As stated in earlier blogs, the Internal Revenue Service (IRS) can attach liens and levies against your personal and/or business assets to collect a tax debt. It can also attach a wage garnishment to your wages and earnings through your employer if you do not establish an installment agreement to pay the tax debt with them. However, obtaining a Wage Garnishment Release will stop the IRS from taking any part of your wages or earnings to satisfy your tax debt.
Wednesday, May 5, 2021
Monday, May 3, 2021
There is one more method of negating a tax lien against a property. A Tax Lien Withdrawal removes the Public Notice of Federal Tax Lien from an asset. This makes it easier to sell or refinance a property or asset. Remember that the Internal Revenue Service (IRS) places a tax lien on property and/or assets when you fail to pay your taxes. This means that you cannot refinance or sell the property to which a tax lien has been attached. The IRS can place a tax lien on personal property for a tax debt owed by your business. Attaching a tax lien to personal property is one tool the IRS uses to impose a Trust Fund Recovery Penalty and collect a tax debt. However, if you enter into a direct debit installment agreement with the IRS regarding this tax debt, you may be eligible for a Tax Lien Withdrawal.There are two options for eligibility for a Tax Lien Withdrawal:
Saturday, May 1, 2021
As stated in earlier blogs, the Internal Revenue Service (IRS) has several tools they use to collect back taxes owed: liens, levies, wage garnishments, etc. As the saying goes: there is no escape from death and taxes. The IRS has several means of protecting their interest in the event you fail to pay your tax debt in a timely manner.The IRS has the power to place a Federal Tax Lien against all of your assets and properties: financial, personal, business and/or real estate. Federal tax liens vary depending upon each individual situation and case. By failing to pay the IRS timely, a lien will be attached to all of your current and future assets until the offending tax issue is resolved. Furthermore, the lien can develop into a levy which empowers the IRS to seize any of your assets to pay your tax debt if you do not address a tax debt in a timely manner. Assets include vehicles, personal properties, jewelry, coin collections, real estate properties, stocks, bonds, cash, bank accounts, even bitcoin. Resolving your tax debt prevents a lien from being assessed or resolves one that has already been attached to any of your properties.
Monday, April 26, 2021
So, you owe the Internal Revenue Service (IRS) money for taxes. You do not have the money so you decide not to pay any amount toward the debt. After all, it you do not have money, the IRS cannot collect, right? WRONG! The IRS has the power to place a Federal Tax Lien against all of your assets and properties, whether they are financial, personal, business and/or real estate. This is the government’s way of protecting their interest in the event you fail to pay your tax debt in a timely manner.Federal tax liens vary depending upon each individual case and situation. If you fail to pay the IRS timely, a lien will be attached to all of your current and future assets until the offending tax issue is resolved. Furthermore, if you do not address a tax debt in a timely manner, the lien can develop into a levy which empowers the IRS to seize any of your assets to pay your tax debt. Assets include cars, personal properties, real estate properties, stocks, bonds, cash, monies in your bank accounts, even bitcoin.
The Internal Revenue Service (IRS) allows you, the taxpayer, to pay your tax debt in affordable monthly installments in which you determine the amount. These are called Installment Agreements. They are extremely helpful in affording the taxpayer time to pay their tax debt without the IRS forcing payment through liens, levies, wage garnishments and other collection tools.Of all the installment agreements available, the Partial Payment Installment Agreement (PPIA) affords the best of both worlds to the taxpayer. The taxpayer 1) makes affordable installment payments of his/her own choosing over a set period against the tax debt and 2) after that set period of time, the IRS considers the tax debt paid even if the full amount of the tax debt has not been paid. The IRS usually sets a time period of two years. You must provide full financial disclosure indicating your wages, assets, and expenses to the IRS. If you cannot afford a regular installment agreement and it is unlikely that you can pay the full amount of your tax debt, then the PPIA may be the most beneficial course of action for either you or your business.
Tuesday, April 20, 2021
Even the best of intentions does not always materialize. You completed and filed your federal income tax return, but suddenly you realize that you do not have the money to pay the tax amount due. Now what?! Do you not file the tax return? Do you send the tax return without money? Lucky for you, the Internal Revenue Service (IRS) has several options for you to pay the tax amount owed and file your tax return on time.One of these options is the Installment Agreement. If you cannot pay the full tax amount owed to the IRS in less than 120 days, the IRS allows you to pay your debt down into monthly installments. This allows you to pay down your tax debt while incurring less penalties and interest since the amount owed would be smaller. It also allows you to avoid wage garnishments, bank levies, tax liens and collections. Furthermore, paying against your tax debt will demonstrate your “good faith” to the IRS.
Sunday, April 18, 2021
Sometimes life just gets the best of you. Your taxes are withheld from every paycheck, but you do not file your tax returns. Sometimes you forget to pay your taxes on time as a self-employed worker. Sometimes you withhold payroll taxes but forget to deposit these monies with the Internal Revenue Service (IRS) on time … or you “borrowed” from those monies to pay important business expenses. It is not that you are deliberately “dogging” your tax obligation. It is just … life gets in the way.
The IRS can add interest and penalties to your tax obligation, making life a little rougher. The above situations are real life but can cause a lot of tax problems. Fortunately, the IRS has some helpful solutions. One such tax resolution is Penalty Abatement Relief. In the case of businesses, it is called Trust Fund Recovery Penalty Abatement or TFRP Abatement. The IRS offers this concession when life gets in the way of fulfilling tax obligations. They allow the penalties to be waived using three different types of penalty relief:
- Reasonable Cause
- First-Time Penalty Abatement
- Statutory Exception
So, what are these relief options and how do they help with payroll tax and/or my tax debt? Let us discuss them one by one.
First, there is reasonable cause. As defined by the IRS, reasonable cause is based on circumstances and facts particular to your situation. You must establish that you followed all procedures to meet your tax obligations but were unable to meet them due to certain circumstances. According to the IRS, financial hardship does not make you eligible for a reasonable cause waiver; however, the circumstances leading to that financial hardship may. Some examples are natural disaster, fire, death, the inability to obtain records, serious illness or an unavoidable absence of a taxpayer or immediate family member.
Second, First-Time Penalty Abatement (FTA) rewards those who have typically met their tax obligations in the past but for whatever reason did not meet their tax obligations this time around. This type of abatement relief is offered to those who did not meet their tax obligation on a single return. The only other criteria are that you must not have received a penalty within the past three years on a specific type of tax return. So, to recap the eligibility for First-Time Abatement:
- You have filed all current tax returns or have filed an extension of time to file a tax return.
- You did not previously have to file a return.
- You have arranged to pay all taxes due.
- You have no penalties for the three tax years prior to the tax return in question that you received a penalty for.
Third, a statutory exception places the fault of your dilemma on the IRS itself. You asked the IRS advice and your received incorrect information which you acted upon and thereby received a penalty. You will have to prove this so have the following information at the ready:
- Your written correspondence from the IRS for advice
- The incorrect advice the IRS gave you.
- The report of the penalty along with items related to this incorrect advice.
If indeed you are eligible for any of these waivers, the IRS will reduce or remove the penalties and therefore the interest charged will be reduced.
Before contacting the IRS on your own, consult a tax professional. A tax professional will determine what option applies to your situation and how to approach it. Our following blogs will continue to discuss tax resolutions. Stay tuned!
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