1. What do I do about this notice the IRS just sent me? Top of the Page
First off, DO NOT IGNORE IT! It may be something simple like saying your income listed didn’t match what your employer reported or that you have a payment due. If you don’t understand what it is saying, you should consult a tax attorney who can explain things to you. If you ignore it, and the letter is date sensitive, you could lose your legal rights and leave yourself open for legal action, garnishments or liens against you.
2. What if the IRS wants to audit me? Top of the Page
It’s advisable to have a tax attorney contact the agent assigned to your case to determine the nature of the inquiry. Make sure all of your documentation is accessible and easy to read. If you cannot prove your income and deductions because your records are disorganized, you may be assessed additional taxes and penalties.
3. I have not filed tax returns for a number of years; should I file those returns? What may happen if I don’t? Top of the Page
Willful failure to file a required tax return is a federal crime. A return is required to be filed even if no tax is due, if the individual had enough gross income to require the filing. If a prospective client advises us that he or she has not filed and was required to do so, we insist that the first thing accomplished is to have all required returns prepared by a competent tax return preparer and filed, which is a service we provide at our firm using in-house tax preparers. Usually, the government will not prosecute if the returns are filed as a part of a voluntary disclosure, meaning before the IRS notifies the taxpayer that it is aware that returns have not been filed.
4. What is the Automated Collection Service (ACS) of the IRS? Top of the Page
The Automated Collection Service (ACS) is a division within the IRS that focuses on balance due accounts and non-filer cases—those taxpayers who owe the IRS money and/or have not filed tax return(s). ACS handles incoming and outgoing phone calls, generates wage and bank levies and sends out collection notices. Additionally, ACS monitors and tracks taxpayers’ accounts. Based on our experience, ACS can be very aggressive with its collection efforts.
5. What should I do if I can’t pay my taxes? Top of the Page
You have several options available to you:
* Currently Non-Collectible Status (or CNC): you may qualify if your monthly income is less than your monthly living expenses. To determine whether or not you may qualify for CNC status, our firm will gather recent financial history to prove to the IRS that your monthly expenses are greater than your monthly income, which makes you unable to pay.
* An Installment Plan: payment of your debt over a period of months or years.
* An Offer In Compromise: payment of only a portion of what you owe in one lump sum.
6. What is an installment agreement and how does it work? Top of the Page
In some cases, the IRS will enter into an agreement permitting the taxpayer to pay the taxes due over a period of time. However, penalties and interest will continue to accrue on the unpaid portion of the taxes.
7. What is an Offer in Compromise? Top of the Page
In certain circumstances, the IRS will accept less than the full amount due in full satisfaction of the tax liability. Usually it’s based on your inability to pay the full amount. In order for the IRS to determine whether it will accept such an offer, it’s necessary to submit complete and exhaustive financial information—including assets, liabilities and current average monthly income and expenses. If the offer is accepted, any tax liens filed regarding those taxes will be released. The IRS is prohibited from levying on assets while an Offer in Compromise is pending.
8. What is the process of submitting an Offer in Compromise? Top of the Page
For each offer you make, you must pay the IRS a $150 application fee and submit a deposit of funds equal to 20% of the total amount offered in your Offer In Compromise (as of July, 2006), which is non refundable. This fee, and the deposit submitted with an Offer In Compromise, is designed to eliminate frivolous offers, but it is a small price to pay for the ability to possibly settle your tax debt for less than the total amount owed.
9. How do I know my settlement proposal will be accepted by the IRS? Top of the Page
We conduct a thorough interview to determine if you qualify for a particular program. Typically, we can tell you whether you qualify or not. If we honestly feel that you are not a likely candidate, we will tell you before you retain us.
10. How long does it take for an Offer in Compromise to be approved by the IRS? Top of the Page
Depending on the caseload in your district, it generally takes six to twelve months. No matter how long it takes to review the Offer in Compromise, all further collection activities are suspended during that period.
11. What happens if the IRS accepts my Offer In Compromise? Top of the Page
Pay the agreed-upon amount due as soon as possible. Your tax attorney will explain the options, including a possible extended time to pay. You must also comply with all filing and payment deadlines for the next five years.
12. I owe taxes that have nothing to do with my present spouse; can they seize his or her assets to satisfy those tax debts? Top of the Page
No. But, in determining whether to accept an Offer in Compromise or in evaluating a proposed installment agreement, the IRS insists on knowing everything about the spouse’s assets, liabilities and monthly income.
13. If my spouse owes back taxes from before our marriage, will the IRS take my tax refund every year? Top of the Page
No. The IRS provides a simple procedure you can follow to make sure you receive your portion of the tax refund, even if your spouse owes back taxes. This IRS program is referred to as Injured Spouse Relief. In order to take advantage of this program, you must complete and file IRS Form 8379, Injured Spouse Allocation, at the time you file your joint income tax return. The IRS will use the Injured Spouse Form to determine the portion of the refund that should be allocated to you. The IRS may then refund the appropriate funds to you and apply the remaining refund to your spouse’s back taxes.
According to the IRS, to qualify for Injured Spouse Relief, you must meet the following: 1) You must not be legally obligated to pay the back taxes; 2) You must report income such as wages, taxable interest, etc. on the joint return; and 3) You must have made and reported payments, such as federal income tax withheld from your wages or estimated tax payments, or you claimed earned income credit or other refundable credit, on the joint return.
If you do not complete the Injured Spouse Allocation Form when you file your joint tax return, the IRS will most likely keep the entire refund to pay down your spouse’s back taxes. Some people also try to solve this problem by filing as Married, Filing Separate. If you choose this solution, you will receive your refund. However, you may give up some important tax advantages. You should probably consult with a qualified tax preparer before making the decision to file separate returns.
14. Can the IRS still use collection procedures if I am paying on an installment plan? Top of the Page
Yes. If you don’t have the proper legal documentation submitted, the IRS can continue to levy and lien your assets. Make sure both you AND the IRS representative sign your plan agreement.
15. Can I wipe out taxes by filing for bankruptcy protection? Top of the Page
Certain kinds of taxes may be wiped out, primarily income taxes that were assessed more than three years prior to the bankruptcy filing. However, taxes known as “trust fund” taxes (meaning taxes withheld from employees but not paid over to the IRS or that should have been but were not withheld) cannot be eliminated in bankruptcy.
16. Can I avoid dealing with the IRS? Top of the Page
You should not avoid the IRS, but generally it is not recommended that you deal with the IRS yourself. Once you have retained someone and filed the proper documents, the IRS may no longer contact you directly.
17. What do I do if an IRS special agent comes to my door? Top of the Page
IRS special agents are CRIMINAL INVESTIGATORS. The only thing you should say is: “I will have my attorney contact you in the next few days. I’m not prepared to say anything until I’ve talked to my attorney. Thank you.” Even though the special agent may suggest he could clear things up with a few simple questions, don’t be swayed into a discussion. Again, simply say you are going to contact your attorney and insist the agent leave, politely.
18. What if the IRS files a lien against me? Top of the Page
A lien will generally be filed against you if you ignore the IRS. You will usually have 30 days to object by filing a protest with the manager of the revenue officer placing the lien. If you don’t file your objection in the time allowed, you will lose your legal rights in this matter.
19. Why did the IRS file a tax lien against me? Top of the Page
A tax lien, usually filed with your county recorder, serves as notice to those who may loan you money (home or car loan, bank loan, credit card advances, etc.) that once the lien is filed, the IRS’ claim against you for taxes will come before those of anyone loaning you money after the filing. With certain exceptions it attaches to all property, real and personal, tangible and intangible, in which you have an interest, wherever the property may be located. A lien does not result in the actual seizure of any property, real estate or other forms. Further, before the IRS can file a lien against your property, it should give you 30-day notification that it intends to do so. This may give you time to make a payment or other arrangements.
20. The IRS is garnishing my wages. How can I stop them? Top of the Page
The IRS will garnish your wages after proper notice. All the IRS wants is payment or a good reason why you can’t pay. This is when you can negotiate a payment plan or an Offer in Compromise or convince the agency you are worthy of uncollectible status. It is imperative after you receive a notice of “Intent to Levy” that you deal with it immediately. Intents to Levy are time-sensitive and if you miss your deadline to reply, i.e. make payment arrangements, your employer will be made aware of the situation and your wages may be garnished. If you’re not sure how to go about this, consult a qualified tax attorney to assist you.
21. Can the IRS garnish all of my wages? Top of the Page
Many taxpayers think the IRS takes a certain percentage of a taxpayer’s income. In fact, the IRS only leaves taxpayers with a certain dollar amount depending on the taxpayer’s filing status. Thus, there could be two taxpayers who are single with no dependents with one earning $2,000 per month and the other earning $10,000 per month. Both taxpayers will be left with the same amount of money in their check after the garnishment. Therefore, regardless of your income level, a wage garnishment can have a devastating impact on your personal finances.
22. How can I prevent the IRS from levying on my assets? Top of the Page
If you cooperate with the IRS, the collection officer assigned the account will normally suspend collection activity—at least for a while. But you must:
* File all tax returns due
* Pay all estimated taxes and taxes withheld from employees currently due
* Supply the IRS with detailed financial information regarding your ability to pay the taxes due
23. What if the IRS freezes my bank account? Top of the Page
The IRS should not freeze and seize your bank account without proper notice. Once your account is frozen, you only have a short period of time to protest before the bank must hand your money over to the Feds. You will need to negotiate either a partial or a full release of funds.
24. Can the IRS levy on my house? On my wages? On my bank accounts? What about retirement funds? Top of the Page
A levy usually means the property is actually seized by the IRS. In the case of real estate, it means the IRS can force a sale of the property and keep the proceeds up to the amount of taxes, penalties and interest owed.
A certain portion of wages and commissions are exempt from levy; the amount depends on a number of factors, including the number of dependents. All forms of bank accounts—savings, checking and CDs—are subject to a levy in full. In order to catch subsequent deposits, the IRS must serve a new levy on the bank. Once wages are levied upon, the same levy reaches all subsequent wages, commissions, bonuses, etc.
No forms of retirement funds are exempt from levy, including social security payments and other forms of government pensions. However, unemployment and workers’ compensation benefits are exempt from levy, as are SSI and some forms of public assistance.
A small amount of household and personal effects, and tolls and equipment used in the taxpayer’s trade or business, are exempt from levy.
25. Can the IRS seize my cars, truck and other vehicles? Top of the Page
Yes, but as a practical matter, unless the vehicles are of unusual value or type, the IRS rarely resorts to this.
26. What is the statute of limitations on taxes? Top of the Page
There is a three year statute of limitations from the date you file the original return for the IRS to assess taxes against you (assessment date) or two years from the date you pay your taxes. The dates change based on certain circumstances.
There is NO limitation to audit and collect taxes if you filed a fraudulent return. The IRS will have ten years from the date of assessment to collect. Once again, all of the dates can be modified by agreement, various plans, etc. A tax attorney can give a more specific date based on your facts.
27. Is it possible to completely walk away from any tax liabilities? Top of the Page
Yes. With certain exceptions the IRS has 10 years from the date a tax is assessed to collect that tax. Once the 10 years has expired, all collection activity must cease. Any tax liens that have been filed must be released. (Assessment of a tax is made as a result of processing the return shortly after it is filed). The major exceptions are if the taxpayer is involved in bankruptcy proceedings or files an Offer in Compromise which is either rejected by the IRS or withdrawn by the taxpayer.
28. When is the right time to consult an attorney? Top of the Page
There are various reasons you would need to consult an attorney such as: fraud investigation, a long audit or one that involves legal issues, inadequate books/records, not filing returns for a number of years, if you don’t actually owe taxes, if the statute of limitations has run out or if you would feel more comfortable dealing with the IRS through an attorney. Whatever the reason, don’t hesitate to contact an experienced tax attorney to help you through your foray into the wide world of IRS red tape.
29. Your office is in Columbus, Ohio, from which I am some distance away. Does that make it difficult for you to represent me regarding my tax problems? Top of the Page
Not at all! Almost all of the services to be rendered in handling tax payment problems are accomplished by telephone discussions and correspondence with IRS agents. In the unlikely event I am asked to attend a conference with an agent, I can ask for the file to be transferred to Columbus or other nearby city; such a request is usually granted. Jones & Ryan is fully licensed to handle federal tax matters in the entire US, as well as state and local tax matters in the state of Ohio inluding major cities such as Cleveland, Columbus, Cincinnati, Toledo, Dayton, and more. We welcome clients from any state. To start on the road of tax recovery and end your tax problems please take our tax relief questionnaire today.
30. Can you guarantee results? Top of the Page
We will assist you in arriving at a resolution to your problem. However, we cannot guarantee specific results.
31. Could I attempt to resolve the problem myself? Top of the Page
You could, however, the IRS scrutinizes each case very closely. If your proposal is not accurate or incomplete, you may pay much more. Worse yet, the IRS may reject your proposal altogether. Most people find working with a firm that specializes in tax problem resolution actually saves them time and work, as well as a significant amount of money.
32. How are your fees determined? Will I know the fees of your services in advance? Top of the Page
When you telephone or write for the initial free consultation we offer, we’ll obtain some basic information from you, such as the years and kinds of tax in question, the amount owed and other background information. You may be asked to send copies of documents recently received from the IRS or other taxing authorities. Once everything is evaluated, we can tell what can be accomplished and what the services will cost. IF the fee is agreed upon verbally, we will send you what is called an engagement letter, which sets forth the services to be rendered along with the agreed-upon-fees. Only then will you be obligated to pay any fees and only for work outlined in the engagement letter.
Call us at 1-877-698-2953 or take our tax relief questionnaire. Jones & Ryan help solve more than simply the tax issues listed on our frontpage. Contact us with any pending or present tax issues. If you qualify for our services, we will begin working on your case as soon as you retain us. Once retained, a Power of Attorney will be filed which will allow us to call to the government to stop further collection activity and begin our step-by-step tax relief service.
|