IRS Back Tax Problems | IRS Back Taxes | Wage Garnishment | Tax Levy
IRS Back tax problems vary from person to person. It is important to understand the various tax problems with IRS before evaluating solutions. Some of the information below seem overwhelming. If you need help understanding the information below, please feel free to contact on of our IRS back tax professionals. (Ask A PRO)
1. Inability to Pay IRS Back Taxes
You can’t pay the IRS because you can’t afford to. You must begin to look for a way out, to avoid accruing of interests and penalties.
The IRS has many settlement options out there. While the type of relief will vary from person to person, the help is out there and you should take advantage of it.
2. Unfiled Tax Returns
If you don’t file your tax returns, the IRS will eventually file one for you. A Substitute For Return (SFR) is a tax return the IRS files on your behalf when a tax year goes unfiled.
Most of the problems with the IRS start right here. The IRS won’t forget about you. Eventually, the IRS will file a SFR and you will be assessed a tax debt that accrues the appropriate penalties and interest. So if you get a tax bill and haven’t filed your taxes, it may turn out that you don’t owe as much as the IRS letter states. Filing returns and getting the right support in doing so, can save you thousands of dollars and block any actions from the IRS.
Not paying your taxes on time results in owing more to the IRS because of penalties and Interest. There are different types of penalty assessments. Penalties and interest abatement may be offered under some circumstances.
If you believe you might be fling you taxes late or unable to pay your tax debt, you need to consult a tax professional or contact the IRS. You can save yourself from excessive penalties and fees. Fee abatement may be difficult to obtain after a fee is assessed. Take action on your IRS back tax issues sooner than later. It may save you from a much larger tax obligation in the future.
4. Notices from IRS
Upon confirmation by the IRS that you owe back taxes, they commence a series of letters to you to inform you of the onset of their collection actions. It is important not to ignore these letters and devise a plan to contact the IRS.
The IRS use computers to generate notices that apply to your tax account. If you are late or have unpaid taxes, you will start to receive a lot of IRS correspondence. You must not ignore these letters. These letters usually warn of upcoming actions and penalty assessments. If you respond to these letters, either by calling your self or using a professional, you could save yourself a lot of trouble in the future. Ignoring them, will only make negotiations to settle your tax debt harder and more costly.
Most common of all levies, the IRS contacts your employer to take money directly out of your paycheck. The garnishment amount is limited to 25% in most cases, unless your income is substantially more.
Remember the IRS notices discussed above? Well this may be what happens when you ignore said notices. Wage garnishments may be removed or released. However, at this fork in the road, I would recommend professional help. Unless of course, amount being garnished is affordable to you. In theory. once the IRS gets their money, they will remove the garnishment. If I were you, I wouldn’t take my chances on that idea and continue to monitor the amounts being deducted from your paycheck against your IRS back tax debt.
6. IRS Tax Lien
This is the very first definitive step by the IRS to force you to pay that taxes that you. It will harm your financial situation and your accessibility to borrow money from financial institutions. The IRS will report a lien on your credit reports.
You will receive notices about IRS tax liens before they put them on you. In most cases, removal of a tax lien is only accomplished through a tax settlement. I should note, tax liens not only impact your finances, but could prevent you from a job or clearances, since these liens are attached to your name. You don’t want one of these, even after you settle and the lien is removed, it stays on your your credit report for a minimum of 7 years.
7. IRS Tax Levy
A tax levy is a legal seizure of a taxpayer’s property and assets, to satisfy a IRS back tax debt. Assets include bank accounts, stock & bond accounts, real estate, cars and other types of real estate and personal property.
Tax levies are assessed when the IRS finds assets worth collecting. This is the IRS’s most aggressive tool and they WILL use it. Keep in mind, the IRS may take an car you believe is worth $25,000 but, the IRS may disagree and only give you a credit of $12,000 to your tax debt. Do everything you can to not get to this point. It could cost you more than you could ever have anticipated.
This type of IRS levy goes legal withdraws funds from your banked assets (checking account, savings accounts, brokerage accounts, etc.).
This is another devastating collection method used by the IRS. It clearly indicates that you have been dragging your feet to resolving your back tax problem. You can’t let things get to this point. Pay someone to help you evaluate your situation. An installment agreement would be much better option for you than legal seizure of your money!
9. IRS Audit
IRS audits happen when the IRS decides you have meet certain parameters that warrants a closer look tax return representations
If by an unfortunate stroke of luck, you are chosen to be audited, you need to must seek help. I recommend a back tax professional for this situation 99% of the time.
10. Business IRS Back Tax Problems
There are certain problems which business owners are likely to face with the IRS, and these should be understood by every business owner, as well as how to tackle them.
Unless you are a tax expert, you should probably leave these issues to a back tax pro, preferably a CPA. Businesses may not be offered some of the same concessions or settlement options served to the consumer taxpayer.