Many taxpayers fail to file required tax returns for many reasons. What they may not be aware of is failure to file a tax return is a criminal offense! This type of criminal act is punishable by one year in jail for each year not filed! It is one thing to owe the IRS money, but it is another to potentially lose your freedom for failure to file a tax return.
In most situations we can prepare and file delinquent returns avoiding exposure to such harsh penalties. In some cases, the IRS may even file SFR (Substitute For Return) tax returns for you. This is the IRS's version of an unfiled tax return. Because SFR returns are filed in the best interest of the government, the only deductions you'll see are standard deductions and one personal exemption.
On a SFR return, you will not get credit or deductions that you may be entitled to like exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, among others. Therefore, the amount of tax assessed is higher than the amount we would calculate considering appropriate deductions and exemptions.
Taxpayers often find themselves in trouble with the IRS because of their spouses or ex-spouses actions. The IRS realizes that these situations do occur and to help taxpayers that are subjected to IRS collection actions because of their spouse's actions, special new rules went into effect under the 1998 IRS Restructuring Act. These new rules created guidelines where a person may qualify as an Innocent Spouse.
This means if a taxpayer can prove they fit those guidelines, they may not be subject to the taxes caused by their spouses or ex-spouses.
The IRS is currently considering additional new regulations, which would make it even easier to qualify as an Innocent Spouse. If the IRS is trying to collect tax related to the income of a spouse or ex-spouse that you believe you don't owe, call us for a free consultation.
We can secure an agreement with the IRS to allow monthly payments on your tax liability. This agreement keeps them from filing liens and levies as long as the payments are made. Without an agreement, the IRS may take money from your paycheck or bank accounts, and they can file liens against your home or other property. We may even be able to combine an Installment Agreement with Penalty Abatement, described below.
One thing to keep in mind, in order to arrange an installment agreement, the IRS will require all tax returns to be filed (with some special exceptions we can explain). It is okay to owe, but these returns must be filed (See the section on unfiled returns). The total dollar amount you owe usually dictates with whom the negotiations will be handled. Typically, this amount is determined by owing less than or more than $25,000. Also, there are some cases that IRS Revenue Officers are directly involved, but this is usually cases where the amounts owed are more than $25,000.
There are also circumstances that can occur that will allow them to set up an installment agreement for less than the usual amount, called a partial pay installment agreement. In these cases, as long as you pay as agreed, the remaining tax leftover at the end of the payment term may be forgiven.
The IRS Offer In Compromise (OIC) program is the government's ,Let's Make A Deal, plan. It provides taxpayers that owe the IRS more than they could ever afford a chance to pay a small amount as a full and final settlement. Yes, this means the amount you pay is based on what you can afford, not what you owe!
This program also offers taxpayers that don't agree that they actually owe the taxes in the first place a chance to file an Offer in Compromise and have those tax liabilities reconsidered, as well as those that agree they owe, and may be able to pay, but an exceptional circumstance exists. The Offer in Compromise program allows taxpayers to get a fresh start. All back tax liabilities are settled with the amount of the offer. All federal tax liens are released upon IRS acceptance of an Offer in Compromise and payment of the amount offered Taxpayers can compromise all types of IRS taxes, penalties, and interest. Even payroll taxes can be compromised. If you qualify for this program you can save thousands of dollars in taxes, penalties, and interest.
The IRS wage garnishment is a very powerful tool used to collect taxes owed through your employer. Once a wage garnishment is filed with an employer, the employer is required to collect a large percentage of each paycheck. The paycheck that would have otherwise been paid to the employee will now be paid to the IRS. The wage garnishment stays in effect until the IRS is fully paid or until the IRS agrees to release the garnishment. We can assist with getting the garnishment released so your paycheck goes to you and not to the IRS!
A Lien is filed by the IRS on your home or other assets that you have now, as well as future assets you acquire during the duration of the lien. Liens are filed to protect the government's interests. If you then sell an asset with a Lien attached, the IRS tax debt is settled with the proceeds before you receive the remainder (if any). This also affects your Credit, since it becomes public record, affects your credit report, and will affect your ability to get credit. Even if you file for bankruptcy, your lien may continue after the bankruptcy.
An IRS Levy is the action taken by the IRS to collect taxes by seizure. For example, the IRS can issue a bank levy to obtain your cash in savings and checking accounts. Or the IRS can levy your wages or accounts receivable. The person, company, or institution that is served the levy must comply for face their own IRS problems. The additional paperwork this person, company, or institution is faced with to comply with the levy usually causes the taxpayer's relationship to suffer with the person being levied. A levy can also be issued to seize other assets. Levies should be avoided at all costs and are usually the result of poor or no communication with the IRS.