Wednesday, May 5, 2021

A Wage Garnishment Release Frees Your Wages from the IRS

 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.



Just as the IRS can place a tax lien on your business, a wage garnishment is like a tax levy in that the IRS has a right to your property, i.e., your paycheck. Your employer is instructed to withhold a portion of your paycheck and send it to the IRS to make payments against your tax debt. If you are a business with a wage garnishment notice from the IRS for one of your employees, call us for advice on this payroll tax resolution. Wage garnishments are serious. They can affect not only your gross wages or salary, but commissions, bonuses, retirement benefits, disability payments, and VA and social security benefits. 

Before garnishing your wages, the IRS will send you several notices reflecting the amount you owe in taxes before garnishing your wages. The IRS will garnish your wages if you do not attempt to pay off your debt in full or enter into an installment agreement with them. The IRS will NOT notify you that it is garnishing your wages but will directly issue a notification of garnishment to your employer. Your employer will then in turn notify you that your wages are being garnished.

As the name implies, a Wage Garnishment Release “releases” your wages from garnishment by the IRS. You must request a wage garnishment release from the IRS. Here are several main reasons that the IRS will consider before releasing your wages from garnishment:

  1. Your tax debt has been paid off in full.
  2. You have entered into a collection agreement: (However, failure in paying the agreed amount can led to the IRS garnishing your wages again.)
    1. Offer in Compromise (OIC)
    2. Installment Agreement (IA)
    3. Currently Non-Collectible (CNC)
  3. A Wage Garnishment would lead to financial hardship, making it more difficult to pay off your tax debt or pay for basic living expenses.
  4. If you have not previously filed for an extension to pay (ETP) for this tax debt, but you have complied with previous payment agreements, the IRS may accept an extension to pay which will automatically release your wages from garnishment.

By amending or filing any missing or incorrect tax returns, you can also reduce the amount of collections owed. By having a tax professional review your tax returns for any missed deductions, you may also reduce your tax debt. The rules and fees that the IRS must follow do not make wage garnishment an ideal method for obtaining full payment of your tax debt. Since it is burdensome, the IRS is reluctant to release a wage garnishment once it is imposed since you were given warning via several notices.

Consulting a tax professional who can evaluate your specific tax situation and advise you on how to proceed is your best course of action, especially if you have received a notice of garnishment from your employer or your wages are already being garnished. Call us today at Bullseye Tax Relief so that we can help you avoid a wage garnishment or release one if one has already been imposed.


Monday, May 3, 2021

A Tax Lien Withdrawal Releases Your Property

 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:

For Option 1: The lien has been paid off and the property released from the tax lien so that the IRS is no longer prioritized regarding it. Criteria is as follows:

  1. All tax returns for the past three years have been filed including individual, business and information returns.
  2. All estimated tax payments and deposits are current.
  3. Your tax liability has been released.

For Option 2: Direct debit installment agreement allows for the filing of a tax lien withdrawal. This includes converting a regular installment agreement into a direct debt installment agreement in which installment payments are directly paid from your bank account. Criteria is as follows:

  1. Qualifying taxpayer: individual, business with income tax liability only and/or out of business entities with any type of tax debt. The IRS can place a tax lien on your business.
  2. A tax debt of $25,000 or less is owed. If more than $25,000 is owed, a taxpayer may pay the amount down to $25,000 before requesting a Tax Lien Withdrawal.
  3. Other filing and payment requirements are in full compliance.
  4. Three consecutive direct debit payments have already been made.
  5. There has been no default on current or previous Direct Deposit Installment Agreements.
  6. The Direct Debit Installment Agreement must be paid in full within 60 months or before the collection statute expires, whichever is earlier.

There are other considerations for eligibility for a tax lien withdrawal:

  1. The tax debt is less than $25,000.
  2. Withdrawal of the tax lien is in the best interest of the government and the taxpayer.
  3. It would be easier to repay the tax debt is the tax lien was withdrawn.
  4. The taxpayer enters into an installment agreement to pay off the past due tax lien.
  5. Evidence exists that the tax lien was not in accordance with IRS procedures or was filed prematurely.

The most important eligibility requirement for any Tax lien Withdrawal is entering into a Direct Debit Installment Agreement since installment payments are paid directly from your bank account. You can simply set this up online through the IRS website. You must also provide documentation to support your application for a tax lien withdrawal. Furthermore, you must list the financial institutions you would like notified of the withdrawal of the tax lien.

Applying for a tax lien withdrawal may be the best option for you if are wanting to sell your property and there is a public notice of federal tax lien on your assets, which renders them undesirable to buyers or creditors. Give us a call today to consult with a tax professional about your situation as to whether a Tax Lien Withdrawal is advantageous for you.

Saturday, May 1, 2021

Tax Lien Discharge Reverts Property Back to You

 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. 

It is called tax lien discharge. A discharge removes the tax lien from the specific property to which it was attached, but not to every tax lien. A discharge is specific to which property is affected. Once a tax debt is satisfied, the IRS grants a tax lien discharge if it accepts your request for discharge. The IRS will issue you a Certificate of Discharge which will allow you to sell, refinance or “retrieve” the property that had the tax lien attached to it.  

Anyone wishing to sell or refinance a real estate property with a tax lien attached to it should apply for a Tax Lien Discharge. Otherwise, you will have difficulty in selling or refinancing the property since the tax lien remains with the property until it is discharged. Although the new owners would not be subject to paying the tax debt, the IRS would still be able to place a lien against the property and seize it. Most potential buyers would not want this liability and so the tax lien would likely discourage any buyers. 

Applying for a tax lien discharge requires completing forms regarding the appraised value of the property, its description and the basis for a discharge. The IRS must be satisfied that granting the tax lien discharge would not jeopardize their interest in the property. In other words, the IRS would still be paid the amount owed without the use of a tax lien. The IRS would consider the following in granting a tax lien discharge:

  • Proof that the value of the property is worthless to the IRS. For example, you owe more on the property than an appraisal states that it is worth.
  • You have other valuable assets attached to the tax lien.
  • You can sell the property and provide the proceeds to the IRS.
  • You can pay the IRS an amount equal to the interest they have on the property.

Once the IRS approves your application for a tax lien discharge, they will send you a Certificate of Discharge for that property. You can then:

  • List the property for sale without the liability of a tax lien attached to the property.
  • Refinance the property and use the money to pay toward your tax debt.
  • Sell the property outright and use the proceeds to pay the tax debt in full.

However: 

  • You would still owe any remaining tax debt along with penalties and interest.
  • The discharge only applies to the specific property named on the Certificate of Discharge.
  • Any other property attached to the tax lien would remain attached and subject to levy if the tax debt is not paid in full.

Since this process is complicated and any mistakes may make the situation worse, it is advised to consult a tax professional. Call us today so that we can determine your best options. More tax resolutions will be discussed in the coming blogs, so please visit us again.

Monday, April 26, 2021

Federal Tax Liens Ensure Collection of Tax Debt

 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. 

Since April 2018 all three credit reporting bureaus (Equifax, Experian and TransUnion) stopped reporting liens on their credit reports. This means that Federal Tax Liens should not affect your credit scores regardless of whether or not the lien has been satisfied. However, this does not mean that no one can determine if you have any liens against you. There are other consumer reports on which tax liens may appear since liens are public records. Moreover, the IRS must follow a procedure for collections of a tax debt before mailing out a notice informing you that a tax lien has been filed against you. They will: 1) assess the amount of taxes owed by examining a filed tax return and 2) send a tax bill to your last known address. If you do not respond to the bill notice, the IRS will send out a lien notice. 

The best way to avoid a federal tax lien is to pay your amount of taxes in full. If you have trouble paying the entire amount due to financial stress, the IRS offers a multitude of payment options to avoid liens, levies, and other forms of collections. Some options are:

  • File an Offer In Compromise (OIC).
  • File for Currently Non-Collectable (CNC).
  • Apply for an Installment Agreement (IA).
  • Apply for a Partial Payment Installment Agreement (PPIA).

However, if you have already received a Notice for imposing a Federal Tax Lien against you from the IRS, do not panic. Aside from paying the entire tax debt to the IRS, there are other options:

  • Apply for an Installment Agreement (IA).
  • Apply for a Partial Payment Installment Agreement (PPIA).
  • Apply for Lien Discharge if you pay the tax debt in full.
  • Apply for Lien Subordination.
  • Request a Lien Withdrawal.

Whether you have already received a Lien Notice from the IRS or you believe you may receive one shortly, DO NOT IGNORE IT! Call us immediately to review your options before a bad situation becomes worse. Continue to visit our website to learn more about tax problem resolutions.

Pay a Portion of What You Owe with a Partial Payment Installment Agreement

 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.

The eligibility requirements for the Partial Payment Installment Agreement are similar to the Offer in Compromise. The IRS must determine that:

  • You do not have enough assets worth liquidating to pay off your tax debt.
  • Your wages do not cover the full payment of your tax debt without you incurring financial hardship and therefore you are unable to cover your basic living expenses.
  • You do not have the earning potential to pay your tax debt in full in the upcoming years.
  • You are unable to cover the minimum payment requirement of a regular installment agreement.
  • You owe more than $10,000 in tax debt.
  • You have not filed for bankruptcy.
  • You can pay off some of your tax debt, but not all of it, before the statute of limitations expires.

So, if an Offer in Compromise and PPIA are similar, why are they both available? Due to its lack of finality, the IRS is more likely to accept a PPIA because they can review your ability to pay off your tax debt annually. If your ability to pay your tax debt in full increases, then the IRS can collect the full amount before the statute of limitations expires. This is a better outcome for the IRS since it can possibly collect a larger amount than it can with an Offer in Compromise which is final once negotiated and agreed upon. With an Offer in Compromise, the IRS can only collect what it negotiated to collect even if your financial situation improves. 

The statute of limitations is the time frame in which the IRS can lawfully seek payment for your tax debt. Usually, the statute of limitations for the IRS to collect a tax debt is 10 years for the date the debt was originally assessed. Once the statute of limitations expires, the IRS cannot collect the tax debt, interest, and penalties from you, even if you can afford to pay the tax debt.

Although you can negotiate a Partial Payment Installment Agreement on your own with the IRS, the question is: why would you? The application process involves the submission of many forms, is complicated and you can be out negotiated by the IRS agent. If you are not eligible for an Offer in Compromise and you cannot afford a regular installment agreement, then a PPIA may be best for you. Let a tax professional from Bullseye Tax Relief assist you. We will discuss all your options and direct you to your best option. Our following blogs will continue discussing other tax relief resolution options.

Tuesday, April 20, 2021

How Installment Agreements Can Help

 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.

The IRS allows you to determine the amount your minimum monthly payment will be based upon what you can afford. However, they do encourage you to pay as much as possible to avoid additional fees, penalties, and interest. If you offer the IRS an offer that they believe is too low or if you neglect to inform them of the amount you wish to pay monthly, they will simply take the total amount of tax due and divide it into 72 monthly payment installments. 

If you meet certain IRS criteria for an installment agreement, you or your business may be guaranteed eligibility for an installment plan. Even better, the IRS does not require you to complete a financial statement or verification for a Guaranteed Installment Agreement.

Here are some of the criteria you must meet for a guaranteed installment agreement:

  • You have filed all required tax returns.
  • You agree to file and pay all future tax returns on time.
  • You owe $10,000 or less in tax debt.
  • You agree to allow the IRS to use all future tax return refunds to pay down your tax debt.
  • You agree to pay off your installment agreement within 72 months or less.

If you owe $50,000 in tax debt or less and do not qualify for a Guaranteed Installment Agreement, you may be eligible for a Streamlined Installment Agreement. Typically, this type of plan does not require you to complete financial statements or submit verification. The criteria for this type of plan are:

  • You have filed all required tax returns.
  • You owe $25,000 to $50,000 in tax debt.
  • You agree to file and pay all future tax returns on time.
  • You agree to pay off your installment agreement within 72 months or less.

The IRS has installment agreements for small businesses too. An In-Business Trust Fund Installment Agreement is best for small businesses that owe $25,000 or less in tax debt. Typically, this type of plan does not require you to complete financial statements or submit verification. The criteria for this type of plan are:

  • You have a small business with employees.
  • You have filed all required tax returns.
  • You agree to allow the IRS to use all future tax return refunds to pay down your tax debt.
  • You owe $25,000 or less in tax debt.
  • You agree to file and pay all future tax returns on time.
  • You agree to pay off your installment agreement within 24 months or less.

Each installment agreement discussed here have certain requirements, so it is best to consult a tax professional. Call today so that we can help you navigate the complex criteria. Our next blogs will further discuss options for dealing with the IRS and your tax debt so please visit us again.

Sunday, April 18, 2021

Penalty Abatement Relief

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: 

  1. Reasonable Cause
  2. First-Time Penalty Abatement
  3. 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!


A Wage Garnishment Release Frees Your Wages from the IRS

  As stated in earlier blogs, the Internal Revenue Service (IRS) can attach liens and levies against your personal and/or business assets to...