Orange County Accountant

It’s important you do not to ignore IRS back taxes for long. When IRS collection notices are ignored, the IRS has to resort to collecting from taxpayers by force. They do this with their dreaded IRS tax levy. By law, the Internal Revenue Service has the right to issue an IRS tax levy on you. This means it’s completely legal for the IRS to levy your bank accounts, issue wage garnishments, and even seize your assets in extreme cases.The most common IRS tax levy collection tools are the IRS bank levy and the IRS wage levy. If you receive notice from the IRS that either Tax Levy is going to be issued on you, you need to act fast. Your income and bank account funds are at stake and the matter is now extremely urgent! IRS Bank Levy: The IRS bank levy is an extremely harmful way to collect IRS back taxes. All of the money you scrimped and saved can be gone in and instant. Here’s what happens when the IRS Issues a bank levy:1. First, the IRS freezes your bank account.2. They give you 21 days to contact them and explain why you should receive the money. If you do not comply, the IRS will keep all of the money in your account for good.If you received a Notice of Intent to Levy from the IRS, it’s imperative to act fast and get your tax debt taken care of. It’s a smart idea to consider professional help at this point. Timing is crucial and a tax professional has a better chance of negotiating with the IRS and getting the bank levy removed in the short 21 day time frame. Remember that once the IRS seizes your account funds with the bank levy, you will not be able to get them back. IRS Wage Levy: The IRS wage levy is another brutal method used to collect IRS back taxes. It’s also known as wage garnishment. Basically, the IRS can take a percentage of your paycheck until your tax debt is paid in full, or until the statute of limitations on your tax debt expires. You do not want the IRS to seize money from your paycheck for years. Remember, they can seize up to 70% of your paycheck. It’s important to work fast to find a better solution for paying off your IRS back taxes. Stop the Bleeding: Your bank account and paycheck are being threatened. How do you stop the tax levies, and fast? You have to start by giving the IRS what they want. You have to make an arrangement to pay on your IRS back taxes. You can pay by settling your tax debt (for less than the full amount due) with an Offer in Compromise, or your can pay them monthly through what is called an Installment Agreement. Hiring Professional Help: Once an IRS tax levy or federal tax lien has been issued against you, things get tricky. Negotiating with the IRS is tough once they’ve opened a direct route to your money. If you’ve already received an official IRS Notice you might need professional assistance with your tax debt. With a tax professional working on your side you have a better chance of being successful and getting your tax debt issues resolved once and for all.

It’s important you do not to ignore IRS back taxes for long. When IRS collection notices are ignored, the IRS has to resort to collecting from taxpayers by force. They do this with their dreaded IRS tax levy. By law, the Internal Revenue Service has the right to issue an IRS tax levy on you. This means it’s completely legal for the IRS to levy your bank accounts, issue wage garnishments, and even seize your assets in extreme cases.The most common IRS tax levy collection tools are the IRS bank levy and the IRS wage levy. If you receive notice from the IRS that either Tax Levy is going to be issued on you, you need to act fast. Your income and bank account funds are at stake and the matter is now extremely urgent! IRS Bank Levy: The IRS bank levy is an extremely harmful way to collect IRS back taxes. All of the money you scrimped and saved can be gone in and instant. Here’s what happens when the IRS Issues a bank levy:1. First, the IRS freezes your bank account.2. They give you 21 days to contact them and explain why you should receive the money. If you do not comply, the IRS will keep all of the money in your account for good.If you received a Notice of Intent to Levy from the IRS, it’s imperative to act fast and get your tax debt taken care of. It’s a smart idea to consider professional help at this point. Timing is crucial and a tax professional has a better chance of negotiating with the IRS and getting the bank levy removed in the short 21 day time frame. Remember that once the IRS seizes your account funds with the bank levy, you will not be able to get them back. IRS Wage Levy: The IRS wage levy is another brutal method used to collect IRS back taxes. It’s also known as wage garnishment. Basically, the IRS can take a percentage of your paycheck until your tax debt is paid in full, or until the statute of limitations on your tax debt expires. You do not want the IRS to seize money from your paycheck for years. Remember, they can seize up to 70% of your paycheck. It’s important to work fast to find a better solution for paying off your IRS back taxes. Stop the Bleeding: Your bank account and paycheck are being threatened. How do you stop the tax levies, and fast? You have to start by giving the IRS what they want. You have to make an arrangement to pay on your IRS back taxes. You can pay by settling your tax debt (for less than the full amount due) with an Offer in Compromise, or your can pay them monthly through what is called an Installment Agreement. Hiring Professional Help: Once an IRS tax levy or federal tax lien has been issued against you, things get tricky. Negotiating with the IRS is tough once they’ve opened a direct route to your money. If you’ve already received an official IRS Notice you might need professional assistance with your tax debt. With a tax professional working on your side you have a better chance of being successful and getting your tax debt issues resolved once and for all.

IRS Debt Help:
Do you owe the IRS? Are you struggling with IRS debts and cannot figure out what to do? Don’t despair, you are not alone. Many Americans owe back taxes, or cannot afford to pay their IRS debts. If you want to get IRS debt help, it’s important to understand the different IRS tax debt strategies.
There are five strategies for getting out of IRS tax debt.
1.Offer in Compromise: a program where you can settle your tax debts for less than what you owe. Requires making a lump sum or short term payment plan to pay off the IRS at a reduced dollar amount.
2.Installment agreement: a monthly payment plan for paying off the IRS.
3.Partial payment installment agreement: a somewhat new debt management program where you have a long term payment plan to pay off the IRS at a reduced dollar amount.
4.Not currently collectible: a program where the IRS voluntarily agrees not to collect on the tax debt for a year or so.
5.Filing bankruptcy: discharge your tax debts under the strict rules of a Chapter 7 or 13 bankruptcy petition.
Offer in Compromise
Many people who find themselves in debt to the IRS might focus on the first option above – the Offer in Compromise (”OIC”). For those who qualify it can be the optimal solution, however, it is important to note that not everyone qualifies for the Offer in Compromise solution. Only about 15% of applicants succeed in reducing their debts through the OIC program. For this reason and because of the complexity of filing an Offer in Compromise many people enlist the services of a Tax Professional who has a track record of success negotiating with the IRS. This Tax Professional will not only be able to determine if you are eligible to reduce your IRS debts via an OIC but they will also assist you in navigating the complicated IRS bureaucracy to achieve the desired outcome.
An Offer in Compromise is a lengthy and time-consuming process. It takes most individuals anywhere from 12 months to 24 months to achieve a successful resolution on your offer application. Through an Offer in Compromise, taxpayers agree to pay the IRS only the reasonable collection potential instead of the full amount of taxes owed. For some people the “reasonable collection potential” will be less than the full amount of taxes owed – sometimes as little as 10%.
Installment Agreement
Many taxpayers cannot qualify for an Offer in Compromise, Statute of Limitations expiration, or bankruptcy relief but still seek resolution for their IRS liability. In these cases, it may be possible to negotiate long term IRS payment arrangements. The IRS allows “structuring” five primary types of payment plans, or Installment Agreements: Guaranteed Installment Agreements, Streamlined Installment Agreements, In-Business Trust Fund Agreements, Long-Term Installment Agreements, and Installment Agreements on Specified Balance Due Accounts.
Currently Not Collectible
If a taxpayer does not qualify for an offer in compromise and cannot afford to pay an Installment Agreement, Currently not Collectible (CNC) status may be an option. If a client is placed in CNC status, the statute of limitations continues to run and the IRS will not pursue collection actions. However, if a taxpayer’s financial status improves, the IRS can remove the file from CNC status and return to active collection status.
Reasons for attempting CNC status:
1. Taxpayer has income below allowable expenses and there is no indication that the financial situation will improve in the future;
2. Due to high equity, the taxpayer does not qualify for an OIC and has more allowable expenses than income so an Installment Agreement is not an option; and,
3. Taxpayer has more allowable expenses than income and the statute of limitations is getting close to expiring.
Statute of Limitation for IRS Tax Debt
The IRS has 10 years to collect outstanding tax liabilities. This is measured from the day a tax liability has been finalized. A tax liability can be finalized in a number of ways. It could be a balance due on a tax return, an assessment from an audit, or a proposed assessment that has become final. From that day, the IRS has ten years to collect the full amount, plus any penalties and interest. If the IRS doesn’t collect the full amount in the 10-year period, then the remaining balance on the account disappears forever. The statute of limitations on collecting the tax has expired.
Selecting a Tax Professional to handle your IRS Tax Debts
Because of the complexity of the Offer in Compromise and other IRS tax debt processes, many taxpayers hire a tax professional to prepare their IRS documentation and to negotiate directly with the IRS. Tax professionals charge anywhere from $1,500 to $6,000 or more for accurate and thorough IRS representation. Because most of the IRS tax debt solutions involve negotiating with the IRS, your tax professional should be admitted to practice before the IRS. You should be looking for a Tax Attorney, an Enrolled Agent (EA), or a Certified Public Accountant (CPA) to handle your Offer in Compromise. The tax professional must know about the laws governing IRS collection of tax debts, how the IRS evaluates offers, and what all the options are for resolving tax debt problems. “Taxpayers should be looking for a tax professional with years of experience in IRS collection matters, especially experience in dealing with revenue officers, the Automated Collection Systems division, and the complex IRS process” according to Jim Brown, the managing tax attorney with Freedom Tax Relief.
Please be aware that even the most successful tax professionals have lost Offer in Compromise cases, so not every consumer looking for IRS debt help is guaranteed the most savings. It is important to know that your Offer in Compromise will be decided based on your unique financial situation. If you do need IRS debt help, having a tax professional represent you before the IRS will help ensure that all letters and phone calls from the IRS are handled quickly and professionally. But in the end, it is up to the IRS to make a decision about your case.
It is important to know that like death and taxes, your IRS tax debt issue will not simply vanish, so you should seek help before the IRS escalates collection efforts and/or you accrue additional penalties and interest.