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The best thing you can do is file your tax return as soon as possible. The IRS will eventually find out that you haven’t paid taxes through employers, contractors, mortgage holders or the assets that you purchase. The longer you go without paying taxes, the more fines you will have to pay. If you can’t pay all of your taxes, you may be able to qualify for an Offer in Compromise, Installment Agreement or Currently Not Collectible Status.
Get all tax documentation you have to prepare for resolving previous years of unfiled tax returns. If you can’t find some of the documentation, we can help.
If you are not financially capable of paying back the IRS, you may be able to negotiate an Offer in Compromise, where you can settle your back taxes for less than you owe. If the IRS accepts your offer, you can pay the amount agreed upon, and all federal tax liens or levies are removed.
Negotiating an Offer in Compromise can last up to 18 months and be very complicated. About a quarter of all offers are accepted so it is highly recommended that you get a tax professional to help.
A lien is a public record on your property that says you owe the IRS money. It tells creditors that the IRS has a claim on all your property, including property you buy after the lien is filed. If a lien is attached to your property, you cannot sell that property without a clear title.
If you pay your debt to the IRS, the lien will be released within 30 days.
If you never pay your debt, the lien will usually be released automatically 10 years after it is issued.
An IRS tax levy takes immediate actions against you. It requires the person receiving the levy to turn over all funds due you the IRS. This could be the money in your bank account, the paycheck from your employer, or your accounts receivable if you are in business. A tax lien is used as security for tax debt. It says that the IRS has the right to seize the property before other creditors. If the IRS has a levy against your property, they can actually take your property to satisfy that debt.
The IRS can issue a levy against your property, including your house, your vehicle and even your bank account. This levy allows the IRS to seize your property to pay back debt.
If a levy has been issued against your property, start communicating immediately with the IRS. Find out if you qualify for an Offer in Compromise, Installment Agreement or Currently Not Collectible status. If the seizure would cause severe hardship, you can request a Taxpayer Assistance Order to protect you.
The IRS can collect money you owe them by issuing a garnishment on your paycheck. A garnishment is basically a levy that requires your employer to collect a large portion of your paycheck and pay it straight to the IRS until your debt is paid off. Garnishments usually collect between 30 and 70 percent of each paycheck.
Your best chance of avoiding garnishment is to respond immediately when the IRS contacts you. Before they can garnish any wages, the IRS can send a Final Notice 45 days before taking action. Also, it is important to know that the IRS can garnish your wages months or years after sending you the Final Notice. The best thing you can do when you get a Final Notice is act immediately.
If the IRS does issue a garnishment on your paycheck, you can find out if you qualify for an Offer in Compromise, Installment Agreement or Currently Not Collectible status. Act as quickly as possible, because even you get an IRS wage garnishment released, the IRS will not give back money that they have already collected.
The amount garnished depends on the amount you earn and the number of dependents in your family. Also, the IRS is only required to leave you a certain amount of money. So, the IRS could take the same amount of money from you whether you make $1,500 or $15,000 per month.
You do not have to be liable for those taxes. The IRS offers Innocent Spouse relief to protect you.
The easiest way to avoid an audit is to completely and accurately fill out your tax return. This includes double checking your math and making sure you used all the correct forms. Because the IRS flags items that look suspicious, you may want to consider attaching an explanation if you think a deduction or credit you are claiming looks too large.
First, find out whether or not the IRS wants to have a face-to-face meeting with you. About a third of audits are just letters from the IRS asking for explanation for a certain item on your tax return.
Next, consider contacting an accountant, tax attorney or Enrolled Agent to stand before the IRS for you. Before you go to your audit, organize all tax material relevant to the question being asked and make copies. Bring all worksheets to show how the tax figures were calculated. Always remember that you can do yourself more harm than good by volunteering more information than was requested by the IRS.
At the end of the audit, the IRS agent will give his informal judgment on the matter. You will receive a formal report later. If you do not agree with the audit ruling, you can appeal to the IRS or even the U.S. Tax Court.