After a series of notices, ending with a certified letter Final Notice, the IRS will normally issue a Wage Levy, Bank Levy, or both. If those actions are not successful in getting you to make satisfactory arrangements with them to pay your delinquent balances, they can take more drastic Seizure actions. It is important to contact them to make arrangements you can live with before they get to that stage in the collection process.
A Wage Levy requires your employer to take a deduction from every paycheck until your delinquent taxes have been paid. The IRS is allowed to take most of your pay and leave you very little to live on. A Bank Levy is a one time freeze on your bank account balance(s) for 21 days, after which the bank is required to send the IRS whatever was in your account on the day they received the Levy, unless you have gotten the IRS to remove the Levy. Any money put into your account after the Levy is still available to you, but usually all the checks that had not cleared before the Levy will bounce due to insufficient funds. In order to take any new funds you have put into your account the IRS would have to issue another Bank Levy. You are much better off making a voluntary payment arrangement with the IRS, instead of waiting for them to initiate either type of Levy.
We require a retainer (payment before we start) and work against that at our standard hourly rate and request additional retainers as the initial payment is used up. The costs vary depending on how long the work takes. We have a fee schedule that is available for your review. We usually find that our assistance saves people more taxes, penalties, interest, and future headaches than it costs.
The IRS will eventually issue a Notice of Federal Tax Lien and record it at your local County Recorder's office. This puts credit granters on notice that you have a tax problem. It usually means that you can not get a home mortgage, vehicle loan, or other credit until the taxes are paid and the lien is released.
The U.S. Congress came down pretty hard on the IRS a few years ago and the result was that they now have a clearer series of steps they must go through before they are allowed to take more drastic collection actions such as filing liens, freezing bank accounts, garnishing wages, seizing assets, and so on. Now there are clear steps in the collection process and ample warnings to a taxpayer. The normal waiting periods between notices can be extended if the taxpayer communicates with the IRS, offers a plan of action, and lives up to the proposed plan. Also, there is an appeals process that can be used if you do not believe the IRS personnel have given you a fair hearing or opportunity to work out the situation. The IRS has established an Office of Taxpayer Advocate and they can be contacted to help in situations in which normal channels have not worked.
Yes, open it. If it is the second certified letter you have received from them, there is not much time left before they take action and you need to get busy resolving the problem and you may want professional help.
Send in the return now. There is an extra penalty of 5% per month up to 25% for late filing. Sending the return with no money can save you from that penalty. You can also send a Form 9465, Request for an Installment Payment Agreement, and arrange to pay the balance due in monthly installments over up to a 5-year period. Also, intentional non-filing of tax returns can be considered fraud. The IRS normally does not pursue that claim if you are taking steps to get your returns filed and you don't owe extra large amounts. However, it is possible to get one year in jail for every year not filed, but that is uncommon.
An Offer in Compromise is different for each taxpayer. It depends on your unique financial situation. One person owing that amount might get an Offer accepted for $11,000 and another in a tighter financial situation might have their Offer accepted for $3,000. We actually had one person who owed $23,000 have their Offer of $50 accepted, but their financial condition was the determining factor.
No, we are not attorneys. Jonathan D. Wieand is a Certified Public Accountant (CPA) and Joe Alcozar and Andrew E. Blount are Enrolled Agents (EA). Jonathan was firm tax partner and managing partner of a 3 office regional CPA firm and Joe is a retired IRS Examiner.
There is no one answer that fits all situations. If you have children or other dependents and may qualify for the earned income credit and the child tax credit, you should probably file jointly, but include the Injured Spouse form with your return and note "Injured Spouse" in bold letters at the top of page one of your return. The IRS would then give you your share of any refund based on your separate income, deductions, exemptions, and withholdings. In some other circumstances, you may be better off to file married filing separately.
You should locate the tax return and all the information you used to prepare it. The examiner will usually want to see the prior and subsequent years' returns as well. Then, we suggest you contact an experienced CPA, Enrolled Agent, or Attorney who represents clients in these situations and have them attend the examination for you. This will keep you from offering more information than is needed and should make the exam go more smoothly. Be sure to have your representative contact the IRS, provide them your power of attorney, and arrange the exam at a time in the future that gives you and your representative enough time to locate the records and be prepared for it.
We have access to almost all the old State and Federal tax forms. The IRS will usually provide us with computer printouts of W-2s, 1099s, and other income information and we can prepare the returns with that information. However, it does help if you can find your W-2s because the IRS information does not include any State withholding.
Tell us what will work for you and we will try to work it out. We can't do work without a retainer to cover it, but we can often work at a pace with your ability to pay.