In most general terms April 15th is typically the deadline each taxpayer in the U.S. has to file a tax return. If you owe the IRS a federal income tax and don't pay it at the time of filing interest and penalties start to accrue. If you don't owe any taxes and are due a refund, you will not be penalized for filing after the April 15th deadline. However, if you do owe tax, and you don't file by April 15th a failure-to-file penalty is applied which can be 10 times higher than the failure-to-pay penalty. In all cases, filing on time will help to lessen the IRS tax penalties and interest being accumulated on your tax bill. For more information about IRS penalties for late filing, read "What to Know about Late Filing and Late Paying Penalties" on the IRS website. For how we can help and more tips about resolving back taxes read our post "Back Taxes? Unfiled Tax Returns? No Need for a Tax Resolution Company. We Got You!"
IRS Tax Lien
The IRS has a number of methods for collecting the tax debt they are owed. One of those is a federal tax lien. Many of us associate a lien with a mortgage or a lien secured by collateral. At Ken-Mar Tax we have seen many people dismiss receiving notice of an IRS tax lien because they figure without a home there is nothing the IRS can attach the lien to. This is false thinking (but understandable). An IRS tax lien is a public document that gets filed to alert creditors that the government has a right to your property - this means your credit scores will suffer, creditors will conclude you are too high of a risk to make loans to, you will have to get the lien released before you buy or refinance your home and with the tax lien on your credit report it could make other things more difficult - like securing employment, insurance and even a rental car.
If you have received notices of taxes owed from the IRS, once you have ignored these notices or not made attempts to pay your IRS debt, the IRS will send a Notice of Federal Tax Lien. If you have unpaid back taxes and not been in contact with the IRS you can expect a Notice of Federal Tax Lien to arrive. In order to avoid an IRS tax lien, or to resolve one, you will need to work out a payment agreement, or Offer in Compromise. As an Enrolled Agent, Ken Weinberg of the Ken-Mar Tax team is authorized by the IRS to represent you in formulating and working out terms of an IRS Offer in Compromise. Click here to read more information about the IRS Collection Process.
IRS Wage Garnishment, or Tax Levy
A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens because a lien is a legal claim against your property to secure payment of your tax debt, while a levy actually takes the property to satisfy the tax debt. After failure to pay IRS back taxes you may receive a Notice of Intent to Levy and Notice of Your Right to a Hearing. This notice is the IRS telling you that you may request a hearing within 30 days of the notice or they can begin to seize property. This seizure of property is the same as a tax levy and can be fulfilled in many ways including seizure of property i.e. house or car and seizure of your rights to property i.e. wage garnishments, bank account or Social Security payments. For more information regarding IRS wage garnishments, tax levies, seizure of property and the collection process, read IRS Collection Process. This IRS document details what to expect with wage garnishments and other tax levies as well as how to get a levy released. There are no secrets to what the IRS collection process is. The real value that an Enrolled Agent, a CPA or a Tax Attorney provide to an individual in need of tax resolution is that we represent the tax payer to the IRS. At Ken-Mar Tax we learn about your tax debt, your current capabilities to pay back your tax debt and we go through the arduous process of calling the IRS, waiting on hold, speaking to multiple IRS Agents, negotiating the best Offer in Compromise for your situation, getting penalties waived and setting up an IRS Installment Agreement. The sooner we can do this for you and present your situation to the IRS, the more we can minimize the damage that can be done by federal tax liens, wage garnishments and other IRS levies.
Offers In Compromise
The IRS will suggest you pay your taxes and tax debts in full. In fact the IRS Agents are usually looking for clues in how you represent yourself and what you say to discover whether or not you have the means to pay your tax debt in full. However, once the IRS is certain you are unable to pay in full, an Installment Agreement or Offer in Compromise, are payment plans that allow you to pay your taxes in installments over time, to pay less than you owe, or both. In order for the IRS to agree to an Offer in Compromise we must prove to them that one of the three is true:
- The IRS agrees your tax debt may not be accurate,
- The IRS concludes you have insufficient assets and income to pay the amount due, or
- The IRS finds that because of your exceptional circumstances, paying the amount due would cause an economic hardship or would be unjust.
At Ken-Mar Tax we assess your situation to determine if you would qualify for an Offer in Compromise or an Installment Agreement, which one will be the biggest benefit to resolving your tax debt with the least financial burden and then we negotiate with the IRS on your behalf. Contact Ken-Mar Tax for your free consultation at (440) 777-2207 or fill out the contact form on the website.