What is Innocent Spouse Relief?

 Sometimes an individual underreports his or her income to the Internal Revenue Service (IRS). Whenever the IRS discovers that this has occurred, it will investigate all parties involved, including spouses if the two have filed a joint tax return. If a spouse can prove to the IRS that he or she did not deliberately act in the underreporting of income, that individual may apply for Innocent Spouse Relief. 

Innocent Spouse Relief relieves that individual from paying any taxes, penalties and interest on misreported or underreport items on the tax return for which his or her spouse is ultimately responsible for. It applies if your spouse or former spouse omitted or improperly reported items on the joint tax return without your knowledge. The IRS will determine whether you will be relieved of the responsibility for all or a portion of the amount after they approve your request for relief. You must file the form for Innocent Spouse Relief (IRS Form 8857). Per the IRS, Innocent Spouse Relief only applies to individual or self-employment taxes. It does not apply to business taxes, household employment taxes, individual shared responsibility payments or trust fund recovery penalty employment taxes.

There are a number of conditions for qualifying for Innocent Spouse Relief:

• You filed a joint tax return with an understatement of tax due to unreported income or incorrect credit(s), deduction(s) or basis(es).
• At the time of signing the joint tax return, you did not know, and had no reason to know, that there was an understatement of income.
• It would be unfair to hold you liable for the understatement of income and tax due to facts and circumstances.
• Neither you nor your spouse (or former spouse) have transferred property to one another as part of a fraudulent scheme, defrauding the IRS or another third party, such as a creditor, ex-spouse or business partner.

There are several terms that need clarification:

• Unreported income is any gross income not reported by you, your spouse or former spouse to the IRS. This would include income from self-contractor work, reported on a 1095; any income reported on a W-2; or any other income the IRS discovers that has gone unreported.
• Improper deduction, credit or basis is any expense that were not really paid, did not qualify as a deduction or for which no factual argument can be made to support the deductibility of the expense claimed.
• Reason to Know is whether you had any actual knowledge of the misreported or omitted taxes. The IRS will determine whether or not there is a basis for your lack of knowledge. The IRS will consider all facts and circumstances in determining whether you had reason to know of an understatement of tax due to an erroneous item. The facts and circumstances include:

• The extent of your participation in the activity that resulted in the erroneous item.
• The nature of the erroneous item and the amount of the erroneous item relative to other items.
• Your educational background and business experience.
• Whether you failed to ask, at or before the time the return was signed, about items on the return or omitted from the return that a reasonable person would question.
• The financial situation of you and your spouse (or former spouse).
• Whether the erroneous item represented a departure from a recurring pattern reflected in prior years’ returns (for example, omitted income from an investment regularly reported on prior years’ returns).

Furthermore, the IRS will also determine whether or not it is fair to hold you liable for the return. The following criteria are some examples that the IRS will consider:

• Your spouse (or former spouse) deserted you or you are divorced or separated from your spouse.
• You received a significant benefit from the understatement either directly or indirectly.

Claiming Innocent Spouse Relief requires the assistance from a tax professional. Bullseye Tax Relief can offer help with all sorts of tax problems. We are an expert in tax resolution. Call us today so that we can guide you through the process or even determine if claiming an Innocent Spouse Relief is the best option for you.

Free Your Bank Account with a Bank Levy Release

 As stated in earlier blogs, the Internal Revenue Service (IRS) has several different tools for collecting a tax debt. Another tool is the Bank Levy. Here, the IRS freezes your bank account and collects whatever money is being held in that bank account. If you do not have enough money to pay your tax debt in full, the IRS will resort to another collection tool, such as garnishing your wages or earnings or attaching a lien to one or more of your properties. There is no escaping death and taxes!

Wait a minute. Actually, there are a couple or tax resolutions available to you. You can request a Bank Levy Release that will free your bank account from the IRS so that they cannot seize the money held there. First, after several letters from them, you will receive a Final Notice of Intent to Levy. If you do not respond and attempt to pay your tax debt via install agreement or payment in full, the IRS will place bank levy on your bank account(s). You have only 30 days to respond to the Final Notice of Intent to Levy before the IRS seizes the money. The IRS can levy all checking accounts and saving accounts attached to your name at any bank.

As the name implies, a Bank Levy Release frees any bank account from a bank levy imposed by the IRS. This means that the IRS can no longer seize those monies to pay your tax debt. There are several methods in obtaining a Bank Levy Release. Here is a list of them:

• Respond to the Final Notice of Intent to Levy before the 30-day response period expires.
• Pay your tax debt in full.
• Entering into an Installment Agreement (IA) or a Partial Pay Installment Agreement (PPIA).
• Request a Collection Due Process (CDP) hearing whereby you can try to persuade the IRS not to levy your bank account(s). This can be your last chance to resolve your tax controversy with the IRS before the collection process begins. Remember you only have 30 days in which to respond to the Final Notice of Intent to Levy. 

There are several other circumstances whereby the IRS may not proceed with imposing a Bank Levy. Here is another list:

• Paying your tax debt in full.
• Filing for bankruptcy during the same time frame the tax debt was assessed. 
• Proving that the collection was incorrectly assessed against you.
• Demonstrating that the collection was assessed after the statute of limitations had passed.

Fortunately, you are given a 22-day grace period after the expirations of the 30-day time frame to respond to the Notice. This means that your monies in your bank account are frozen or set aside instead of being taken immediately. During this 22-day grace period, you may request that the bank levy be released. You must prove or do the following:

• An amended tax return for which you have been assessed the tax debt indicates that you do not owe the tax debt.
• The bank levy was issued in error by the IRS.
• You are behind on other bills.
• Levying your bank account would cause financial hardship, making it impossible to meet your basic living needs.
• The bank levy would make it more difficult for the IRS to collect the full tax debt.
• You entered into an Installment Agreement.
• The IRS approved your request for a Currently Non-Collectible Status (CNC).
• An Offer in Compromise was approved per your request.

Keep in mind that your tax debt or assets are liable to be levied again if you do not pay off your tax debt once the bank levy is released. Once you have received a Final Notice of Intent to Levy, you must immediately consult a tax professional to avoid further complications and liability. We at Bullseye Tax Relief are ready with a variety of tax problems solutions. Just give us a call and we will assess your situation to determine if a Bank Levy Release is your best option. Come back and visit us for more information on tax problems help.

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.