I FILED MY TAXES, OWE THE IRS AND CAN’T AFFORD TO PAY, WHAT SHOULD I DO?

Each year, about 30 million taxpayers file a return with a balance due.

Most pay with the return.  But what if a taxpayer cannot pay?  What are their options?

Here are the options and a few tips:

Make sure you file on time: not filing because you owe is a major mistake.   Within 5 months, you will add 25% to your tax bill due to the failure to file a penalty.  Don’t make things worse- file on time.

You have payment options: you can set up a payment plan with the IRS or get an extension to pay up to 120 days.  IRS interest rates are fairly low (for example, 5% interest rate as of the first quarter of 2020).

You can’t avoid a late payment penalty by filing an extension: if a taxpayer files an extension and does not pay 90% of their final tax bill, they will get a failure to pay penalty of 0.5% per month when you file before the extended due date.  This penalty is not a lot, but it can add up over time.

If you have a hardship, there are other options: if a taxpayer is experiencing a hardship that is affecting their income or ability to meet necessary living expenses, like unemployment, there are other options such a payment deferral (not collectible status) or an offer in compromise that will settle the tax debt.   Beware that the taxpayer must qualify to receive these hardship relief provisions.

Act quickly to avoid a federal tax lien filing: if a taxpayer ignores the IRS notices for too long and owes more than $10,000, they can expect a federal tax lien to be filed.  If they obtain currently not collectible status and owe more than $10,000, the IRS will also likely file a tax lien.

If this is your first time owing, request first-time penalty abatement relief: if you have to pay by an IRS payment plan and you did not have a penalty in the three years prior to that year (except for the estimated tax penalty), you can get the penalties waived.  Taxpayers should request penalty abatement at the end of the payment plan to maximize the amount abated.

Under no conditions should you file late, not file at all, or not take action to request a payment option or collection alternative with the IRS

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief

WHAT IS A BACK TAX LEVY?

A tax levy, under United States Federal law, is an administrative action by the Internal Revenue Service (IRS) under statutory authority, generally without going to court, to seize property to satisfy a tax liability. The levy "includes the power of distraint and seizure by any means". 

The general rule is that no court permission is required for the IRS to execute a tax levy. While the government relies mainly on voluntary payment of tax, it retains the power of levy to collect involuntarily from those who persistently refuse to pay. 

The IRS can levy on wages, bank accounts, social security payments, accounts receivables, insurance proceeds, real property, and, in some cases, a personal residence. Under Internal Revenue Code section 6331, the Internal Revenue Service can - "levy upon all property and rights to property" of a taxpayer who owes Federal tax. The IRS can levy upon assets that are in the possession of the taxpayer, called a seizure, or it can levy upon assets in the possession of a third party, a bank, a brokerage house, etc. All future statutory references will be to the Internal Revenue Code unless noted otherwise.

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There are three requirements before a levy can be issued:

Notice and demand for payment

Notice of intent to levy

Notice of a right to a Collection Due Process (CDP) hearing

The IRS can levy up to the amount of tax owed for the tax period(s) subject to levy.

Types of levies

The IRS can issue several types of levies targeting different assets or sources of income.   Depending on the type of levy, the IRS can seize 100% of the funds or a partial amount.  Levies can also be continuous until the tax is paid or an agreement is set up with the IRS.   Wage, social security and state income tax refunds are continuous, they stay in place until released or the amount of the levy is paid in full.

Levies can also be a one-time seizure.  Bank, financial institution and accounts receivable levies are one-time levies. The IRS will take the amount in the account or owed to the taxpayer (up to the amount of the levy), subsequent deposits/payments are not taken unless another levy is issued.

To get relief from a levy, you must obtain a levy release.

The IRS can release a levy when any of the following conditions exist:

The balance due is paid in full.

You demonstrate financial hardship.

Releasing the levy will facilitate the collection of the tax.

The IRS wrongly or erroneously issued a levy.

The collection statute expiration date has passed.

You file for bankruptcy.

You apply for an offer in compromise.

You enter into a collection agreement with the IRS.

For most, the solution is to get into one of the following arrangements as quickly as possible:

Extension to pay

Installment agreement (i.e. payment plan)

Currently not collectible status

File for an offer in compromise

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief 

BILLIONS IN UNPAID TAXES DUE TO UNREPORTED 1099-K INCOME

Recently, the Treasury Inspector General for Tax Administration (TIGTA) advised the Internal Revenue Service (IRS) that it was losing billions of dollars in tax revenue due to unreported and underreported 1099-K income. A report released on December 30, 2020, explained the methods TIGTA used to find unreported 1099-K income, TIGTA’s recommendations, and the IRS’s plans to address this part of the tax gap.

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

 

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If you have 1099-K income, you need to understand what is happening. Here is a breakdown of the essentials.

What Is the 1099-K?

The 1099-K is an information return used to report payment transactions from payment cards and third-party network transactions. Designed to help reduce the tax gap, this form was rolled out in 2012 for payments received during the 2011 tax year.

Payment settlement companies must issue this form to anyone who receives over $20,000 in payments and over 200 transactions during the tax year. 

To give you an example, if someone receives $30,000 in payments in 100 different transactions, they will not receive a 1099-K. However, if someone receives $25,000 in 400 different transactions, they will receive a 1099-K. You must meet both conditions for this form to be issued.

TIGTA Discoveries About 1099-K Income

TIGTA discovered several issues related to unfiled returns or underreported income from individuals and businesses that received 1099-K forms. Take a look at some of the group’s key observations:

314,586 business taxpayers with a total of $335.5 billion in 1099-K income did not file tax returns but were not identified as nonfilers by the IRS.

62,087 individuals with $575 million in 1099-K income did not file tax returns but were not identified as nonfilers by the IRS

325,060 business non-filers with $203 billion in 1099-K income were not contacted by the IRS

103,991 individual non-filers with $3 billion in 1099-K income were not contacted by the IRS

The IRS did not work cases from 45,169 businesses that had at least a $10,000 discrepancy between the amount reported on their form 1099-K and the amount reported on their tax return, leading to $73 billion in unreported income

According to TIGTA, the IRS could recoup $5 billion in taxes just by focusing on cases related to businesses with over $1 million in 1099-K income and individuals with over $100,000 in 1099-K income. 

TIGTA Recommendations

TIGTA made seven recommendations and the IRS agreed with the following three:

1. Re-evaluate start date criteria for reviewing newly created entities

The IRS’s current start date criteria allow businesses that opened during the tax year to slip through the cracks, but if the agency re-assessed the information it uses to establish start dates, it could find new businesses that received 1099-K income for a portion of the year.

TIGTA estimates that approximately 36,028 businesses with nearly $4 billion in 1099-K income fell into this category. Even if the IRS only focused on the 509 new businesses that received over $1 million in 1099-K income, it could recoup taxes on $1.41 billion of income.

2. Define high-income business non-filers.

In 2018, the IRS created a new strategy for dealing with nonfilers, but although the strategy defines high-income individual non-filers, it does not define high-income business non-filers. To improve its nonfiler strategy, the agency has agreed to define this category.

3. Work a percentage of the individual nonfiler cases identified by TIGTA

TIGTA identified 770 high-income individual non-filers with 1099-K income of $100,000 or greater. The IRS said that it was not working on these cases because the adjusted gross income (AGI) of the majority of these taxpayers was under $100,000.

However, TIGTA argued that at least a percentage of these cases should be worked as they almost all showed AGIs of over $92,000. The IRS has agreed to work on a percentage of these cases.

What Does This Mean for Taxpayers?

To put it simply — the IRS is paying attention to 1099-K income. If you or your business has not been reporting 1099-K income, consult with a tax professional, and report this income. 

Reaching out to the IRS is always better than waiting to be contacted. By making the first move, you put yourself in a position to minimize fees and penalties as much as possible.

If you regularly report 1099-K income, make sure that you have records supporting any discrepancies between the amount reported on your 1099-K and the amount noted on your tax return.

Discrepancies With 1099-K Income

In addition to being a relatively new tax form, the 1099-K can be confusing because it often contains income that has been reported on a 1099-misc form.

To explain, imagine that you sell items online and process payments through PayPal. Over the course of the year, you receive $25,000 in payments in 500 different transactions. At the same time, you also do freelance work for a company that pays you through PayPal. That organization pays you $10,000 in 10 different transactions through the year and it sends you a 1099-misc detailing the $10,000.

In this scenario, the payment processing company will issue you a 1099-K showing the total of all the payments ($35,000) you received over the 510 transactions. However, if you report the full amount from the 1099-K as well as the full amount from your 1099-misc, you end up reporting $45,000 even though you only received $35,000.

To rectify this issue, you need to report less than the amount shown on your 1099-K, but of course, the standard tax return has nowhere for you to explain the discrepancy. This can lead to confusion for both you and the IRS.

In the past, the agency has reached out to taxpayers who have underreported income from a 1099-K and assessed the entire tax liability related to the income noted on this form. To ensure you don’t face this issue, save all paperwork related to this income so you can easily protest the IRS’s assessment.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief

WHAT IS THE DIFFERENCE BETWEEN A TAX LIEN AND TAX LEVY?

Tax lingo doesn’t come naturally to people who don’t work for the IRS. That’s one of the reasons why there’s some confusion regarding the difference between a Levy and Lien. The two terms are not interchangeable. However, they are linked. Let’s break down what there is to know about these IRS penalties that should never be ignored!

LEVY vs LIEN

A levy refers to the legal seizure of your property by the IRS to satisfy your tax debt. However, a levy does not simply come out of nowhere without warning. You will be notified of a lien prior to a levy being activated. A tax lien is the IRS’s legal claim to your property that precedes an actual seizure. This is an important distinction because it’s wise to consult with a tax professional after a lien has been initiated to try to prevent a levy from being activated. The easiest way to look at it is that a lien refers to the IRS’s statement of intention for seizing your property. A levy is the actual seizure process.

WHAT IS A TAX LEVY?

A levy is the IRS’s attempt to seize property to satisfy what you owe in unpaid taxes. The IRS is lawfully entitled to seize your personal property, real estate, cash, bank savings, and other assets. What’s more, the IRS can also activate a wage levy (garnishment) that forces your employer to hold back a certain percentage of your pay each pay period until your debt is satisfied.

Typically, you will receive a notice of intent to levy about 30 days prior to a levy being initiated. This is a very crucial period for reacting. You may be able to stop a levy in its tracks before harm is done to your finances or credit record by working with a tax professional to obtain a relief option.

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

 

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WHAT IS A LIEN?

The IRS will notify you of a tax lien if you do not pay a tax bill after the agency assesses a tax against you. A lien is considered a “warning” from the IRS. However, it is far from an empty threat. An IRS lien is a public record that provides notice of the IRS’s claim to your property. An IRS Notice of Federal Tax Lien serves the purpose of alerting creditors to the fact that the government has a legal right to your property. As a taxpayer, you do have the right to appeal a tax lien.

WHAT IS THE DIFFERENCE BETWEEN A LEVY AND A LIEN? 

A lien is a legal claim on the part of the IRS against your property. The IRS is asserting its claim to your property because you’ve failed to pay a tax debt. By contrast, a levy is the actual legal seizure of your property to satisfy the tax debt that you owe. A tax lien will precede a tax levy.

HOW LONG BEFORE A TAX LIEN BECOMES A TAX LEVY?

This is where a document known as the IRS Final Notice of Intent to Levy is going to become crucial. A notice will either be mailed to you or delivered in person. The clock is actually already ticking loudly if you’ve received this letter. The IRS cannot seize your property within 30 days of sending you a notice of final intent. This 30-day window provides you with an opportunity to request a Collection Due Process (CDP) hearing with the IRS Office of Appeals. Unfortunately, the levy process may begin if you allow that 30-day window to come and go without action. 

There are some exceptions to that 30-day window. For instance, the IRS does not need to obey the 30-day window when it comes to levying your tax refund(s). The IRS may also circumvent the 30-day requirement if the collection of a tax amount is in jeopardy.

Getting Help Before a Tax Lien or Levy Becomes a Problem

Looking at tax lien vs tax levy shows taxpayers that these two tax terms are not interchangeable. The one thing that a levy and lien do have in common is that no taxpayer wants to deal with either issue. That’s where Advance Tax Relief can come in to help you avoid the “snowball” effect that can occur once you receive a lien notice. It could take anywhere from a few days to a few months before the IRS tracks you down with a lien notice after assessing that you owe taxes. 

However, the truth is that most taxpayers who are late on tax payments begin suffering the consequences before a lien notice ever arrives. That’s because interest rates and late-payment penalties can begin accruing the moment you miss the tax-day payment deadline.

At Advance Tax Relief, we’re able to help you address or appeal liens and levies using the IRS’s own language. Our team of licensed tax professionals, lawyers, and accountants has been helping taxpayers understand their options regarding late tax payments for 30 years. Let us help you explore options for penalty relief or forgiveness if you have concerns about a lien or levy stemming from unpaid taxes. We can also assist you if you believe that an action has been improperly applied to your account. Call our office today for a consultation.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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 #TaxDebtRelief 

WHAT HAPPENS IF YOUR DECEASED RELATIVE OWES BACK TAXES?

One of the most sensitive topics tax professionals must face is helping people handle taxes for family members or loved ones who have passed away. 

Family members often wonder if filing taxes for decedents is necessary. The answer is that death doesn’t erase taxes; a tax obligation still stands even if a person passes away. In fact, this is one of the first orders of business to take care of to avoid “surprise” debts that the estate could be responsible for going forward.

If you need to file taxes for someone who has died, you may be wondering where to start. In some cases, you may need to request copies of tax records from the IRS to determine how many years back you’ll need to go when filing taxes on behalf of the deceased. If you are the executor of an estate, you must essentially take on the tax burden as if it’s your own. 

But let’s take this one step at a time. First, we’ll explore the path typically followed when filing taxes for a deceased parent or loved one.

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

 

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FILING TAXES ON BEHALF OF YOUR DECEASED RELATIVE

Taxes for a recently deceased person should be prepared and filed using generally the same methods required for any taxpayer. This means reporting all income earned up until the day of death. All relevant deductions should also be claimed to reduce the overall tax burden the same way you would for any filing. Here are some basics to know:

You may need to file IRS Form 4506-T: Request for Transcript of Tax Return to obtain tax records of the deceased person.

Form 1040, W-2s for withheld income, and 1099s for untaxed income may be needed.

The decedent’s income will count from January 1 of the year they passed until the day before they passed.

Write “deceased” next to the taxpayer’s name when filling out tax forms.When a person is deceased, the tax deadline is automatically pushed to April 15 (tax day) of the year after the death.

A surviving spouse can still file a joint return for the last year that the deceased was living.

It will be necessary to use Form 1041: U.S. Income Tax Return for Estates and Trusts if the deceased individual is leaving any estate with taxable income. You’ll also need that form for any estate with at least $600 in gross income during the tax year in question.

One issue that family members often come across when attempting to prepare current tax returns for deceased individuals is that unfiled taxes remain from previous years. In this case, it will be necessary to file any unfiled returns on behalf of the deceased. While it may seem odd, it’s important to file tax returns from previous years on behalf of the deceased individual to avoid allowing IRS penalties and interest to accumulate against the estate.

WHAT HAPPENS IF YOUR DECEASED RELATIVE OWES BACK TAXES?

If you discover that your deceased loved one owes money, you’ll need to pay what is owed. If you don’t have the funds immediately available from the estate to do this, you may be able to work out a payment plan with the IRS. Similarly, you may find that the deceased is actually owed refund money. The IRS has a special form called IRS Form 1310: Statement of a Person Claiming Refund Due a Deceased Taxpayer that allows you to claim the refund.

FILING TAXES FOR A DECEASED WITH NO ESTATE

Typically, the executor of an estate is tasked with filing taxes for the deceased. But not everyone passes away with an estate in place. If no executor has been named, tax responsibilities should be handled by a surviving family member. If there is no estate, the tax situation can get a bit tricky. The responsibility to pay owed taxes may fall on your shoulders if you’re the representative of the deceased. To determine what is owed, it may be necessary to contact the IRS to get tax records dating back a few years. Here’s a look at some of the possible taxes that may need to be paid:

Federal taxes

State taxes

Local taxes

Self-employment taxes

Business taxes

How long do you have to worry about taxes owed by the decedent? The IRS Collection Statute Expiration Date (CSED) for all federal taxes is 10 years, even if the person who owed the taxes is no longer living. With that said, each state has its own statute for owed taxes. The expiration date for state taxes ranges from three years to 20 years, and in a handful of states, state tax debts never expire. 

It’s also important to know that the IRS can still audit a person who has passed away, although the worry of an audit generally disappears after three years.

DON’T IGNORE TAX DEBT AFTER DEATH

Many families assume that tax obligations evaporate because the person who owed the money is no longer living. Unfortunately, this can set you up for years of pursuit by creditors while penalties pile up. The IRS will not automatically “forgive” a tax debt just because a person is no longer living. If there is an IRS debt after death with no estate, the IRS will take all possible measures to collect that debt before it expires. Expect the IRS to contact beneficiaries of the will to try to recoup tax debts. This often includes children and siblings, and it is also common for both close and distant relatives to hear from the IRS when a debt is pursued. When settling debts on behalf of someone who has passed away, the IRS should be considered the primary creditor above other creditors.

FINAL THOUGHTS ON HANDING TAXES AFTER SOMEONE HAS DIED

None of us like to think about what happens if a deceased person owes taxes. However, this is a reality that can land on your plate if a family member passes away with unsettled IRS debts. Filing taxes after someone has died can be a confusing process, even if you usually handle your own taxes with no issues. In truth, it is one of the most complicated tax situations a person can encounter. This is why bringing in a tax expert is so important for peace of mind.

At Advance Tax Relief, we help people take care of any lingering tax obligations that loved ones may have left behind. Let us help you use the correct IRS forms when filing taxes for someone who has passed away. In addition, we can assist with obtaining tax records to ensure that no unfiled tax returns or lingering debts are going unnoticed by you. If a tax debt is owed, our team can help you explore tax relief options for paying the debt over time in smaller installments. Advance Tax Relief has more than 30 years of experience with IRS issues. If you have any questions about handling taxes after death, contact us today.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief 

WHAT TO KNOW ABOUT IRS ENFORCEMENT WHEN YOU DON'T FILE BACK TAXES?

Taxpayers with a filing requirement need to file a timely, accurate annual tax return:  non-filing can cause serious IRS enforcement action, including both civil and criminal investigations. 

 

The penalties for late filing can be substantial but can be abated under the first-time abatement or for a reasonable cause:  for individual returns, late filing penalties only apply if you owe additional tax.  However, the penalties can be significant- 5% per month, up to 25%.  Fraudulent failure to file is 15% per month, up to 75%.  Taxpayers can request relief for the first year of late filing penalties if they have a clean compliance history for the prior three years using the IRS’ first-time abatement waiver.  If the taxpayer does not qualify for first-time abatement, they can request relief if they can show that they had unforeseen circumstances outside of their control that caused the late filing (reasonable cause argument).

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

 

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For individuals, the IRS usually only requires that you file the current and last six tax years to be filing compliant:  IRS Policy Statement 5-133 only requires individual taxpayers to file the past six years of returns.  

The IRS can deviate from this policy if they believe the taxpayer will owe significant amounts in years prior to the last six tax years, if the taxpayer is a business, or if the taxpayer has a history of significant noncompliance.  Normally, deviations to the policy originate when the taxpayer is assigned to IRS field collection (i.e. a revenue officer).

IRS transcripts can help you file an accurate prior year return:  the IRS can provide you wage and income information by year (called an IRS wage and income transcript) as well as an account transcript to show any payments or credits.

If you do not file a return, the IRS can file one for you – and you will owe taxes, penalties, and interest:  this return is called a “substitute for return” or “SFR.”   The IRS will prepare and process a balance due return that only includes the taxpayer’s income and withholdings – no deductions, preferred filing status, or credits are allowed.  

Taxpayers can use special procedures to file an original return to replace the SFR return.

The IRS can freeze future refunds:  taxpayers who do not file a required return can face IRS refund freezes on returns filed in future years.

Late filers may have to use special IRS procedures to file their returns:   some procedures include matching their return to IRS income records and filing their return directly with the enforcement function (Collection, audit, etc.) at the IRS.0

Late filing is enforced by IRS Collection employees:   these investigations are called taxpayer delinquency investigations or return delinquency investigations.  IRS Collection employees (revenue officers and Automated Collection staff) are responsible for pursuing non-filers.   However, all IRS enforcement personnel (audit, collection, etc.) can pursue enforcement against a non-filer.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief 

WHAT IS PAST-DUE UNFILED TAX RETURNS (back tax preparation)?

Taxpayers who do not file a required tax return can face IRS delinquent return enforcement actions.  These actions can include requests to file and other more serious enforcement activity such as filing a return for the taxpayer and criminal investigations.    

Taxpayers can face serious penalties for late filing, including a 5% per month late filing penalty (up to 25%).  In order to get back into filing compliance, the taxpayer should follow IRS procedures and utilize several best practices to resolve their late filing issue.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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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MUST-DO’S WHEN RESPONDING TO A CP2000 NOTICE OR TAX AUDIT VIA MAIL

Statutory Notice of Deficiency (SNOD)

Want to know how to streamline this process and make sure that the IRS considers your response without having to deal with the courts?

Respond timely: a complete, timely response that addresses all issues and questioned items is the starting point.   If you respond timely, you have the right to have your information considered before the SNOD.

Send your response certified to the IRS: this is your proof of a timely response.  Evidence of timely mailing is usually required – so send it certified with tracking.

In the response, protect your appeal rights: CP2000s and mail audits follow IRS deficiency procedures – that is, the IRS must generally provide you the right to an appeal within the IRS Office of Appeals on any adverse determination.   In your response, include the statement, “If you disagree, this response serves to request a hearing with the IRS Office of Appeals.”  This will provide you the foundation for undoing the SNOD and avoiding the need to go to court to dispute the findings.

Don’t respond with a 1040X: if you respond to a CP2000 or mail audit with a Form 1040X, expect the IRS to issue a premature SNOD.  Why?   CP2000s and mail audits are handled by IRS compliance units- a 1040X is a tax return, handled by the people at the IRS who process tax returns (Accounts Management in this case).  Many 1040X responders to CP2000s and mail audits receive premature SNODs because the IRS does not associate a tax return as a response to a compliance inquiry.

Contest penalties in a response: many CP2000s and mail audit come with 20% accuracy penalties.  Many taxpayers never contest the penalty and often find themselves wanting to contest the penalty after it has been assessed.  The time to question penalties is BEFORE the penalty is assessed (again, these are IRS deficiency procedures).  You should state your facts, law, and position to argue the assessment of the penalty with the response.  Arguing after the penalty has been assessed is essentially begging the IRS for CP2000 or audit reconsideration.  Also, you forego your appeal rights within the IRS if you do not argue with a timely CP2000 or audit response.

If you get a premature SNOD, request reconsideration and/or contact the taxpayer advocate’s office: if you have responded timely and receive a premature proposed assessment, you can request the Taxpayer Advocate Service (“TAS”) to intervene.  It is fairly common for taxpayers to request the TAS to intervene (it is #10 on the most common issues faced in TAS).  TAS can help reverse premature assessment and ensure that the taxpayer has access to IRS appeals if they are timely requested.  If you did not respond timely, you can also request “reconsideration” of the CP2000 or mail audit SNOD (or even after the tax is assessed).   Reconsideration is common for CP2000s and for mail audits as the IRS often does not hear back from taxpayers on time or process adjustments without getting all of the facts from the taxpayer.

A response that addresses all of the issues along with these 6 things will help you avoid a lot of headaches and time with the IRS trying to “undo” an incorrect CP2000 or mail audit assessment.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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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2021 IS A GOOD YEAR TO RESOLVE YOUR TAX DEBT ISSUES

IRS Commissioner Charles Rettig has gone on the record to tell taxpayers that it is a good time to resolve tax issues with the IRS.  The Commissioner likely directed his comments towards many unresolved tax debtors and non-filers.   IRS non-filer enforcement is a priority at the IRS, in 2020 and in the future.  Taxpayers with unfiled back returns and who likely owe for the unfiled years will be the primary enforcement targets.   

Tax debtors who are not in a collection agreement with the IRS should look to get right with the IRS while IRS enforcement is on hold. 

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

 

ADVANCE TAX RELIEF LLC

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Taxpayers may want to act immediately because of these 5 reasons:

The IRS is likely going to stay “kinder and gentler,” even after the pandemic:  the IRS understands the high level of unemployment and financial struggles taxpayers are experiencing.  This mindset will likely make it easier for taxpayers (even taxpayers who are in a current payment plan with the IRS) to negotiate non-collectible status. Non-collectible status, or “currently not collectible,” allows taxpayers to defer making payments on their tax debt until their finances get better in future years.  If a taxpayer’s finances do not get better before the collection statute expiration date (generally 10 years from when the tax is assessed), the IRS may write off the debt.

The IRS is going to be bogged down:  taxpayers who want to get into an agreement will face issues navigating the overwhelmed IRS.  IRS mail and phone call backlogs will take them months, if not over a year, to answer and resolve.  Taxpayers who want to get into a collection agreement based on their current circumstances should start now with evaluating options and executing their collection agreement with the IRS.  IRS Collection phone lines are open, and taxpayers can call/mail the IRS with information/forms to obtain a collection agreement.  This includes applying for a payment plan, currently not collectible status, or for an offer in compromise.

There may be future stimulus payments – and the amount you get may be based on your status with the IRS:  normally, stimulus payments are kept by the IRS if the taxpayer owes back taxes.  Not true for the first round of COVID-19 CARES Act stimulus payments.  The payments were paid to taxpayers regardless of whether the taxpayer owed the IRS and was in good standing on their tax issues.  Big questions remain on the next steps: Will there be another round of stimulus payments to taxpayers?  Will there be different rules for non-filers and tax debtors?   We can all speculate, but being “in compliance” (i.e. filed all past returns and in a collection agreement on past balances) is always the safest position.  The first round of stimulus payments likely induced many prior non-filers to now file a return.   Any future stimulus may have conditions that the taxpayer is in good standing on their taxes.

You may now qualify for a hardship collection agreement -including a tax settlement:  as a result of the impact of COVID-19, some taxpayers may be faced with a long-term financial hardship.  Also, taxpayers may have liquidated many of their assets to pay for necessary living expenses during the pandemic.  Lower asset values and little monthly income after necessary living expenses make for favorable settlement conditions for tax debtors.  Now maybe the time to apply for that OIC.

Acting now can avoid future IRS enforcement actions:  many non-compliant taxpayers, including those who were under the radar and filed a past-due return to obtain a stimulus payment, may find themselves subject to future IRS compliance enforcement. Once 7/15 arrives, taxpayers can expect the IRS to gradually ramp up to previous enforcement levels.  The IRS may also activate these accounts based on recent information received on their tax return.  Better to address the past issues now on your timeline than being pressured to comply on the IRS enforcement timeline.

3 steps to get right with the IRS

Taxpayers that are not in compliance with their tax obligations should follow three steps to get back into compliance:

First, they should research their IRS account and understand exactly what is needed to get back into compliance.  This likely means calling the IRS and/or reviewing their IRS transcripts.  Information such as unfiled tax years, penalties assessed, balances outstanding, and questionable IRS assessments are examples of what taxpayers can find when they research their account at the IRS.  Taxpayers will also find out who they will need to deal with at the IRS to resolve their issue(s) (hint:  it may be more than one IRS function).

Next, with the problem(s) clearly understood, the taxpayer can evaluate options and the steps needed to resolve their issue(s).    For example, taxpayers with penalties should review penalty abatement opportunities.  Taxpayers with balances owed can review collection alternatives.  Taxpayers with questionable IRS tax assessments can review their tax records and understand what is needed to lower the amount owed, such as filing an amended return. Once options are evaluated and prioritized, the taxpayer can take action to resolve their issues.

Lastly, once the problem(s) are resolved, the taxpayer can put in measures to stay in good standing with the IRS.  For example, taxpayers can increase withholdings to avoid additional balances owed.

This 3-step process will put you back in good standing with your IRS issues.  But act now, after the pandemic is over, the IRS may not be as kind and gentle.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2014, 2015, 2016, 2017, 2018, 2019 & 2020 Form 1040 tax returns 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

#TaxDebtRelief