What’s Wage Garnishment?

The IRS may use wage garnishment to settle your tax debt, and it could be financially and emotionally stressful for you and your family. You will be worry-free because our company can assist you with your IRS issues.

What to expect

A letter, phone call, or visit serves as prior notice from the IRS about your lack of ment of taxes. You will be served a legal notice telling you that the IRS will be resorting to other methods to collect your tax liability if you dismiss the prior notices. They will not tell you again before they take action. It will begin collecting your taxes by any method it deems necessary. Wage garnishment is an effective option that the IRS uses to collect unpaid taxes.

Wage Garnishment

The IRS can seize a part or all of your assets, such as wages and bank accounts to pay your back taxes. You’ll never see this money as your employer will be expected to give part of your paycheck straight to the IRS until your tax debt are settled fully or an agreement is reached with the IRS.

This is used by the IRS to get your attention because you obviously do not want to have this burden.

Your Options

You can stop wage garnishment by negotiating an Offer in Compromise or installment agreement, or getting a currently not collectible status. The process is made easier with the assistance of our firm.

Before the IRS can commence wage garnishment, avoid this issue by settling your tax debt.

Unfiled Tax Returns:The Facts

The main reason why most people do not file their tax returns is that they do not have enough money to pay their taxes. Interest and penalties compound on your tax bill, so it is multiplying fast. How should you address this IRS issue?

Not filing your tax returns is worse than filing them late and owing the IRS tax debt. There’s no criminal punishment if you can’t pay your taxes but you filed, but it’s a felony if you don’t file at all. You will be sentenced to one year in prison or fined up to $25,000 a year for every unfiled year if you continue to not file your taxes.

To determine if people have filed tax returns, the IRS uses its computerized IRP (Information Returns Program) to scan 1099 income reports and W-2’s. This program is very efficient. File your tax return before the IRS finds out that you haven’t.

Ways to Get It Done

• Get all documentation together. Collect your W-2�s and other documentation together. If you determine that there are documentation missing, request copies from the IRS.
• A tax professional can do your tax return. They can even deal with the IRS for you.
• Know everything about tax refunds. An unfiled tax return might actually have a tax refund. Be ready to have the IRS use this refund for payment of your tax debt and be aware of the time limits.
• Fully pay your tax liabilities. A good plan can let you settle your tax liabilities. Work with the IRS and obtain advice from a tax professional to protect yourself from an IRS investigation. This may require qualification for an installment agreement or Offer in Compromise. Your IRS issues will go away with a good plan.
• Look to the future. Evaluate your tax situation with a tax professional and research methods that’ll work to lessen your taxes and help you achieve your economic goals.

Everything About Offer in Compromise

If you have IRS issues, an Offer in Compromise might be a solution. An OIC or Offer in Compromise is the agreement to solve your tax debt between you and the IRS.

Everyone would want to reduce their taxes, especially those with IRS problems. With the help of our office, you’ll complete the requirements needed to submit an OIC.

You must be under the criteria and accomplish an Offer in Compromise (Form 656) to be considered for an OIC:

• It’s determined that the IRS might not be able to collect from you now or in the future (Doubts as to Collectability).
• Doubts as to Liability: There is question that you even owe the tax.
• Effective Tax Administration: You have the funds to pay the tax but in so doing, it would put a hardship on you and your family.

Your full name, social security number, address, and employer identification number are needed on the Form 656. For joint submissions, i.e., husband and wife, both names must be submitted. Other specific criteria are also included in this form. The form has to be accomplished right and our firm can help you do it.

Form 656 also needs you to identify your unpaid liabilities to be compromised. This includes 1040/1120 income tax, 941 Employer�s quarterly Federal tax return, 940 Employer�s annual Federal unemployment tax return, Trust Fund Recovery Penalty assessment, and any other Federal taxes. The OIC will not be accepted if you do not declare all the taxes you owe.

Our firm can help you figure out if you’re offering Doubt as to Collectability or Doubt as to Liability.

Also, the amount you are offering the IRS should also be included, based on:

• Your monthly income, exluding expenses, multiplied by the life of the collection statute (48 or 60 months)
• The equity in your assets

You will have to tell the IRS if you are paying in full or if you’re just paying a deposit at the time you submit. You will also need to determine a deadline for when the balance will be paid in full.

Your signature is needed on the offer, as well as the date you signed.

When submitting an OIC on the basis of Doubt as to Collectability, a Collection Information Statement (Form 433-A for individuals, Form 433-B for businesses) needs to be attached to the Form 656. All the blocks on the form needs to be filled out, and if a block is not applicable, just lable it N/A. Also attach documents showing the value of your assets, expenses and income, and encumbrances.

There’s no need to submit Forms 433-A or 433-B if you’re filing an OIC based on Doubt as to Liability. However, a detailed explanation why you believe you do not owe the tax must be submitted.

Resolve Your IRS Tax Levy Problems Today

If you have IRS issues consisting of owing tax debt, you may be served notice of a tax levy. A levy is a way collect the back taxes you owe. A tax levy is actually the seizure of your assets.

You have to get a Notice of Demand for payment, refuse to pay taxes, and be served a Final Notice of Intent to Levy before the IRS can take your assets.

These assets can be taken by the IRS:

• Inheritance
• Partnership interest
• Social Security benefits
• Checking and savings accounts
• Your house, vehicle and/or boat
• Cash value of your life insurance
• Your income which includes both salary and commissions if applicable
• Accounts receivable, contracts, and securities
• State income tax refunds
• Retirement pensions

And the list goes on…

Obviously, seizure of any of these will be financially and emotionally disstressful for you and your family. If the stress involved with IRS problems is burdening your family, a tax levy will add to this stress.

A tax levy notice needs a response. Here are some options that can release a tax levy, and you can resolve IRS problems with an IRS Problem Resolution professional:

• Payment of your taxes including the interest accrued and any penalties
• The levy issued after the statute of limitation expired
• Convince the IRS that taxes will be collected if the levy is released
• An installment agreement is negotiated upon
• Extrem hardship if levied
• The levied property is worth more than what you need to pay so a fraction ofthe seized property will be released
• Filing bankruptcy
• Offer in Compromise

Types of Penalties

Unless your tax debt is paid in full, your IRS issue is always growing because penalties are added to your tax bill by IRS computer or personnel.

Penalties were originally intended to encourage taxpayers to pay their taxes or be penalized, but now the IRS depends on them for additional revenue.

Some purposes for penalties:

• Failure to Pay Taxes
• Late Filing of Tax Return
• Fraud
• Accuracy
• Combined

If you downplayed your income tax liability on your tax return, accuracy penalties will be evaluated on your tax liability. This will be twenty per cent of your tax liability.

Fraud penalties of seventy-five per cent is imposed on fraudulent understating or deletion of your return’s income.

Failure to pay taxes have penalties from 0.25% to 1% monthly. It commences at 0.50% on April 16 and later compounded to your liability every 16th of the month. It decreases to 0.25% if an installment agreement is entered into and may be raised up to one per cent if a Notice of Intent to Levy is issued.

Late filing of tax return penalties are evaluted at 5% montly on the amount due, up to twenty-five per cent of the sum.

A combination of two or more penalties lead to combined penalties and it accumulates fast.

Penalties may be abated if you received incorrect advice from an IRS official, though you must prove that you disclosed correct information.

Penalties can be lessened or wiped out altogether if you can provide reasonable cause in writing why you didn’t follow the tax law.

Proving a valid reason for failing to act or acting constitutes a reasonable cause. Financial problems, personal problems, medical issues, unavailable or missing records, and serious disruption of one’s life are common grounds for reasonable cause. You have to prove that you acted with “ordinary business care and prudence” to show reasonable cause.

What You Have To Learn About Payroll Taxes

You withhold taxes from employees’ paychecks each pay period if you have your own business. These are FICA contributions (Medicare and Social Security) and federal and/or state income tax. The number of exemptions each employee claims is the determinant for income tax withheld. FICA is a part of the employee’s gross earnings. The FICA amount should be matched by you, either fully or partially. This money is deposited to a bank that’s qualified as a depository for federal taxes. A federal deposit form must accompany the payment.

You have to pay the taxes to the IRS, whether monthly or quarterly, dependent on the size of the payroll. What is really happening here is that your business is a collecting agent for the government. Your employee’s taxes are held in trust until payment is made.

Business owners are required to submit:

• Form 940 (Employer’s Annual Federal Unemployment Tax Return) yearly. This form reports the total quarterly payroll tax deposit. The deposit amount determines the federal unemployment tax. This tax is paid by the business. This tax does not come out of the employee’s paychecks.
• Form 941 (Employer’s Quarterly Federal Tax Return) quarterly. This form reports the total of your employee’s federal income tax and FICA that was withheld for the last 3 months.

Though deliquency in filing and paying employment taxes is common with most businesses, the IRS still considers it as illegally borrowing funds from the U.S., and they can seize your assets and close your business if you have back taxes.

Paying taxes on time should be your priority and this could be done efficiently with a bonded payroll tax service that’ll file and pay taxes for you, and pay late payment penalties when late filing occurs.

Reasons for Audits

If you are among the thousands of Americans audited every year by the IRS, you might wonder what the specific reasons are for the audit and what alerted the IRS to audit you.

The IRS computer system determines most of the audits. It compares the details on the tax return that you file with the details it already has from the W-2 and 1099 form. These numbers need to match. If not, you will probably receive an IRS notice for audit. This commences the correspondence audit.

Factors including low or no business profit, low gross profit margin, high travel and entertainment deductions, high use of cars in the business, and high car expenses are also looked into by the computer system. The elements might mark you for an audit.

You might be subject to additional investigation based on:

• Huge amounts of itemized deductions
• Unreported taxable income
• Cash or tips in business
• A record of prior audit and tax deficiency
• Claims of tax shelter investment losses
• Higher than average business expenses for your business
• Big cash figures of charitable donations
• Partner or shareholder in a business
• Complex tax transactions without explanations

Taking all your tax deductions might lead to an audit. If you have not done anything wrong, there is no need to be concerned.

Selection for audit are also conducted through:

• You have been reported to the IRS: Reports can be from an ex-spouse, business associates, former employees, or even a law enforcement agency.
• You were once part of a crime with a big amount of cash involved.
• You have been audited in the past: You’ll have more probability of being audited again.
• You’ve amended a return and claimed a refund: If you have amended a return and claimed a refund on any tax return within 3 years of its due date, you have a relatively high risk of being audited.
• You are a member of a special target group of professions that the IRS deems in need of scrutiny.
• You’re included in the 50,000 taxpayers picked to participate every 3 years in the IRS compliance measurement program.
• You are part of a market segment specialization program: The IRS is clamping down on certain workers.

The Right Tax Preparer

Anybody can be tax preparers, so you must choose one wisely to avoid IRS issues due to errors on your tax return.

You can select a tax preparer with the help of the following factors:

• Know the service fee. If a tax preparer bases his fee on a percentage of your refund or claims] go the other way.
• Look for stability. If inquiries from the IRS arise, you need a tax preparer who’ll be available to answer them.
• Look at references. Get client�s names and call them to see if they were satisfied with the work.
• Research Check with the Better Business Bureau to see if there were charges. Find out if the tax preparer is affiliated to any associations that hold their members accountable to a code of ethics.
• Check their credentials. Only enrolled agents, CPAs, and lawyers can represent you at an appeals hearing or IRS audit.

During your meeting with the tax preparer, he will want to see your records and receipts. They must ask a lot of questions to know your income, your expenses, and your deductions. They are able to make changes if errors are uncovered and are able to assist you at an audit, as well as guarantee the accuracy of their work.

Re-examine the tax return and make sure all information is correct prior to signing because its accuracy is still your responsibility, though the tax preparer should accomplish and sign an area of the form. Always sign in ink, don’t ever sign a blank return, and file a copy for your records.

How a Dependable Tax Lawyer Can Help You

If your IRS issues have extended to a dispute with the IRS and you haven’t been able to resolve them, you might need to consult a tax lawyer. These IRS problems could be the outcome of an audit, from possible property seizures, tax problems with your business, or from being self-employed, or many other situations. It’s essential to search for guidance before interest and penalties compounds on your tax bill. Confer with a tax lawyer. This may end up in extremely high cost to you.

Tax attorneys can provide practical advice because they are knowledgeable about tax updates, have superior negotiation skills, and will keep your confidentiality. They are experts in helping you solve your tax issues, concentrating on relief and tax problems.

Confidentiality

With the pressure of IRS issues, you may find yourself saying things or dreaming of ways out of your circumstance that can get you into even more trouble. You have to make decisions about what deductions to claim or what to report on your tax return. Tax lawyers keep your conversations private, unlike other tax professionals. You’ll be able to ask your tax attorney whatever questions you like and brainstorm outlandish scenarios without worrying that your words will be disclosed to other people. It is vital to note that tax attorneys won’t advise you to act criminally but they also won’t tell on you if you are acting suspicious.

Practical Advice

Tax attorneys assess your situation to decide the best option to address your claims and deductions, whether it’s to file for bankruptcy or negotiate an Offer in Compromise. This assures that you’re guided through the process.

Negotiation Skills

Tax attorneys know the IRS system, so they understand exactly what needs to be done, even if negotiating with the IRS can be difficult.

Knowledge of Latest Tax Changes

The U.S. tax laws can and do change nearly every year. A good tax attorney can give fitting advice to his clients because he’s kept abreast on the changes. A tax attorney can also help you make decisions regarding trust funds and stock portfolios. There won’t be any surprises on April 15.

Choosing a Tax Attorney

If you want your IRS issues solved, you should pick the ideal tax lawyer. Take referrals and check references, as well as check that the tax attorney is a member of your state’s and the American Bar Association. Also find out the tax attorney’s rates and payment terms.

Indeed, a reliable tax attorney is a wise investment.

How To Address IRS Penalties and Interest

Penalties and interest are continuously accumulating if you have tax debt or haven’t filed your taxes for a some time. Our firm specializes in this and other IRS issues, so let us assist you.

The IRS will add interest and penalties to a late tax return with an amount due and back taxes. You may also receive penalties if you fail to file the correct tax form. Late taxpayers are punished by penalties added automatically.

Penalties

• Failure to File – five per cent to 25% per month for late filing
• Failure to Pay – a quarter of a per cent to one per cent every month of total amount for not paying on time
• Combined – 5% per month for both late filing and paying
• Fraud – 15% per month for five months for underreporting your income, a total of 75%
• Accuracy – twenty per cent on top of our bill for understating your income

The penalties are pretty cumbersome, when you think about it. If you know that you are going to need more time to prepare your return, file an extension. This will help to reduce or even eliminate your Failure to File Penalty.

It is important to note that if you have a refund coming and file late, there is no penalty charged since penalties are calculated from the balance due.

Interest

If you have tax debt, the IRS considers it as borrowed money from the U.S. government, so interest will be computed, with penalties. The interest rate formula was set by Congress and adjusted every quarter and compounded every day, ranging from 4% to 10 per cent per year.

You can have interest cancelled from your tax bill if interest was charged due to an IRS error or if one of these occur:

• The interest must be cancelled if a tax or penalty is abated. It ought to be on your tax bill.
• You don’t need to pay interest charges if they were a result of IRS delays.
• If the IRS thinks that you won’t be able to pay the tax and interest, an Offer in Compromise will decrease your bill.
• Your last option is declaring bankruptcy.