unfiled tax return and owe the IRS money, you’ll also face the failure to pay penalty: generally 0.5% per month of unpaid taxes, with a minimum fine of $135. 

As the interest and fees continue to pile up on your unfiled taxes from prior years, you’ll soon find yourself with a mounting tax debt and in need of unfiled taxes to help settle your outstanding obligation.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

 

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Can I Face Criminal Charges for Unfiled Taxes?

In some cases, yes. The IRS is unlikely to prosecute a taxpayer who filed late, can’t afford to pay their tax bill, or accidentally reported misinformation. However, if you don’t file your taxes despite knowing an obligation to do so, you could be guilty of tax evasion—a criminal offense punishable by law. The punishment will vary depending on the severity of your crime, but in almost all cases someone charged with tax evasion will require a tax advocate or tax attorney to represent them before a court.

What if the IRS Owes Me Money?

If you’re owed a return due to eligible tax credits or from withholding extra allowances on your Form W-2, an unfiled tax return could cause you to lose out on any money heading your way. If you leave your taxes unfiled, the IRS will likely just keep your scheduled return—which benefits them but works against your favor, especially if you were expecting to see a large return. As of 2017, the IRS states that you have up to three years to request a former return, so be sure to settle your unfiled tax returns as soon as possible.

I Have Unfiled Tax Returns But Haven’t Heard from the IRS — Am I Okay?

No, just because the IRS has not contacted you regarding your unfiled taxes does not mean you’re not on their radar. April is the busy tax season, but IRS officers have all year long to review unfiled tax returns. Just because they’re prioritizing the big fish doesn’t mean they won’t also go after the small guys, too. You might not have filed an income tax return for years, only to one day suddenly receive a notice stating your shockingly high tax debt and finding yourself in desperate need of unfiled tax return help. This is because the IRS technically has an unrestricted amount of time to investigate your account for as long as you fail to file. The good news is that once you do correct your outstanding taxes, you start the clock on the unfiled tax return statute of limitations.

The IRS statute of limitations states that generally speaking, the government has up to ten years to collect on a debt for your unfiled tax return. If you’ve been sitting on back taxes for years, the time frame constraining the IRS has not yet started, giving them an endless amount of time to sit on your case. File your taxes immediately to start the window of unfiled tax return statute of limitations and narrow the timeframe the government has to collect on you.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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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WHY YOU OWE MORE TAXES THIS YEAR THAN YOU DID LAST YEAR

Beyond allowances, there are a variety of things that may cause the amount of taxes you owe to shift from year to year. Those may include things such as: 

Changes in marital status: As your marital status changes, your filing status may change as well. For instance, if you went through a divorce over the past year and are now filing alone, you may be pushed into a different tax bracket that could increase the amount of taxes that you owe. If you haven’t updated the allowances in your W-4 to reflect these changes, you may be underpaying taxes throughout the year. 

A new job: Did you or your spouse take on a new job this year? For a new W-2 job, you may have completed your W-4 differently, which could lead to underpayment of estimated tax liability. If you took on a freelance or contract position and didn’t pay your own estimated quarterly tax, you’ll likely owe a significant amount of taxes at the end of the year. Next year, be sure to pay your estimated taxes each quarter to reduce the damage at the end of the year. 

A change in dependents: If you previously claimed the child tax credit and your child has aged out of eligibility, you can no longer claim it on this year’s tax return. Similarly, if a dependent has moved out of your care, you’ll no longer be able to take a deduction or credit for them. 

Let’s face it: taxes are confusing, and the way you fill out a form could totally alter your financial situation over the course of a year. If you’re interested in exploring the various ways that you can save money on your taxes, or have questions about the amount you owe, consider exploring tax preparation services from Advance Tax Relief. Our experts can consult on your taxes and help prepare you for the upcoming tax year, so that you’re walking away with the most in your pocket. Contact us today.

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

CAN THE IRS USE COLLECTION AGENCIES TO COME AFTER YOU FOR BACK TAXES?

2015’s passing of the FAST Act reauthorized the IRS to use third-party debt collectors. However, this reintroduction comes after several previous stints of the IRS enlisting the help of private collectors. 

In both 1996-1997 and 2006-2009, the U.S. Internal Revenue Service called on private debt collectors to help track down taxpayers with unresolved federal debts. However, each of these attempts to outsource collections functions resulted in failure, yielding fewer collections than initially projected, wasting money, and contributing to large-scale inequities in the U.S. tax collection system.

Congress passed Fixing America’s Surface Transportation Act (FAST Act) in December of 2015. Though the bill was technically a highway bill, the FAST Act included a debt-collection section that essentially granted the IRS the ability to once again use private debt collectors for recouping outstanding tax debts from citizens. Since the passing of the FAST Act, the IRS has since hired a total of four private debt collection agencies: ConServe, Performant Recovery, CBE Group, and Pioneer.

 

Thus far, reports have shown that in 2019 alone, the IRS was able to collect nearly $213 million in debt through the use of their contracted collection agencies. This marked the largest amount of money recovered since the program’s 2015 inception.

Which Private Collection Agencies Are Contracted by the IRS?

As of 2020, the IRS currently contracts the four following private collection agencies:

1. CBE

P.O. Box 2217

Waterloo, IA 50704

800-910-5837

2. ConServe

P.O. Box 307

Fairport, NY 14450

844-853-4875

 

3. Performant

P.O. Box 9045

Pleasanton, CA 94566

844-807-9367

4. Pioneer

PO Box 500

Horseheads, NY 14845

800-448-3531

What Types of Tax Debts do IRS Private Collectors Handle?

As mentioned before, IRS-contracted private debt collectors are only allowed to collect on certain types of federal tax debts. According to IRS Commissioner John Koskinen, “you won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times.”

There are a number of ineligible back taxes that IRS-contracted collectors are not authorized to requisition, including:

Accounts with an Offer in Compromise agreement

Accounts with an IRS installment agreement

Innocent Spouse cases

Victims of tax-related identity theft

Accounts for minors

Accounts for the deceased

Taxpayers in designated combat zones

Taxpayers in federally-declared disaster areas who have requested relief

 

If you fail to pay your taxes, the IRS can even lay claim to your personal assets to satisfy your repayments with a tax lien. In this case, you can file IRS Form 12153 to appeal the decision.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company that 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 as one of the best tax relief companies nationwide.

 

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CAN THE IRS HOLD ME LIABLE FOR MY SPOUSE'S TAX DEBT PROBLEMS?

Can the IRS come after you for your spouse’s taxes? In some cases, yes. The reason the IRS will track you down if your wife or husband owes taxes depends on a few factors, such as when you filed and your filing status. Whether your partner claimed false deductions or simply failed to pay the IRS money they owe, you may be held responsible for your husband or wife’s wrongdoings. We’ll go over scenarios where you may find yourself in troubled waters if your spouse has tax debt below.

Filing Status and Liability

Your filing status is one of the key determinants of whether you can be held responsible for your spouse’s taxes. Married couples have two options when it comes to filing taxes: filing jointly and filing separately. These options are available whether you’re filing when married to a foreigner or a legal resident. Let’s take a look at each filing status and your potential liability.

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Married Filing Jointly

Your tax filing status matters because it determines how much of your income is taxable. Joint filing is a common choice for couples because it comes with a variety of tax breaks, such as:

Earned Income Tax Credit

Child and Dependent Care Tax Credit

Lifetime Learning Education Tax Credit

American Opportunity Education Tax Credit

Traditional IRA deductions

Student loan interest deductions

There are many beneficial perks to filing jointly with your spouse, such as claiming tax allowances and qualifying for credits and deductions. One downside, however, is if your spouse owes money to the IRS.

When you file jointly with your partner, you assume “joint and several liability,” which means both of your tax obligations become one and the same. This makes you both legally responsible for each other’s tax debt.

If you’re lying awake at night wondering, “can the IRS come after me for my spouse’s taxes?” the answer is yes. This is true even if you didn’t do anything wrong. In this case, the IRS will use your refund to offset your spouse’s debt. If you don’t want your tax refund going toward your partner’s back taxes, there are ways to dispute liability, such as applying for Innocent Spouse Relief or Injured Spouse Relief, which we’ll dive into later.

Married Filing Separately

Married filing separately is another option couples have when it comes to filing taxes. From the latest IRS data published, of the 153 million tax returns filed in 2017, only 3.2 million were married filing separately. Why would a couple decide to file separately? One of the main reasons is because couples may not want to be liable for their partner’s tax bill. Married filing separately is a way to remain financially protected if your spouse is filing late taxes, has a large tax bill, or has any other penalties.

So, is your spouse liable for your tax debt if you file separately? No. When you file separately, you assume individual liability, which means your spouse won’t be tied to your tax debt.

Does it Matter When My Spouse’s Tax Debt Incurred?

If your wife or husband owes the IRS money, it’s important to remember that timing matters. The status of your marriage can determine your liability.

Before Marriage

The IRS cannot come after you for your spouse’s taxes if they incurred their debt before you said, “I do.” Any tax debt your partner accumulated before marriage is their own responsibility, which means your tax refund is protected. However, sometimes the IRS may intercept your refund and put it toward your spouse’s back taxes. If this is the case, you might qualify for Injured Spouse status and get your refund back.

During Marriage

You might be liable for any tax debt that was incurred during marriage in a year you filed jointly. As stated, when you file jointly, you assume joint and several liability. The only way to protect your refund and avoid paying off your spouse’s tax debt is by filing separately, or but applying for Innocent Spouse status.

After Marriage

In some instances, you may be liable for tax debt incurred after marriage if you still filed jointly. This only occurs when you and your spouse are separated and heading for divorce, but are still legally married by law and filed jointly. In a situation like this, you can qualify for Separation of Liability Relief if you are legally separated or not living with your current or former spouse.

Can the IRS Seize My House or Assets?

If the constant thought, “if my husband owes taxes, do they come after me?” is running through your mind, it’s important to know the power the IRS has over your house and assets. Unfortunately, yes, the IRS can seize your house or assets, even if your spouse is the one who owes money to the IRS. This only happens if the debt was incurred during a year where you filed jointly on your tax return.

Whether you’re the one who incurred the tax debt or your partner, the IRS can seize tax refunds, garnish wages, and even seize your house or assets, depending on how much debt is owed. However, the IRS rarely seizes physical property such as your home, car, and other assets. Instead, they’re more likely to issue a tax lien or levy. This is where the IRS will garnish your wages or use money in your bank account to pay for your or your and your spouse’s tax debt.

Can My Spouse’s Tax Debt Affect My Tax Refund?

Yes, your spouse’s tax debt can affect your tax refund. If your spouse owes money to the IRS and you file jointly, you both become responsible for each other’s taxes, penalties, debt, and levies. This means your tax refund can be put toward your spouse’s back taxes, even if you weren’t responsible for the debt that was incurred.

Can I Dispute Liability of My Spouse’s Back Taxes?

Now that you know situations where you may be responsible for your spouse’s back taxes, it’s time to explore ways you can dispute liability to keep your tax refund and finances protected. The IRS offers two options to provide relief to spouses who were taxed on their spouse’s behalf: Innocent Spouse Relief and Injured Spouse Relief.

Innocent Spouse Relief

Innocent Spouse Relief can be offered if a spouse failed to report income, claimed improper credits or deductions, or falsely reported income. An innocent spouse is married to someone who deliberately lied to the federal government by misreporting or hiding income, or claiming too many deductions or credits to lower their tax bill. To qualify for innocent spouse relief, the IRS lists the following conditions:

You filed a joint return that has an understatement of tax that’s solely attributable to your spouse’s erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they’re incorrectly reported on the joint return

You establish that at the time you signed the joint return you didn’t know, and had no reason to know, that there was an understatement of tax, and

Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.

If you meet the following conditions, you can request a separate tax liability by filing Form 8857, which can provide relief from tax liability, penalties, and interest if you believe your spouse should be held completely responsible for their tax debt.

Injured Spouse Relief

Injured Spouse Relief, on the other hand, is for someone whose share of the refund on their joint tax return was used to offset any pre-existing debt incurred by their spouse. Back taxes can take a variety of forms, such as federal debt, state income tax debt, child or spousal support payments, defaulted student loans, or state unemployment compensation debt. The IRS or Department of Treasury will send you a Notice of Offset if they used part or all of your refund to pay for a past-due debt.

If you’re an injured spouse, you can receive your share of your refund by filing Form 8379 and write “Injured Spouse” on the top left corner of Form 1040.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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 TO DO IF YOUR SPOUSE OWES BACK TAXES

Can the IRS come after you if your spouse owes taxes? Yes, but only if you filed a married filing jointly tax return. The status of your marriage also dictates whether you’re liable for your partner’s back taxes. For example, if your husband owes the IRS money but incurred that debt before you became legally married, you’re not liable for their taxes.

 

If your spouse deliberately lied on your joint tax return, you can find relief through Innocent Spouse Relief and Injured Spouse Relief. You can also file a married filing separately tax return if you and your spouse want to remain liable for your own taxes. To keep your refund and finances protected, maintain open lines of communication with your spouse and make sure you’re open about finances. Taxes aren’t always a romantic topic of conversation, but it’s a part of being married.

 

At Advance Tax Relief LLC, we provide tax resolution services if you find yourself in a situation where you or your spouse owes money to the IRS. Our team of dedicated professionals are ready to represent you and help clear your tax debt.

NEED HELP WITH IRS BACK TAXES, FORM 941’S BACK TAX ISSUES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

 

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www.advancetaxrelief.com

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MISTAKES ON YOUR TAX RETURN THAT CAN GET YOU AUDITED BY THE IRS

It’s important to know the top reporting mistakes taxpayers make to prevent raising an IRS red flag. Take a look:

Failing to report all of your income: It’s easy to remember to report income made from your place of employment, but it’s important to remember other sources of taxable income, such as unemployment benefits, gambling winnings, investment accounts, and canceled debt.

Claiming the wrong or too many deductions: There are dozens of deductions taxpayers can take advantage of to reduce their tax liability. However, claiming deductions that you’re not eligible for, or too many, can result in an IRS audit, penalties, fees, and even jail time if it was intentional or fraudulent.

Not filing on time or failing to file: Not filing on time or failing to file altogether can result in a failure to file fee. If you’re running out of time, you can always file for an extension. However, it’s important to remember that even though you applied for an extension to file, you still need to pay your taxes by the tax deadline, which is usually April 15.

Math errors: There is a lot of math involved when it comes to filling out your individual tax return. This can make it easy to make a careless mistake, which can result in the IRS reviewing your tax return. Make sure you double-check each number to ensure it’s correct.

Incorrect or missing information: As you fill out your federal tax return, make sure you fill in every single box, or else the IRS won’t be able to process your return. Additionally, make sure all of your information is correct. This means writing legibly, not rounding numbers, and keying in the correct information from your 1099 and W2 forms.

NEED HELP WITH OFFER IN COMPROMISE, TAX SETTLEMENTS, TAX PREPARATION, AUDIT REPRESENTATION OR STOP WAGE GARNISHMENTS?

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CAN I BE DENIED A US PASSPORT IF I OWE THE IRS?

Yes, you can be denied a passport if you owe back taxes. Not only can you be denied when applying for a new passport, but your renewal may also be turned down.

However, there is some leeway in how these actions are deployed. Instead of an automatic denial, your application will be held for 90 days. This gives you time to determine whether the certification as seriously delinquent is incorrect or to make payment arrangements with the IRS.

Can the IRS Put a Hold on Your Passport?

Yes, your current passport can be revoked or put on hold. The hold will be released when you make arrangements for repayment with the IRS, whether that be paying in full or setting up a payment plan.

NEED HELP WITH IRS BACK TAXES, FORM 941’S BACK TAX ISSUES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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What Disqualifies You from Getting a Passport?

Can owing back taxes prevent you from getting a passport? Yes. But there are also many other factors that may be standing between you and your travel plans. In addition to being denied a passport if you owe taxes, you may also be disqualified if:

There is an outstanding state or federal warrant for your arrest

One of the conditions of your parole or probation is that you remain in the U.S.

You owe more than $2,500 in past-due child support (Unless you have an arrangement with your state agency)

You have a warrant for a felony in a foreign country

You have unpaid federal loans

You are currently incarcerated

Now that you have a better perspective of all the factors that could be considered in denying or revoking your passport, let’s get back to the main question at hand, “If you owe back taxes, can you get a passport?”. For many, the answer is yes.

How Is Seriously Delinquent Tax Debt Determined?

Only certain tax debt is considered to be in “seriously delinquent” status. If your back taxes are considered seriously delinquent, you will receive a CP508C Notice from the IRS.

However, there are a variety of exceptions that are made when it comes to which back taxes are used to calculate your delinquency status. If your all or part of your tax debt falls within one of the following categories, it may be excluded from what is considered seriously delinquent:

Debt is part of an approved installment agreement and is being paid on time.

Debt that is part of an IRS-approved Offer in Compromise and is being paid on time.

Debt that is currently under suspended collection on the ground of innocent spouse relief.

Debt that is part of a collection due process hearing that has been requested as part of innocent spouse relief.

Generally speaking, you should be aware of your back taxes falling into one of these categories because it would take action on your part to enter into these agreements or initiate proceedings.

However, if you have questions as to whether your debt could be considered seriously delinquent, our tax experts can evaluate the state of your debt and provide back taxes help.

Renewing a Passport If You Owe Back Taxes

There are several important steps to take if you are trying to renew your passport but owe back taxes:

Ensure that you are not seriously delinquent (otherwise, your application for renewal will be denied or put on hold).

If you are seriously delinquent, you need to contact a tax professional and begin the process of negotiating tax resolution with the IRS.

Submit the required information and documents for passport renewal (Form DS-82, current passport, photo, etc.)

Mail in your renewal application.

If your passport renewal is denied because you are considered seriously delinquent, you will need to begin repaying your tax debt to the IRS before you can move forward.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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 as one of the best tax relief companies nationwide.

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HOW LONG DOES AN IRS BACK TAX FEDERAL LIEN LAST ON YOUR PROPERTY?

Federal Tax Liens

Federal tax liens are administered by the IRS. IRS tax liens self-release after their statute of limitations expires; this happens automatically after ten years. This provision is contained directly in the language of the lien:

“For each assessment listed below, unless the lien is refiled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release as defined in IRC 6325(a).”

So, all you have to do is wait ten years for the federal tax lien statute of limitations to expire and you’re in the clear, right? Well, not exactly; there’s a reason so few taxpayers opt to wait out the statute of limitations.

If you purchase any property or earn any money through income during that 10-year period, the IRS can — and will — seize it to pay off the outstanding tax debt. An active tax lien can destroy your credit, making it an immense challenge to get a mortgage or any other type of loan.

NEED HELP WITH IRS BACK TAXES, FORM 941’S BACK TAX ISSUES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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www.advancetaxrelief.com

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State Tax Lien

As the name suggests, state tax liens are assessed at the state level. Each state has its own rules and procedures regarding lien removal. Many states will offer fewer resolutions than the IRS. In order to know exactly what options you have when placed under a state tax lien, it is highly recommended that you consult with a tax professional.

How to Remove a Tax Lien

File an Appeal

When it comes to the collections process, the law gives taxpayers many rights and protections. One such protection is the entitlement to notices from the IRS and the right to sufficient time to resolve tax problems. Another such right taxpayers have is the right to appeal collection actions by the IRS.

When you first receive a notice of a lien from the IRS, start by giving them a call. While this won’t always be a success, it has the potential to end your headache quickly and easily — if it is successful.

If your initial phone call with the IRS is not successful, you can request an official appeal by filing Form 9423.

The appeals process doesn’t always work, but it is always worth a shot. And if you have a compelling case — and if removing the lien can demonstrably improve the IRS’ chances of receiving the outstanding amount — then appealing the lien may be the quickest and easiest way to get it removed.

Pay Your Back Taxes

If your initial appeals fail, the best way to remove a lien is to pay your back taxes as soon as possible; the longer you owe unpaid taxes, the bigger your tax headache can get.

The first and most straightforward way to pay you back taxes is to pay in full. If paying in full is within the realm of financial possibility, it is strongly recommended as it accrues neither interest nor penalties.

If you can’t afford to pay in full, you may qualify for a payment plan with the Internal Revenue Service. Simply put, a payment plan is an agreement with the IRS to pay the taxes you owe within an extended but defined timeframe. There are two kinds of payment plans: short-term and long-term.

A short-term payment plan, or Full Payment Agreement, is a 120-day extension to pay in full. There are no additional fees for a full payment Agreement, but interest and applicable penalties still accrue until your liability is paid. However, if you are experiencing financial hardship, full payment agreements can still put a strain on your bank account — and your peace of mind.

If a Full Payment Agreement is not financially attainable, you may be eligible for a Long-Term Payment Plan, which entails an Installment Agreement. An Installment Agreement allows you to pay your taxes over an extended period of time while avoiding collection actions from the IRS such as liens, garnishments, and levies.

When utilizing an Installment Agreement to pay your taxes, you will still owe interest and late penalties. However, Installation Agreements allow you to break up the amount you owe into much more affordable chunks.

Additionally, there are a few options for reducing the impact of a lien that the IRS will agree to if it is in the best interest of both the government and the taxpayer:

Discharge of property

A Discharge of Property removes the lien from specific property, such as a home. This allows the taxpayer to, for example, refinance their mortgage to help pay back their tax debt.

Subordination

While Subordination does not remove the lien, it allows other creditors to move ahead of the IRS. This allows the taxpayer to have an easier time getting a loan or mortgage.

Withdrawal

A withdrawal removes the public Notice of Federal Tax Lien and assures that the IRS is not competing with other creditors for your property. However, you are still liable for the amount due.

As part of the IRS’ revamped Fresh Start initiative, are two options that withdraw your Notice of Federal Tax Lien after the lien’s release. In order to be eligible:

Your tax liability has been satisfied and your lien has been released; and also:

You are in compliance for the past three years in filing for all individual returns, business returns, and information returns

You are current on your estimated tax payments and federal tax deposits, as applicable

The other option may allow withdrawal of your Notice of Federal Tax Lien if you have entered in or converted your regular installment agreement to a Direct Debit installment agreement. In order to be eligible:

You are a qualifying taxpayer (individuals, businesses with income tax liability only, and out-of-business entity with any type of tax debt)

You owe $25,000 or less (If you owe more than $25,000, you may pay down the balance to $25,000 prior to requesting withdrawal of the Notice of Federal Tax Lien)

Your Direct Debit Installment Agreement must fully pay the amount you owe within 60 months or before the Collection Statute expires — whichever comes first

You are in full compliance with other filing and payment requirements

You have made three consecutive direct debit payments

You have not defaulted on your current — or any previous — Direct Debit Installment agreement.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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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