KNOW THIS POLICY BEFORE FILING YOUR BACK TAX RETURNS WITH THE IRS

Filing non-compliant taxpayers and their tax professionals commonly ask this question when filing back returns: how far back do I need to file?

If you are a taxpayer who is required to file a tax return but has not filed in a long time, you may want to stop and consider IRS Policy Statement 5-133.  IRS Policy Statements contain IRS internal standard operating procedures on how the IRS will work to administer the nation’s tax laws.

It is the taxpayer’s legal obligation to file an accurate tax return if they are required to do so.  Failing to file or filing an inaccurate return carries stiff penalties.  If it is intentional, the IRS can also pursue criminal penalties.  But when it comes to filing back returns, PS 5-133 may offer some relief to taxpayers.

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If a taxpayer has not filed in many years, PS 5-133 may dictate that the taxpayer needs only to file the previous six years to be in IRS compliance.   Taxpayers who try to go back to earlier years may want to check with the IRS first before filing.  The IRS may not want the earlier returns to consider you in compliance.  How do you know?  You ask the IRS.

There is one word of warning here:   PS 5-133 has several exceptions:

Override by a manager: an IRS manager may override PS 5-133 and request more returns if there are extenuating factors such as a prior history of noncompliance, illegal income sources, higher income and collectibility of the tax, and future compliance.  The most common red flags are Forms 1099-MISC for business income, large amounts of investments sold, and little withholding and estimated tax payments.  How do you know if there is an override?  You ask the IRS.

Business taxpayers: the IRS does not like to give businesses a pass on nonfiling.  They believe that it gives the nonfiling taxpayer a competitive advantage over other businesses.  As such, they like all businesses to file all required returns.   The IRS frequently requests the taxpayer to file overdue payroll tax returns and partnership returns past the six-year requirement.

Local nonfiler enforcement by IRS collections: the most likely scenario when the IRS deviates from PS 5-133 is when nonfiling is investigated by a local IRS person- called a Revenue Officer.  Revenue officers are likely to be assigned the most egregious nonfilers and collection cases and often perform in-depth investigations and request more years to be filed.  IRS notices indicate if a Revenue Officer is investigating the nonfiler.   The “RO” can be quick to get their manager to approve a deviation from PS 5-133.

There is not an IRS document, like an IRS transcript, that you can request to see how far back that you are required to file.   To find out you must ask.   In most cases, an experienced tax pro who has access to a special IRS practitioner hotline can find out best.  They can also obtain your account information and old W-2s/1099s to help with back filing.

Keep in mind, the IRS will always accept any back return that you file.   If you want to potentially limit your liability, penalties, and a lot of work in filing past the six-year requirement, find out how PS 5-133 applies to your circumstances.

Some tips for nonfilers – and late filers too

The IRS knows of at least 7.5 million nonfilers each year when it tracks W-2s, 1099s, and other information statements back to taxpayers.   Potentially, there are millions more who don’t get information statements.

Nonfiling is a serious issue that often can work the IRS up into a frenzy.  If the IRS determines that the nonfiler was intentional, they can pursue criminal penalties.  Al Capone was not convicted of filing a fraudulent return – he was convicted on nonfiling of a return.   Taxpayers who have not filed a required return should do so immediately.   Here are 8 tips that will help you file your back returns successfully and minimize the damage:

Apply IRS Policy Statement 5-133: As a general rule, the IRS only requires that you file the past six years returns (exceptions apply). Confirm that the IRS is looking for only six years of returns. Contact the IRS directly to confirm the required unfiled years.

Beware, the IRS may have already filed a return for you. When you don’t file a return, the IRS sends a series of notices over a three-year stretch requesting that you file. If you do not file, the IRS can file for you. This return is called a substitute for return (SFR).   The return always ends in you owing the IRS taxes, penalties, and interest.  However, you can file an original return to “replace” the SFR.  This return will come under increased scrutiny by the IRS and go through a special filing process that can take up to six months to complete.

Late returns often require special processing at the IRS. Each November, the IRS starts requesting many nonfilers about the status of their return. If the IRS selects the taxpayer for a delinquent return investigation, the taxpayer will usually have to file directly with the investigating unit at the IRS.

Order your IRS transcripts to help with filing. It is extremely important to prepare an accurate return that matches the income that the IRS has in its records. You can trace your income history and request your wage and income (Forms W-2, 1099, etc.) transcripts from the IRS. When preparing your return, make sure all income items on the transcript are reported accurately. Without this match, the IRS can question the accuracy of your return or even audit the return. IRS account transcripts can also help you track down any estimated tax payments that you can credit to any tax balances you owe.

Nonfiling penalties apply if you owe. There can be hefty penalties for filing late. Years with tax balances due will have penalties, such as the failure to file and failure to pay penalties. These penalties combined can accumulate, over time, up to 47.5% of the tax bill. Interest will also accrue on both the taxes owed and the penalties assessed.

Consider asking for penalty relief. If you have a good reason why you are not able to file on time, you can ask the IRS not to charge you failure to file or pay penalties on balance-due returns. You can also ask for first-time abatement for the first year if you qualify.

If you owe and can’t pay, set up a payment agreement with the IRS. Taxpayers who cannot afford to pay the balance will have to make arrangements with the IRS. There are several types of agreements, depending on what you need. If you don’t establish some type of payment plan with the IRS, IRS collection problems will follow.

Old refunds prohibited: The IRS doesn’t pay old refunds. You can only claim refunds for returns filed within three years of the due date of the return. For example, if you file a 2014 return after 4/15/2018, your refund will be lost.

Your first step is to commit to filing all required back returns and get into an agreement with the IRS on the balanced owed.  The next step is to contact the IRS and get your information and see how many back returns are required.  You will use this information to file an accurate return at the right location at the IRS.  You may also have to file State returns.  Lastly, weigh your options on any balance owed, including requesting abatement of penalties, and get into an agreement with the IRS that leaves you in good standing and sleeping better at night.

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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BUSINESSMAN PLEADS GUILTY TO TAX EVASION

 Used Business Funds to Pay More than $4.4 Million in Personal Expenses

 

According to court documents and statements made in court, Irwin Jacobs, 68, was a 50 percent owner of J K Apparel Sales Co. Inc. and S&I Sales Co. Inc., which collectively operated out of New York, New York. Jacobs also held an ownership interest in Prestige Global Co. Ltd., a Taiwanese company. J K Apparel was the exclusive representative for Prestige Global in the United States.

 

Between 2006 and 2014, Jacobs received income from these businesses that he did not report to the IRS on his tax returns. Jacobs directed Prestige Global to wire more than $4.4 million to third parties to pay personal expenses for himself and members of his family, including travel, non-business-related legal bills, expenses associated with his personal residence, and personal credit card bills. During the years 2010 through 2014, Jacobs also used an S&I Sales credit card to pay more than $200,000 in personal expenses, including leisure travel for himself and his family, medical and dental bills, non-business legal fees, and household expenses.

 

Jacobs admitted that his failure to report this additional income caused a tax loss to the IRS of more than $1.3 million.

 

U.S. District Judge Pamela K. Chen set sentencing for April 7, 2021. Jacobs faces a maximum sentence of five years in prison, as well as supervised release, restitution, and monetary penalties.

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CHIROPRACTOR AND HIS WIFE PLEAD GUILTY TO TAX EVASION

A chiropractor and his wife pleaded guilty to tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division and U.S. Attorney Kurt G. Alme for the District of Montana.

According to court documents and statements made in court, Jonathan Wilhelm, owned and operated Pro Chiropractic PC (Pro Chiro) and Big Sky Spinal Care Center Inc. (Big Sky). From 2013 through 2018, the Wilhelms directed payments to cash and then did not report the cash transactions on Pro Chiro’s and Big Sky’s books and records, which they provided to a return preparer to prepare the businesses’ tax returns. The Wilhelms knew that omitting the cashed checks and cash payments resulted in an understatement of taxable income totaling $284,691 for tax years 2013, 2014, 2015, 2017, and 2018. In total, the defendants caused a tax loss to the IRS of $74,486.

U.S. Magistrate Judge Kathleen L. DeSoto has scheduled a sentencing for March 12, 2021. At sentencing the defendants each face a maximum sentence of five years. The defendants also each face a period of supervised release, restitution, and monetary penalties.

GET TAX RELIEF HELP

When the IRS is taking or about to take large portions of your check to pay down your tax bill, it’s important to act quickly.

If you think 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.

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

 

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

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CAN THE IRS GARNISH MY PAYCHECK BECAUSE OF TAX DEBTS?

Yes, the IRS can take your paycheck. It’s called a wage levy/garnishment.

But – if the IRS is going to do this, it won’t be a surprise. The IRS can only take your paycheck if you have an overdue tax balance and the IRS has sent you a series of notices asking you to pay.

If you don’t respond to those notices, the IRS can eventually file federal tax liens and issue levies. In 2017, the IRS issued more than a half-million levy notices. Learn how to avoid IRS liens and levies.

The IRS will send a series of notices before taking your wages

Before the IRS levies your paycheck, the IRS must send these notices to your last-known address:

A notice and demand for payment (notice numbers CP14, CP501, CP503)

A notice of intent to levy (CP504)

A notice of your right to a Collection Due Process (CDP) hearing (LT11/Letter 1058), via certified mail

If you get an LT11/Letter 1058, you’re at the last step before the IRS will start taking your paycheck.

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This notice tells you that you can ask for a special hearing (called a CDP hearing). At the hearing, you can ask for a payment agreement or dispute the tax and penalties the IRS says you owe. But don’t delay. You have to request the hearing within 30 days of the date on the notice. If the IRS doesn’t hear from you within 15 days after the deadline, the IRS can take your paycheck.

In some cases, the IRS can bypass the CDP notice and go straight to a levy after the notice of intent. The IRS does this for some federal contractor levies, or when it thinks collection potential is at risk. If this happens, you can still request a CDP hearing after the IRS issues the levy.

A wage levy can take up to 25 weeks – but it could be faster

It can take from 11 to 25 weeks from the time you get the first IRS notice asking for payment to when the IRS issues a levy.

But, if you have an IRS revenue officer (an IRS employee who collects back taxes and/or pursues back tax returns), that timeline can speed up significantly.

THE IRS CAN TAKE MOST OF YOUR PAYMENTS

When the IRS issues a levy, it will send a notice to your employer (IRS Form 668-W) requiring the business to send part of your paycheck to the IRS.

You’ll get to keep a certain amount of your paycheck. The IRS determines your exempt amount using your filing status, pay period and number of dependents.

For example, if you’re single with no dependents and make $1,000 every two weeks, the IRS can take up to $538 of your check each pay period. IRS Publication 1484 explains how to figure out the exempt amount.

On top of garnishing your wages, the IRS can levy your bank accounts, Social Security income and accounts receivable. The IRS will use the levied money to pay down your back taxes, but you can’t designate the payments toward any particular tax bill.

The levies stop when you get back in compliance

When the IRS issues a wage levy, the levy keeps going until one of these happen:

You pay off your tax bill.

You set up a payment agreement with the IRS (like a monthly payment plan or currently not collectible status).

You prove to the IRS that the levy is creating a financial hardship.

You file an offer in compromise.

The IRS runs out of time to collect your back taxes.

You enter bankruptcy.

You prove to the IRS that the levy was wrongful or erroneous – meaning that the IRS levied money that wasn’t yours, or the IRS issued the levy in violation of procedure or law.

Once the IRS agrees to release the levy, you can speed up the process by asking the IRS to fax the levy release to your employer. Otherwise, you’ll have to wait for your employer to receive IRS Form 668-D by mail.

GET TAX RELIEF HELP

When the IRS is taking or about to take large portions of your check to pay down your tax bill, it’s important to act quickly.

If you think 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.

#FreshStartInitiative

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SOME COMMON QUESTIONS ABOUT BACK TAX LIENS

questions about tax liensSome people may be getting more attention than usual from the IRS this year. If you had trouble scraping up enough to pay your taxes in full, you might have heard from the federal government already.

 

The IRS likes to get the full amount of taxes owed quickly, on Tax Day if possible. If it isn’t possible, and you didn’t file for an extension to let them know payment would be late, the feds have a tool they like to use to encourage payment of tax debt. It’s called a tax lien.

 

There is a bit of confusion about what tax liens are and the impact on the typical taxpayer. So we put together this little FAQ to help everyone understand.

 

WHAT IS A TAX LIEN? IS IT THE SAME AS A TAX LEVY? 

 

A tax lien is a legal claim the IRS places against your property if you fail to pay a tax debt. It protects the federal government's interest in your property, and it can be placed against real estate, personal property, or financial assets.

 

By protecting, the IRS means it can prevent you from selling that property and seize it for themselves if you don’t pay up.

 

A tax lien is not the same as a tax levy. A lien is a legal claim against a property, sort of like labeling the property as collateral. A tax levy allows the IRS to take your stuff.  

 

A levy gives the government an interest in your property if you don’t pay your taxes and allows the IRS to take that property to pay the debt. In essence, a levy is what happens if you can’t remove the lien by paying off your tax debt.

 

If anything good can come of a levy, it’s that a federal tax levy is not a public record and shouldn't affect your credit report.

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DOES THE IRS LET PEOPLE KNOW IF THEY HAVE A BACK TAX LIEN?

 

Yes, it does. The IRS sends out a letter called a Notice and Demand for Payment. That’s a pretty clear label, isn’t it? Once your tax liability has been assessed, you will receive a bill from Uncle Sam telling you how much you owe and what will happen if you don’t pay it.

 

Then the IRS files a public document called a Notice of Federal Tax Lien right out where creditors can see it. They know the federal government now has the right to your property that supersedes their own interest. You receive a copy as well. The notice shows up on your credit profile and can cause problems down the line. 

 

Which leads to the next question.

 

HOW DOES A BACK TAX LIEN AFFECT YOU?

 

If you have a tax lien against any property, the Notice of Federal Tax Lien will be visible to financial institutions. That lien can prevent you from getting a good interest rate on a loan. It may prevent you from getting a loan at all. 

 

A lien attaches to all of your assets as well as any future assets you may acquire while the lien is in force. It can limit your ability to get credit. A lien against business property includes all accounts receivable. And if you file for bankruptcy, the tax lien can remain with you along with the tax debt and the public notice. 

 

A tax lien also affects your credit score. Even after the lien is released (because you paid it off or for another reason), your credit report will show a record of your tax lien for up to 10 years. 

 

One more thing. Don't rely on the IRS to update your tax lien's balance, as listed on the notice. It won't. Contact the IRS to obtain a letter showing your current payoff amount.

 

 

HOW DO I GET RID OF A TAX LIEN?

The best way to get rid of a lien is to pay your tax debt in full, including all interest, fees, and penalties. About 30 days after the balance is paid, the IRS will release the lien. The federal government should notify you that the lien has been released, but if you don't receive anything, ask for a release.

 

Other ways to get rid of a lien include the following:

 

Discharge of property - removes the lien from a specific property as determined by eligibility. A discharge can help you sell a property or obtain a loan to pay your tax debt.

Subordination - allows other creditors to jump in line ahead of the IRS to receive payment. It may be easier to get a loan or mortgage with a subordination (also subject to eligibility).

Withdrawal - removes the public Notice of Federal Tax Lien and lets other creditors know they are not in competition with the IRS for your property. You are still liable for the tax debt, though. Again - eligibility applies. 

The 2011 Fresh Start Initiative provided two other withdrawal options. One may allow a withdrawal of your notice after the lien is released - you know, so it isn’t on your credit record for years to come. The other may allow the notice to be withdrawn if you set up a Direct Debit Installment agreement or converted an existing installment agreement to Direct Debit.

 

HOW CAN I AVOID A BACK TAX FEDERAL LIEN? 

Avoiding a federal (or a state) tax lien is pretty straightforward. Pay your taxes. On time. In full. 

 

Barring that, let the IRS know you can’t pay on time and file for an extension. You get yourself six months to get your taxes and payment together. You will owe some interest on your tax debt, but then you avoid a lien.

 

Another way to avoid a lien is to acknowledge you can’t pay in full all at once and enter into a payment agreement with the IRS. You will continue to accrue interest on your unpaid tax debt, but you could get up to 72 months to pay it all off.

 

Never. Ever. Ignore. Letters. From. The. IRS. Ever. 

 

Anything the federal government sends you, you deal with ASAP. All correspondence gives you options for contacting the IRS to work things out. Burying anything under a pile of other bills won’t make it go away.

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.

#FreshStartInitiative

#OfferInCompromise

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IRS SENDS A REMINDER TO ALL TAXPAYERS: Gift cards are not used to make tax payments

Gift cards are a popular and convenient gift for all occasions.

They’re also a tool that scammers use to steal money from people.

 

Scammers often target taxpayers by asking them to pay a fake tax bill with gift cards. They may also use a compromised email account to send emails requesting gift card purchases for friends, family or co-workers. The IRS reminds taxpayers gift cards are for gifts, not for making tax payments.

Here's how this scam usually happens:

• The most common way scammers request gift cards is over the phone through a government impersonation scam. However, they will also request gift cards by sending a text message, email or through social media.

• A scammer posing as an IRS agent will call the taxpayer or leave a voicemail with a callback number informing the taxpayer that they are linked to some criminal activity. For example, the scammer will tell the taxpayer their identify has been stolen and used to open fake bank accounts.

• The scammer will threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty.

• The scammer instructs the taxpayer to buy gift cards from various stores.

• Once the taxpayer buys the gift cards, the scammer will ask the taxpayer to provide the gift card number and PIN.

Here's how taxpayers can tell if it’s really the IRS calling. The IRS will never:

• Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  
  

• Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights.

• Threaten to bring in local police, immigration officers or other law enforcement to have the taxpayer arrested for not paying.

• Threaten to revoke the taxpayer's driver's license, business licenses or immigration status.

Any taxpayer who thinks they've been targeted by a scammer should:

• Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their IRS Impersonation Scam Reporting webpage or call 800-366-4484.

• Report phone scams to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. They should add "IRS phone scam" in the notes.

• Report threatening or harassing telephone calls claiming to be from the IRS to phishing@irs.gov. Taxpayers should include "IRS phone scam" in the subject line.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your past-due tax returns or need help with the Fresh Start Initiative, you may want to partner with a reputable tax relief company that can help you settle your back tax debt.  

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.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

RESOLVE YOUR TAX DEBT WITH THE IRS OR LOSE YOUR US PASSPORT

This boils down to basic math: Lots of unresolved back taxes + international travel plans = no more passport.

Listen up – if you owe back taxes, haven’t set up an arrangement to pay the IRS, and:

You’re thinking of traveling overseas for business or vacation.

You need to come back to the United States.

You need to apply for or renew your passport.

You need to apply for or renew your passport.

Here’s what you need to know

In 2015, Congress passed a law restricting passport holders who have “seriously delinquent tax debt”

After two years of working out the enforcement details, the IRS has started “certifying” seriously delinquent tax debtors. The IRS estimates that about 235,000 taxpayers will be affected.

What’s seriously delinquent tax debt? U.S. passport holders who owe more than $51,000 in back taxes and aren’t in good standing with the IRS.

What does “good standing” mean? Not being in good standing means you haven’t made any arrangements to pay the IRS (like payment plans or other options).

What does it mean to be certified? Basically, once you’re certified as having seriously delinquent tax debt, the U.S. State Department can start restricting your passport until you pay or make arrangements to pay with the IRS.

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

 

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WHAT WILL HAPPEN IF YOU FALL UNDER THIS PROGRAM 

1. Expect a letter from the IRS.

The IRS says it started sending IRS Letter CP508C in January 2018. This letter will put you on notice that you need to take immediate action to resolve your back taxes with the IRS.

In January 2018, the IRS said that you will have 90 days after the certification notice before the State Department can restrict your passport. But the IRS warns that if you have upcoming international travel plans, you need to act quickly to get your situation resolved.

The faster you act, the more time the IRS has to notify the State Department before it can restrict your passport.

2. You’ll need to pay all your back taxes or make arrangements to pay.

Here are your options:

Set up a monthly IRS payment plan (called an installment agreement) on your back taxes.

File a valid offer in compromise to settle back taxes.

If you’re in a financial hardship situation, establish a deferred payment agreement with the IRS (called currently not collectible status).

Request innocent spouse relief.

Paying your balance to under $51,000 won’t get you out of trouble. You’ll need to make arrangements to pay all your back taxes.

Also, the list above isn’t all-inclusive. The IRS can always add more categories of people who aren’t subject to passport restrictions.

3. You’ll have to wait until the IRS “decertifies” your tax debt status before you can travel.

The law says the IRS should decertify you within 30 days after you’re back in good standing. But, two issues may cause delays for some people:

Delay 1: You also have back tax returns to file. If you want to set up a payment plan or other agreement with the IRS, you’ll have to be “filing compliant.” That means you’ve filed all your required returns, typically for at least the past six years. For people with back tax returns and back taxes, fixing this situation could take months.

Delay 2: You need an alternative payment arrangement. IRS payment agreements that aren’t “streamlined” can take some legwork, especially if you:

Owe more than $100,000

Need to work out payment terms with the IRS based on your finances

If you need payment terms with the IRS, you’ll have to disclose the details of your financial situation (usually with IRS Forms 433). Learn about payment arrangements. This kind of arrangement can take months for the IRS to approve.

Taxpayers who find themselves with passport restrictions and need to travel won’t have a fast track to remove these restrictions. That’s why it’s important to act as soon as possible.

Passport restrictions are here to stay

Passport restrictions are law, and the IRS has now put procedures in place to continuously enforce the program.

This means that if you find yourself with seriously delinquent tax debt in the future, you can expect the IRS to start the process with the State Department to restrict your passport. This new IRS enforcement tool to collect back taxes is here unless Congress changes the law.

Time to get in good standing

People who receive IRS Letter CP508C, or anyone who owes the IRS, should get into good standing with the IRS as soon as possible. The faster you act, the faster your issue is resolved at the IRS – and the less you’ll owe in penalties and interest.

Take these five steps:

Start by filing all your returns.

Make sure the taxes you owe are correct. This may mean contesting tax assessments that the IRS made in an audit, or addressing penalties the IRS says you owe.

Get into a payment agreement or other collection alternative with the IRS.

Confirm that you aren’t a certified seriously delinquent tax debtor, and

Enjoy your travel.

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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HOW YOU CAN AVOID BACK TAX LIEN AND LEVIES

Liens and levies are tools the IRS uses to collect back taxes. Here’s more about each one — and how to avoid both of them.

If you haven’t made arrangements with the IRS to pay your tax balance, the IRS sends a series of notices to try to collect the back taxes. The IRS then starts enforced collection actions, including tax liens and levies.

How the IRS issues levies

The IRS can issue a levy to seize (take) your income and assets. The process follows several steps.

First, the IRS must provide you with:

Notice and demand for payment

Notice of intent to levy

Notice of your right to a Collection Due Process hearing

Most of the time, the IRS sends five letters, starting about six weeks after you file a return. The five letters are often called the collection “notice stream” (notice numbers CP14, CP501, CP503, CP504, and L1058/LT11).

If you receive the last notice and don’t pay the balance or make other arrangements to pay, the IRS can levy your income and assets, garnish your wages and take money in your bank accounts.

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

 

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HOW TO AVOID A BACK TAX LIEN 

If you owe the taxes, one way to avoid a levy—or remove one—is to reach an agreement with the IRS to pay your balance. This means you’ll need to analyze your financial situation and your ability to pay the IRS.

One common solution is an extension of time to pay the full balance. Extensions can give you up to 120 days to pay the balance and avoid a levy.

If you can’t pay with an extension, the IRS offers several types of monthly payment plans, called IRS installment agreements. If you can’t pay anything, you may consider requesting currently not collectible status. This status classifies you as temporarily unable to pay. Requests for both of these agreements suspend levy actions.

Once the IRS accepts your installment agreement, the IRS won’t issue a levy unless you default on the agreement. If the IRS places you in currently not collectible status, the IRS won’t levy your assets. But the IRS can remove the currently not collectible status in the future if it determines that you can pay the tax balance.

Learn about all the IRS payment options you may have if you owe taxes and can’t pay. 

HOW THE IRS ISSUES TAX LIENS 

When you owe back taxes, the IRS can issue a federal tax lien that gives the IRS a legal claim to your property. A Notice of Federal Tax Lien may also be filed at your local courthouse and is a public record. A recorded federal tax lien establishes the government’s right to your assets over other creditors.

The IRS waits to record most tax liens until after it has sent all five notices in the collection notice stream and hasn’t received payment.

You’ll want to avoid a Notice of Federal Tax Lien. Liens can affect your ability to attract new business clients, secure and maintain credit, and obtain employment.

HOW TO AVOID A TAX LIEN 

Avoiding a tax lien filing is more complicated than avoiding a levy. The IRS can file a tax lien even if you have an agreement to pay the IRS. IRS business rules say that a tax lien won’t be filed if you owe less than $10,000. But the IRS reserves the right to file a lien to protect its interests. For example, the IRS might file a lien in the case of a pending bankruptcy or if the IRS thinks you’re getting rid of assets to avoid payment.

Even if you owe more than $10,000, you can still avoid a federal tax lien filing. If you can’t pay the tax right away, the best ways to avoid a lien are to request an extension of time to pay of up to 120 days or get a streamlined installment agreement to pay the full balance.

Streamlined installment agreements require you to pay the full balance within six years or before the collection statute of limitations expires, whichever is sooner. If your balance is less than $50,000, or if you can pay the balance down to less than $50,000 before establishing the streamlined installment agreement, you can avoid a tax lien.

If your unpaid balance is between $25,000 and $50,000, the IRS won’t file a tax lien if you allow the IRS to take installment agreement payments directly from your bank account or wages.

When you can’t pay your tax balance to the IRS, tax professionals with an understanding of IRS rules for liens and levies can help you avoid enforced collection action. The key is to be proactive in finding an agreement with the IRS that avoids liens and levies.

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.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation 

#TaxAttorneys

THE CONSEQUENCES OF OWING A TAX DEBT

Tax Lien, Fresh Start Initiative

Let’s face it. When you owe the IRS and can’t pay, it’s tempting to ignore the issue. Usually, this boils down to fear of the unknown.

If you contact the IRS, will it get you in even more trouble?

The reality is, you should only be afraid if you ignore the issue. If you ignore the tax bill you owe, the IRS can eventually force you to pay using several tools – like federal tax liens, levies, and wage garnishments. And that’s on top of penalties and interest that will pile up.

The good news: The IRS offers options when you can’t pay the taxes you owe – from simple extensions of time to monthly payment plans – and even programs for people in financial hardship situations.

But if you’re still weighing whether to get in touch with the IRS – here are some consequences of ignoring your tax bill.

1. You’ll get IRS notices.

The IRS has to notify you of your tax bill and send certain notices before doing anything else, like collecting your balance with enforcement tools. In and of themselves, IRS letters and notices are a minor nuisance – but if you ignore them, they’ll lead to more significant actions.

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

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

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2. The IRS will put you in automated collection.

The IRS Automated Collection System (ACS) is your likely next stop if you ignore the notice. ACS is the primary IRS function that collects back taxes. ACS can issue liens and levy bank accounts and wages. The notices you receive from ACS will start to explain more serious consequences if you don’t comply by the deadline.

3. The IRS can take your refund.

If you owe taxes to the IRS and end up with a tax refund due to you in a later year, the IRS will keep the refund. That’s true regardless of whether you’re in an agreement to pay. The good news is that your refund will reduce the tax bill you owe, also reducing your interest.

4. Interest will build up on your balance.

On top of your tax bill, the IRS is going to charge you interest. As the balance grows, so does the interest. The current rate is 5% annually.

5. The IRS will charge you penalties.

On top of interest, the IRS charges a failure to pay penalty on your unpaid tax balance (0.5% per month). But that penalty rate doubles to 1% per month if the IRS has sent you many notices to collect and you haven’t made arrangements to pay. There is a little good news, though. Once you set up a payment agreement with the IRS, the penalty rate drops to 0.25% per month.

6. The IRS could publicly file a federal tax lien.

If you owe taxes to the IRS and got a notice about the balance due, but you didn’t pay, the IRS can file a Notice of Federal Tax Lien. A federal tax lien alerts creditors about your tax debt, which basically protects the IRS’ interest in your assets, if you try to sell property or borrow against it.

Because federal tax liens are public information, many people don’t want the negative impact to their reputations. Also, a lien will negatively impact your access to credit.

Note: Declaring bankruptcy won’t get rid of your tax debt and associated liens.

Practically speaking, even though the IRS has the right to file a Notice of Federal Tax Lien on a smaller balance, the IRS normally won’t file one if you owe less than $10,000. And the IRS usually won’t file a lien if you enter into certain payment agreements.

7. The IRS can seize your money and assets.

You might have heard that the IRS can “seize your assets.” Essentially, that’s a levy (not to be confused with a lien). However, the IRS usually only seizes money. It’s a huge hassle for the IRS to seize houses, boats, etc., and then sell them. In fact, the IRS only seizes property a few hundred times a year.

The most common levies are:

Wage levies (also called wage garnishment) – The IRS takes some of your wages to pay your tax bill. If you get into a payment agreement with the IRS, the IRS will normally stop the levy.

Accounts receivable levies – The IRS takes the money you’ve earned as a small business or independent contractor. If you get into a payment agreement with the IRS, the IRS will stop the levy (although you might have to jump through some hoops to make sure your clients or customers stop sending money to the IRS).

Bank levies – The IRS takes money from your bank account. Again, if you get into a payment agreement with the IRS, the IRS will typically stop the levy.

For individuals, levies can create a huge hassle and disrupt your ability to pay your bills. For businesses, levies can be devastating. By disrupting cash flow, levies can make it impossible to pay your employees, purchase supplies and inventory, and run your business.

8. A revenue officer might show up.

Revenue officers are IRS employees who collect tax debt, usually when you owe large amounts of back taxes, owe for continuous years, and/or have unfiled back tax returns. You’ll want to comply with all your revenue officer’s requests by the deadline, because they have the authority and the duty to quickly enforce back tax issues by filing liens and issuing levies.

9. You may not be able to travel abroad.

Recently, the IRS added a new tax-collection tool to its list. If you owe more than $51,000 and the IRS has tried to collect from you before, but you’re not in a payment agreement or other arrangement with the IRS, the IRS can label you a “seriously delinquent” taxpayer. When that happens, the State Department can restrict your passport.

If you don’t have a passport, this restriction will prevent you from getting one. If you already have a passport, you won’t be able to renew it until you are removed from the “seriously delinquent” list.

10. The IRS could give your case to a debt-collection agency.

If after a few years the IRS has failed to collect your tax balance, the IRS can turn your account over to a private debt collector. Like you’d experience with most debt-collection agencies, if your case goes here, you’ll receive calls and inquiries from strangers. In short, not paying can lead to years of hassle.

Get some help from the experts

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.

#FreshStartInitiative

#OfferInCompromise

#TaxPreparation

#TaxAttorneys