Speak with an
Given the state of the economy, the IRS understands and has implemented a hardship option available to taxpayers who qualify. The program named Currently Non Collectible (CNC) is just as it sounds, the taxpayer cannot currently be collected from due to their financial hardship. The IRS reviews the taxpayer’s income versus expenses and assets versus equity. The allowable expenses must exceed the income of the household and there must be no liquid equity. While taxpayers are not required to pay back the taxes due, the tax liens remain and interest continues to accrue on the liability.
(Business and Individual)
The Offer in Compromise (OIC) is a program offered by the IRS and many States for taxpayers which allows them to settle their tax liability for a lesser amount. The IRS looks at many factors to determine if a taxpayer qualifies for the Offer in Compromise program. The IRS mainly focuses on the taxpayer’s disposable income and available assets but other factors are taken into consideration such as age, health, and education. Karana Law havs years of experience dealing with the IRS and have successfully had many OICs accepted. An attorney can review your financial situation and determine if you qualify for an OIC.
When a taxpayer is unable to full pay the tax debt, the IRS allows individuals and businesses to enter into an installment agreement to resolve their liability. Generally, the IRS requires that individual liability is full paid in 60 months and business liability to be full paid in 24 months. If the debt cannot be paid off within this time frame, financial documents and substantiation must be submitted to enter into a longer agreement. Our professionals have the expertise and negotiation skills to enter you into a payment arrangement that is both feasible for the taxpayer and acceptable by the IRS.
An IRS liability can quickly escalate as penalties and interest continue to accrue. You may be able to eliminate the penalties if you can show reasonable cause. Penalty abatement is based on your claim that circumstances outside your control led to the IRS debt. Reasonable cause includes, but is not limited to, death, illness, incorrect advice from a professional, flood and other natural disasters, etc. If the penalty abatement request is initially denied, taxpayers have appeal rights and can have another opportunity to present their case and request for penalty abatement. Contact an attorney today and see if you qualify for penalty abatement.
By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. The IRS can collect these amounts from either you or your spouse (or former spouse).
You must meet all the following conditions to qualify for innocent spouse relief.
- You filed a joint return which has an understatement of tax due to erroneous items (defined below) of your spouse (or former spouse).
- You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax.
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.
- A request for innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, ex-spouse, or business partner.
The IRS statute of limitations is 10 years but can be extended during case resolution proposals or during the appeals process. Once the 10 years expires your debt will be extinguished. As the expiration date nears the IRS becomes far more aggressive attempting to collect the debt as it will soon expire. It is important to consult with an attorney to determine when the statute of limitations starts and expires.
YES! The IRS can garnish your wages. The IRS can garnish up to 85% of your net pay. A wage garnishment is the most aggressive and effective way the IRS can take to collect a debt. When the employer receives an IRS Wage Levy Notice, your check should be affected on the next pay period. The garnishment will stay in effect until corrective action is taken by you as the taxpayer. An IRS wage garnishment can impact your life and family in several ways by reducing the amount of income each week. Contact us now to take corrective action and get your garnishment released!
When not cooperating with the IRS to resolve your tax issues they may issue a bank levy. A bank levy is another aggressive tactic taken by the IRS to collect debt. Before a bank levy is issued you will receive a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” This will give you the opportunity to pay the debt in full or come to a resolution. If not, a bank levy will be issued. The bank will be required to wait 21 days before sending funds over to the IRS. It is POSSIBLE to get the bank levy released before the funds are sent to the IRS. A problem you may encounter is the IRS will be hesitant to work with you as you may be documented as a taxpayer who is unwilling to take corrective measures. Having representation before the IRS will show that you are taking positive steps to solve your tax matter.
Taxpayers should file a return even if full payment cannot be made at the time. Failure to file can result with the IRS tacking on huge penalties and interest on your tax bill. If you are due a refund on your return and wait too long to file, you may lose out on the refund. Continuance of non-filing may also result with the IRS filing a return on your behalf. This is called a Substitute for Return commonly known as a “SFR”. A SFR punishes the taxpayer by not accounting for deductions. As a result, the SFR liability is usually substantially higher along with the corresponding penalties and interest. At Karana Law we can aid in the tax preparation and collection before the IRS and States
Liens give the IRS legal claim to your property as security or payment for your tax debt. A Notice of Federal Tax Lien is filed once the liability is assessed, a demand for payment is sent, and refusal to fully pay the debt within 10 days of the notification. When a lien is filed creditors are publicly notified that there is a claim against ALL of your property, such as a house or car and to rights to property such as accounts receivable. The lien also attaches to property required AFTER the lien is filed.
IMPORTANT: Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy/refinance a house or a car, get a new credit card, or sign a lease. Therefore it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary.
Payroll and Sales
Employment taxes are the amounts an employer should withhold from employees for income, social security, and Medicare taxes (also called withheld or trust fund taxes), plus the amount of social security tax and Medicare taxes an employer pays on behalf of each employee. Paying employment late, or not including payment with a return if required, could result in additional penalties and interest on any unpaid balance. Failure to Deposit (FTD) penalties of up to 15 percent of the amount not deposited may be charged, depending on how many days the payment is late. Unpaid employment taxes could cause additional collection action to be taken. IRS could require an employer to file and pay employment taxes monthly, rather than quarterly, or open a special bank account for the withheld amounts, under penalty of prosecution.
Similar to payroll tax and individual income tax, states may hold an individual personally responsible for sales tax. States take similar collection action to that of the IRS, such as bank levies and liens. States also offer similar collection alternatives to that of the IRS. For example, offer in compromise, payment plans, and currently non-collectible. In many times, however, the state is much more aggressive than the IRS. It is important to have an experienced attorney on your side when dealing with payroll and sales tax as the States and IRS are more aggressive when attempting to collect this type of debt.