The IRS has been under a lot of strain since the pandemic. Not only has the agency been tasked with keeping up with every citizen’s tax return situation, but they’ve handled each and every stimulus payment.

The IRS isn’t the only one suffering, though. 2021 has been labeled the most challenging year for taxpayers. That’s because they’ve had to keep up with stimulus payments, advanced tax credits, new streams of side income, self-employment taxes, unemployment benefits taxes, and even new rule changes.

If you have a business or received a lump sum payment, then you’ll also need to make sure you report that income accurately. That means you need to know about Form 8300 and what cash transactions are reported to the IRS. 

Keep reading to find out everything necessary about reporting big sums of money and filing a Form 8300.

What Is Form 8300?

At the most basic level, Form 8300 is an official report to the IRS stating that you received $10,000 in cash or more as a payment. While this amount may seem excessive at first glance, there are a lot of reasons why you might get such a high cash payment. Those reasons might be:

• The sale of real property
• Pre-existing debt payments
• Rental of real or personal property
• Making or repaying a loan
• Reimbursement of expenses
• Sale of goods or services

Form 8300 rules dictate that you must also report multiple payments within a single year that amount to more than $10,000. While the Form 8300 instructions mention cash payments, it’s important to understand that “cash” also includes bank drafts, traveler’s checks, money orders, and cashier’s checks.

IRS Form 8300 Requirements

Per federal law, your business is required to file Form 8300 within 15 days of receiving any cash payment over $10,000. Filing this information with the IRS helps the agency track cash transactions. 

If you’re wondering what cash transactions are reported to the IRS, then it’s important to understand a new law that went into effect on January 1, 2022. Now, bank transactions reported to the IRS will include everything over $600!

With that in mind, it’s more vital than ever to keep a cash transaction report that monitors every cent of your business’s cash flow. That way, any questions that come up from the IRS can get answered quickly and accurately.

What Happens If a Form 8300 is Filed on You?

One of the most common tax problems happens when a taxpayer is uninformed or misinformed about how to file or report certain types of income. If you’ve paid a substantial amount of cash and didn’t report it, then you might be wondering—what happens if a Form 8300 is filed on you?

First, don’t panic! You should be notified about the filing—the business is required by law to notify you. Plus, you’ll likely know about the situation in advance because you’ll need to provide your TIN to the other party when they file a Form 8300. The other business will be penalized if they don’t attempt to get your TIN when they report the transaction.

How to File Tax Form 8300

A proper IRS Form 8300 reference guide wouldn’t be complete without explaining how to file a Form 8300. Since many Americans do their taxes online, it is possible for businesses to file a Form 3800 completely electronically. Doing so is free; all you have to do is visit the BSA E-Filing system and complete the proper forms. If you’d prefer, then you can print it out and mail it directly to the IRS.

Do you need more detailed information about how to fill out Form 8300 or another tax form? Check out our tax help resources section for more information. If you still can’t find what you’re looking for, then it might be best to reach out directly to a tax expert who can take a look at your personal tax situation and help.

Consequences of Failing to File a Form 8300

If you fail to file a Form 8300 within a timely manner, then you’ll face specific consequences. First, you’ll get fined $100 for each occurrence of failing to file a Form 8300. You could also face additional financial penalties if an investigation reveals that you deliberately attempted not to file a Form 8300 in order to defraud, mislead, or omit information from the IRS. Intentional disregard can lead to fines of up to $250 per violation.

Further, if the IRS determines that you are intentionally being noncompliant and willfully refusing to file a Form 8300 or committing fraud, then they have the legal authority to levy criminal consequences against you, too. You could get charged with a felony offense! Not only does that likely mean you’ll spend time imprisoned, but you could also get fined upwards of $25,000!

Tips to Help You File an IRS Form 8300 Like a Pro

So, how can you remain compliant with the IRS’s many tax laws? One of the best tips we can give is to keep detailed records of all your business transactions. Flag any ones that exceed $10,000, and be sure to note that you filed a Form 8300, too.

If you’ve been slammed with penalty after penalty, then don’t feel like your situation is hopeless. There are plenty of tax relief solutions to explore that could help you reduce or potentially eliminate some of your tax debt. Speak with an expert if you’re interested in learning more about these potential solutions.

Do You Have More Tax Questions?

Do you believe you’ll need to fill out a Form 8300 this year? Are you still unclear on the process, or do you have additional tax questions that weren’t addressed in this article? If so, then it’s important to reach out to a tax expert that can answer your questions one on one.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today to get more information about how we can help you face any tax challenge like a boss!

Each year, auto dealerships sell about 17 million new cars, and homeowners sell about 6-7 million homes. Are you currently hoping to join those statistics by making a big-ticket purchase? If so, then you’ll need to verify your income, especially if you’re hoping to secure a good loan or mortgage rate. 

One of the best ways to prove your income is to fill out and file IRS Form 4506-T to request an official tax return transcript. Once you have this important document, you can prove to potential lenders that you’ll be able to afford your payments.

Are you wondering what a 4506-T Form is and how to fill it out? You can learn everything you need to know below.

What Is a 4506-T Form?

According to the IRS, a Form 4506-T is used by taxpayers to request an official IRS tax transcript. You can receive a tax transcript online or have it delivered to your address. 

This official transcript has undergone a few changes over the past few years to protect a taxpayer’s privacy. Now, certain personally identifiable information will be partially masked so it can’t fall into the hands of cybercriminals and other individuals. 

Here is what will be visible on your official returns:

• The last four digits of your SSN or EIN
• The last four digits of the account phone number
• First four characters of the first name and first four characters of the last name
• First four characters of any name on the business name line
• First 6 characters of the street address
• All money amounts (wages, income, interest, balance due, penalties)

Only individual taxpayers can request their own transcripts.

Why You Might Need to Fill Out a 4506-T Form

What is the 4506 T Form used for, exactly? You likely need it to prove your income. 

To get more specific, the top two reasons taxpayers seek out official tax transcripts are to apply for an auto loan or a mortgage for their homes. Taxpayers might also want to use their transcripts for other reasons, too, though, like seeking out financial aid for college.

You might also want to get these transcripts if you’re struggling to resolve tax problems with the IRS. Requesting a transcript of a tax return for past years will help you get clarity on your tax situation. It can also help you explain your tax history to a tax expert if you’re seeking help.

How to Fill Out Form 4506-T

Are you looking for Form 4506 T instructions? The good news is that your request for a transcript of your tax return will be fairly straightforward to fill out. In the first section, you’ll fill out your name, Social Security number, and address.

When you get to section 6, you’ll want to specify “1040” in the box, and you’ll want to check the box at the end of line 6a. On Line 9, you’ll need to write out the last calendar day of the tax year you’re requesting. Check the box above the signature line, and place your phone number in the proper box.

Finally, you’ll want to sign and date the form.

Tax Return Transcript

Once you’ve completed your form, you’ll either want to submit it directly online on the IRS platform or drop it in the mail. If you mail your form,remember that it will take at least an additional week or two to process your request and get your tax return transcript back to you.

Do you need additional help filling out your form? Are you requesting more than one year of transcripts? Have you fallen further and further behind with your tax obligations and responsibilities? If you’re looking into your tax return transcripts to identify how much you owe the IRS overall, then it might be in your best interests to start researching tax relief solutions that can help you manage your debt.

How Long Does it Take to Receive a Tax Transcript?

On average, it will take the IRS about two to four weeks to process your request and make your transcript available online. If you requested that your tax transcript get mailed to your address, then expect your 4506 T processing time to increase by at least two weeks.

Keep in mind that all of these time estimates could take longer in 2022. Over the past few years, the IRS has struggled under the weight of increased burdens—they’ve had to take on their normal tax responsibilities on top of sending out stimulus checks and advanced tax credits, too.

If you think the IRS is taking too long to process your return or you need more help than you’re getting, then our tax help resources might be able to help.

Do You Need Help With Your IRS Form 4506-T?

An IRS Form 4506-T will help you secure a copy of your official tax transcripts. Once you have this document in hand, you can use it to your advantage to secure a loan, establish a mortgage, or prove your income to other potential lenders. Now, you should have a good idea of where to find this form, how to fill it out, and how long it will take to get your IRS tax return transcript from the IRS.

Do you need additional help with your tax forms? Are you unsure if you’ve even filed your taxes for the years you need transcripts for? If you’ve neglected your taxes for some time, then you might want the help of a tax expert. Contact us to get the help you need.

Most of us don’t want to pay taxes—the good news is that most of us don’t have to on Tax Day. Recent statistics show that only about 39% of Americans owed federal income taxes in 2020 during the height of the pandemic. That means the majority (61%) owed nothing.

How come? The answer is the W-4 and tax withholding. Most of us don’t pay taxes on Tax Day because we’ve already paid them throughout the year via tax withholding. 

So, how much money is withheld from your paycheck? The answer depends on your specific tax situation, but we hope to clear up some confusion by outlining the basics. Learn more about tax withholding and how it applies to you below.

How Does Tax Withholding Work?

Before you get into the details, it’s crucial to understand how withholding works.

As an employee, you are paid by your employer. Your employer doesn’t just hand over all your earnings, though. A percentage of your income is withheld and given to the IRS. Consider this an advanced payment on your income taxes—if your employer did not withhold this amount, then you’d be expected to pay it all in one big lump sum come tax time. For most Americans, it’s far easier to bear the brunt of their tax burdens by paying them with each paycheck rather than all at once.

If you’re self-employed, or your employer doesn’t withhold your taxes, then you’ll be expected to pay them on your own.

Who decides how much is withheld? That’s where the W-4 comes in. 

How Does a W-4 Work?

Prior to 2020, you’d fill out a personal allowances worksheet on your W-4 to determine the amount your employer withheld from your paycheck. Now, however, you’ll find a five-step process on your W-4 form: 

1. Fill out your personal information
2. Account for your and your spouse’s job, if filing jointly
3. Claim your dependents
4. Take the standard deduction or list your deductions manually
5. Sign and date the form

The amount ultimately withheld from your paycheck is a factor of your combined income (if filing jointly), how many dependents you have, and your deductions. 

If you underpay, you might end up owing the IRS when you’d typically get that money refunded. If you end up owing way more than you can pay off, then you’ll be researching tax relief solutions to help get you out of debt!

To avoid that situation, consider using a W-4 withholding calculator to determine how much you’ll owe if you opt not to have your taxes withheld by your employer. This type of calculator is available directly on the IRS website. You’ll want to input all your information to receive the best possible estimate.

How Many Allowances Should I Claim?

Since 2020, filing a W-4 has become much easier. You won’t have to decide how many allowances to claim because there aren’t allowances on the form anymore. Instead, if you want to impact your withholding, then you’ll need to fill out the multiple jobs or spouse works sections. You’ll also want to fill out Step 3, which goes over your dependents. If you have extra withholding you want or if you have other income, you’ll fill out Step 4.

Do You Have More Tax Questions?

Are you still unclear about your tax situation? If so, then it’s advised that you speak with a tax expert about your situation. Getting professional help with your taxes could be the difference between getting penalized by the IRS and getting a chunk of money back through a refund!

Leave your tax worries behind by getting expert guidance from a team with over 30 years of experience working with the IRS. Contact us now to learn more about how we can help you!

Are you a notoriously late tax filer? Have you fallen behind on your taxes for more than a few years? If so, then you’re in good company. Experts suggest that about 7 million American taxpayers fail to file their income tax returns every year.

If it’s been a while since you filed, then you might be wondering what IRS forms you need to file. So, what is a 1040-EZ form? Do you need to file one?

On top of knowing what forms to fill out, you also need to understand how tax laws have changed in recent years. Learn everything you need to know about the 1040-EZ form, whether you need to file one, and how to go about doing your taxes this year below.

What Is a 1040-EZ Form?

So, what exactly is a 1040-EZ tax form? The best form 1040-EZ definition describes the document as a simple and short version of a 1040. The form is streamlined, which makes both tax preparation and filling out a 1040-EZ online form quick and seamless.

A 1040-EZ form is used to complete your annual taxes. On it, you’ll provide all your personal identification information and describe your tax situation.

Who Can File a 1040-EZ Form?

This tax form is the easiest to fill out, but you won’t want to use it if you have a complicated tax situation. This tax form is reserved for individuals who have very basic tax situations and only need to provide minimal information to the IRS. These taxpayers also fall into the following categories:

• They’re single or married filing jointly
• They’re under 65 years old
• They don’t have dependents
• No visual impairments
• Not going through bankruptcy
• Their income comes from wages, salaries, unemployment, or tips
• Their taxable income is less than $1,500
• They don’t owe money as a result of hiring a household employee

In general, first-time taxpayers fill out federal tax forms 1040-EZ since they often don’t claim deductions or many credits at all. That makes a 1040-EZ a good option for younger individuals, students, or people who only work part-time jobs.

This type of tax form isn’t good for you if you have important credits and deductions that you need to file. The 1040-EZ form is dubbed easy for a reason: it doesn’t contain the appropriate sections for you to file those deductions and credits, which are important to reduce your overall tax burden. If you have real estate assets, foreign income, tax shelters, or receive retirement contributions, then it’s not a good idea to use this simplified form.

How Do I File a 1040-EZ?

Do you believe you fall into the categories outlined above? If so, then we know what you’re thinking—how do I file a 1040-EZ? If you’re hoping to use this form, then follow the following 1040-EZ instructions:

• Confirm that you meet the eligibility requirements listed above
• Wait to receive your W-2 from your employer
• Get a blank 1040EZ form for the year you’re filing for
• Input your personal information
• Send the form to the IRS or file the form electronically

Keep in mind that the IRS no longer uses 1040-EZ forms now that it’s 2022. If you’re filling out a 1040-EZ, then you’re likely doing so for a year that you failed to file. If you have more questions about how to file the appropriate forms, then consider consulting with tax attorneys who can help.

Form 1040 or Form 1040-SR?

If 1040-EZ forms are no longer applicable in 2022, what forms do you fill out instead? Rather than using a simplified 1040-EZ, you’ll need to fill out either a regular 1040 or a 1040-SR. Let’s break down the differences below.

A 1040-SR form is appropriate for taxpayers who receive Social Security benefits or are older than 65. This form has a color scheme with greater contrast, which could help seniors file their paperwork with ease. The form also has a larger font. This form allows space to document distributions from retirement plans, income you receive from annuities, your Social Security benefits, other deferred-payment arrangements and more. While you don’t have to be retired to use this form, it’s a great option for taxpayers who have retired.

A standard 1040 form is what you’ll want to use if you’re reporting a significant amount of income, plan to use deductions, or want to claim tax credits. This standard form gets used by the IRS to determine how much of your income is subject to tax. It also alerts the IRS to any refunds they may owe to you. Here are the schedules you’ll want to fill out:

• Schedule 1: Additional income and deductions
• Schedule 2: Owe additional taxes (self-employment, household employment, etc.).
• Schedule 3: Claiming certain credits

Answering Your Tax Questions

While you may understand which forms to fill out now, the process is still pretty complicated. You may have more questions. If that’s the case, then there are tax help resources you can use to continue learning more. You could also consult with a tax professional to ensure you fill out all your returns correctly.

Getting Tax Help For a Brighter Future

Have you found yourself asking questions like, What is a 1040-EZ? What tax forms do I need to fill out this year? If so, then we hope this article has helped inform you about the proper tax forms you need to fill out going forward.

Of course, tax laws do change from time to time, so you may need to check back on our website each year to remain compliant. If you have questions or concerns about past, present, or future taxes, then it’s far better to consult with a tax expert about your situation.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today to get started on your brighter future.

Over 11 million Americans currently owe a collective $125 billion in taxes to the IRS. That’s not good news, considering that the IRS has the legal authority to levy consequences against those individuals.

One of those consequences is an IRS wage garnishment, which means the IRS can seize a portion of your paycheck before it even reaches your hands. If you’re subject to wage garnishment, then you’ll receive IRS form 668-W before the garnishment starts—but you still have time to seek out tax debt help. Below, learn more about this important IRS form and what steps you should take after getting one.

What Is IRS Form 668-W?

Receiving an IRS form 668-W is intimidating, but it’s one of the most common tax problems we see. It’s a notice of an IRS wage garnishment. It’s often sent to your employer to alert them about the garnishment plans.

Once the garnishment goes into play, an employee’s wages, commissions, bonuses, and salary are up for garnishments. Retirement income and other benefits aren’t safe, either; these can still get garnished, too. It’s important to also understand that these garnishments are continuous—your employer is expected to comply until the IRS releases the levy.

How Employers Should Deal With a Wage Levy

If you’re an employer and you receive a 668-W, then there are some specific steps you must take. You have at least a full pay period between receiving a 668-W and complying with the garnishment order, though. The IRS advises employers to encourage the employee that owes the tax liability to contact the IRS. In some cases, that employee can deal with the garnishment and get it removed. If those attempts are unsuccessful, though, then you’ll need to start complying with the order.

To do so, you need to give your employee parts 2, 3, 4, and 5 of the form and have them sign a statement. Then, you’ll need to calculate what that employee’s net pay minus exemptions will be. You’ll need to send over all this information to the IRS.

From there, you’ll need to start complying with the levy and sending over the required amount.

How Employees Should Handle Form 668-W

If you’re currently an employee who was informed about a 668-W (or you received one), then a wage garnishment is imminent. If you haven’t done so already, attempt to contact either the IRS or a tax debt expert who can help with IRS debt. If you can work out an arrangement with the IRS, then the agency will consider releasing the levy and garnishment.

If you don’t act, then your employer will ask you to fill out a few forms. You need to complete those forms within three days. If you don’t, then calculations will get made for you, which could end up causing you to get garnished more than you should.

Once you’ve filled out the papers and returned them to your employer, you’ll start to notice a smaller paycheck each week or month. You won’t have to take further action, as that money will go straight to the IRS.

Are you worried that the IRS levy will cause significant financial hardship for your family? If so, then it’s possible to contact the IRS and file for an extreme hardship.

Self-Employment and Tax Levy Garnishment

Are you currently self-employed? If so, then your tax levy garnishment situation will be much more complex. A 668-W form isn’t ideal. Why? As a self-employed individual, you are not considered an “employee.” In other words, your independent contractor status means you don’t actually have an employer who can garnish your wages.

It’s more appropriate to get a form 668-A form, which is a levy of third parties. Often, this type of levy goes to your bank. That way, your bank can levy your income stream. This type of form is often called a “1099 levy.” If you received a 668-W form but you’re self-employed, then it may be a good idea to consult with a tax professional or IRS agent who can set you up with a 668-A instead.

Can the IRS Garnish Wages Without Notice?

Do you currently owe a serious tax debt? If so, then it’s normal to worry that your wages or bank account could be garnished unexpectedly. So, can the IRS garnish wages without notice? The good news is that the short answer is “no.”

IRS wage garnishment cannot happen without ample notice. First, you should receive a notice by direct mail. You will have the right and opportunity to speak with the IRS directly in an attempt to arrange a payment schedule. You’ll also need to fill out forms when your employer gets the levy notice.

Tax Debt Help

Wage garnishment is not an ideal situation for anyone. You won’t have control of your full paycheck, and you’re putting undue stress on your employer, too. If you’re facing this type of situation, then it’s in your best interests to research tax relief solutions like installment plans. If you need help learning more about your options, then speak with a tax professional who can help.

Understanding Your IRS Form 668-W

Have you recently received IRS form 668-W? If so, then your wages, salary, or income are about to get garnished. The good news is that you are allotted a period of time between getting notified and the time when the garnishment will begin.

During this time, it’s advised that you seek out tax debt help from an expert. In many cases, you can work out a payment plan with the IRS.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today to get started!

Almost half (47%) of Americans are bothered by the complexity of our nation’s tax system. While it remains challenging, things have improved since IRS tax returns went digital. Electronic filing helps taxpayers feel more confident about understanding confusing forms, and it can help reduce errors, too.

Despite that, tax return mistakes still happen, and when they do, you’ll need to file an amended return.

Are you currently attempting to learn more about your amended tax return status? Have you been wondering, Where’s my amended return? Don’t panic! We’re here to put your mind at ease. You can learn everything you need to know about an amended tax return below.

What To Do If You Find an Error On Your Taxes

While electronically filing your taxes can reduce the likelihood of making an error, accidents still happen. If you realize that you made a mistake, don’t panic or attempt to call the IRS to rectify the error. Instead, figure out exactly what went wrong.

Did you make a mistake with the math? If so, then fixing the error might not be necessary at all. Most math mistakes get automatically corrected when your return is processed.

Did you make an error when it comes to your filing status, though? Did you leave out certain income streams or forget to make a crucial deduction? If so, then these errors call for filing an amended return.

How To File an Amended Tax Return

When it comes to common tax problems, figuring out how to fill out forms correctly is one of the most prevalent. The good news is that an amended tax return is straightforward to fill out.

A 1040x will help you correct any errors. It’s broken down into three sections, including:

• Section A: Input the amount you put on your original return
• Section B: The total difference between the inaccurate and amended returns
• Section C: The accurate figures

Did your error result in you owing the IRS more? If so, then it’s advised that you go ahead and include a check or money order with your return. If you’re filing electronically, then feel free to pay electronically, too. You can make a payment directly on the IRS website.

Amended Tax Return Refund Timeline

Have you already filled out the appropriate forms and returned them? Are you constantly wondering, Where’s my 1040x? If so, then it’s important to understand the likely timeline you’re looking at when it comes to getting your return.

Once you finish filing your amended return, it can take up to three weeks for the return to even reach the IRS, depending on whether you file via snail mail or electronically. Once they have it, you may be looking at up to 16 weeks to process the return.

How Do I Check My Amended Tax Return Status?

How can you learn more about your IRS amended return status, or get a better idea of when to expect your return? Rather than searching “check my amended return” on Google, it’s far better to contact the IRS directly to learn more about the status of your return. 

To do so, you’ll need to know your Social Security number (or tax ID), date of birth, and zip code. Once you have that information, you’ll want to navigate to the IRS’s “Where’s My Amended Return” page. Once you do, you’ll get a status like:

• Return received
• Return adjusted
• Return completed

Once received, that’s when your 16 weeks starts. Once an adjustment has been made, your return is in progress. Once the return is completed, that means your return is on its way. The IRS updates this system at least once a day, usually at night. So, feel free to check your status on a daily basis to see how far along in the process your return is so far.

I Have Not Received my Amended Tax Refund: Next Steps

Are you still finding yourself asking, Where’s my amended refund? Have you already checked your 1040x status and confirmed that a refund is on the way? It’s normal to feel anxious about getting the money you deserve, but it’s also important to understand the constraints faced by the IRS. You’ll need to give the agency at least 16 weeks before inquiring further about your return. That’s because the IRS is very busy during tax time.

Will My Amended Return Trigger an IRS Audit?

The answer is complicated. The IRS won’t initiate an audit based on the fact that you amended it, but it can make an audit more likely. If you do end up getting audited, then be prepared to provide proof of your amended estimates.

If you’re concerned that an audit could cause problems for you or you have more questions about filling out your taxes, then consider looking around at our tax help resources.

Do You Need More Tax Help?

If you’ve been waiting patiently to learn more about your amended tax return status, then you’re not alone. It’s important to understand that the IRS will likely look at your returns much more closely, and your chances of getting audited increase, too. For all these reasons, your return will likely take longer to process.

If you have more questions about your taxes, then we invite you to leave your tax worries behind with expert guidance from a team that has over 30 years of experience working with the IRS.  Contact us today to learn more about how our team of tax experts can help you get through even the most complex tax situations.[/vc_column_text][/vc_column][/vc_row]

Before the pandemic, almost half of Americans (48%) viewed the IRS negatively. Once the pandemic hit, though, most Americans were provided with financial relief and the IRS helped them get it, so perceptions about the IRS improved sharply. As a result, a letter from the IRS was no longer seen as something to fear—it might be an indication that a check was on the way!

Not all IRS letters to taxpayers are positive, though. Some could indicate that you owe a hefty sum of money to the IRS, and some could even mean that you’re about to suffer penalties or consequences for avoiding your returns or tax debt. 

The first step in preventing a bad situation from unfolding is to understand your letter from the IRS. You can learn everything you need to know about the different types of IRS letters and how to deal with them right here.

Identifying a Letter from the IRS

If you regularly receive mail, phone calls, or emails, then you already know how prevalent scams are. In fact, there’s a huge chance that you’ve been already targeted at one point or another. 

Fraudsters are always looking for new ways to trick people into handing over their hard-earned cash, and one of the most common types of scams involves tricking Americans into thinking they owe a tax debt to the IRS. For that reason, it makes sense to be suspicious if you receive a letter from the IRS in the mail.

The first thing you should do if you get a letter that appears to be from the IRS is to verify its legitimacy. This can be difficult to do because a fake IRS letter will likely look and appear real. Here are some tell-tale signs that could indicate the letter isn’t legitimate:

• There are misspelled words or clear grammatical issues.
• The letter asks you to provide bank account details to the IRS.
• The letter demands one form of payment.
• The letter is asking for payment in the form of gift cards or something else that doesn’t add up.
• The letter is threatening you and saying you need to act immediately.
• The letter contains contact information that’s different from the official IRS contact information.
• The letter contains mistakes like an incorrect last name.
• The letter doesn’t give you clear instructions on how to proceed.
• The letter claims that you’ve won gift money or some type of contest.

Real IRS letters will always have a notice number or a letter-number on the top or bottom right-hand corner. If there is not a number on one of those areas, then the letter is likely a fake. 

If you’re unsure whether a letter is legitimate or not, then it’s advised that you immediately reach out to the IRS at 800-829-1040. If you don’t feel comfortable doing that, then you could also bring the letter to tax attorneys who can help you determine if it’s real.

Different Types of IRS Letters and How to Deal With Them

Once you’ve accepted that the IRS mail is legitimate, you need to identify what type of letter it is and determine how to proceed. Remember, a real IRS letter will always include clear, actionable steps that you need to take. If a response isn’t required, then the letter should clearly state that no reply or action is needed. 

Below, we’ll go over the different types of IRS letters and how to deal with them.

CP521: You Have an Installment Payment Due

One of the most common IRS letters you might receive is a CP521 letter. This letter indicates that you have an installment payment due. Think of this letter as a gentle reminder to send in your monthly payment by the due date.

In response to this letter, you should pay the amount due by the date indicated on the letter. You can mail in your payment with the provided envelope. If you don’t pay, then you could end up defaulting on your agreement.

CP180 or CP181: Your Return Can’t Be Processed; Missing a Form

Another common reason the IRS may send you a letter is because there was an issue with your most recent tax return. A CP180 or CP181 letter means you’re missing either a schedule or form.

In response to this letter, be sure to read and understand what form or schedule you need to provide to the IRS. Then, download the required form and fill it out. If you have further questions or concerns about the issue, then consider reaching out to either an attorney or the IRS directly.

CP504: You Owe a Debt to the IRS; Final Notice

One of the most common tax problems is getting a tax bill that you can’t pay. If you owe a debt to the IRS, you’d better believe that they’ll remind you to make a payment. The first notice will come in the form of letter CP501. The second request is CP503. If you still haven’t paid in full, then the IRS will send out a CP504 letter.

This is a final notice to settle your tax debt. If you don’t act, then the IRS will move on to more serious consequences, including levying your assets. If you receive this notice, then you need to reach out to either a tax attorney or the IRS as soon as possible, as inaction could result in significant consequences.

CP44: Notification of Delay

Tax FAQ pages are filled with people wondering where their tax refund is. Is this you? If the IRS is experiencing delays when processing your returns, then they’ll send you a CP44 letter. This letter means the IRS is still in the process of determining your tax status. You’ll need to wait for more correspondence letters to determine what to do next.

Economic Impact Payment Notices

Recently, the IRS has taken control over distributing stimulus checks to millions of Americans. After you received your funds, you should have received an IRS letter detailing how much you received. This letter does not require further action, but it’s recommended that you save it. When you go to file taxes, you’ll need to verify how much you received. You can reference this letter to ensure you fill out those questions accurately.

If you did not receive the stimulus funds that the letter indicates you did, then you need to reach out to the IRS about the problem. Not only do you need to clear up the misinformation, but you could end up receiving your rightful stimulus money, too!

CP523: Intent to Terminate Your Installment Agreement and Seize Assets

A CP523 letter is a serious ordeal. This letter means that you’ve failed to keep up with your installment agreement with the IRS. It also means that the IRS is preparing to take drastic action to collect from you. Without any response from you, the IRS will move forward with plans to seize your assets.

After receiving this, it’s crucial to take action. Make a payment on your account if it’s possible. You should also reach out to an attorney ASAP, even if you are able to make a payment. Depending on your situation, you may be able to stop collection efforts. You might also be eligible to file an appeal. Even better, you might still be in a good enough standing to negotiate a new installment agreement or reinstate your old one.

How To Report a Fake IRS Letter

So, what should you do if you got an “IRS” letter in the mail only to find out that it was a scam? First, do not attempt to communicate with the scammer or give them any further details about your address, name, or accounts. Next, consider reporting the scam to the Treasury Inspector General for Tax Administration. You can contact the IRS directly at phishing@irs.gov.

You Don’t Have to Face a Letter from the IRS Alone

Have you recently received a letter from the IRS? If so, don’t panic! Follow this guide to ensure that you remain compliant with the law:

• Identify the letter and verify its legitimacy.
• Determine what type of letter it is and whether action is required on your part.
• Learn what to do to ensure you remain compliant and in good standing with the IRS.

These steps seem easy on paper, but IRS mail can be difficult to cope with. Getting correspondence from the government can feel intimidating, confusing, and ambiguous. The good news is that you don’t have to face the situation on your own!

Here at Tax Group Center, our tax consultants, tax attorneys, CPAs, and enrolled agents can all help you deal with the IRS. Whether you owe the IRS a significant chunk of money or you just don’t understand a letter they’ve sent to you, we can help. Contact us today with any of your tax questions, concerns, or needs. We’re happy to help, and we look forward to hearing from you!

Recently, worldwide headlines reported on the arrest of John McAfee, an American tech expert, who was hiding out in Spain after committing severe tax evasion in the U.S. According to the Department of Justice, McAfee could’ve faced a maximum of five years in prison if found guilty of tax evasion.

But wait, can you go to jail for not filing taxes? Is the U.S. government really willing to extradite citizens who didn’t pay their taxes on time? In a nutshell, the bad news is that you can get arrested if you don’t pay your taxes. The good news is that it’s unlikely to happen to you unless you are intentionally evading the IRS and you owe a lot of money.

Do you need more information about what happens when you don’t pay taxes? Don’t panic! Learn everything you need to know about tax crimes and tax fraud below.

What Happens When You Don’t Pay Taxes?

So, what happens when you don’t pay taxes, and can you go to jail for not filing taxes? The first step in not paying your taxes usually involves not filing your taxes. What you need to know is just because you don’t file your federal taxes or state taxes doesn’t mean that the IRS doesn’t know what you owe. On the contrary—they know exactly how much income you earned and how much you really owe.

If you don’t file, the IRS may not take action right away, but in time, you’ll get a bill in the mail from the IRS that outlines how much you owe. Keep in mind that you’ll likely get hit with a penalty, too. Depending on how much you owe, you could have accumulated a massive penalty in the form of fees and interest.

Aside from this financial penalty, the IRS won’t immediately attempt to file charges against you. If you don’t take action after the IRS notification, though, that may change.

Tax-Related Crimes: Civil Cases or Criminal?

At this point, the IRS knows you didn’t pay your taxes. They also know that you know about your situation because they informed you via letter. They may start to believe that you are both knowingly and purposely refusing to file and pay your taxes.

You can face criminal charges for this type of tax crime. Willful and intentional tax avoidance is called tax fraud.

If you make a mistake but didn’t do it on purpose, then the IRS expects you to act. They expect you to contact them and work on resolving the issue. In these situations, the IRS won’t charge you with a crime, but they may still hit you with civil penalties in the form of monetary penalties: 

• Negligent reporting could cost you up to 20% of the taxes you underestimated. 
• If you failed to file your taxes in a timely manner, then you could owe up to 5% for each month you didn’t file. 
• In total, you could end up paying up to 25% of the overall amount you owe. 
• Failure to report specific information could cost up to $520 per return.

These civil penalties may not seem like much, but they add up quickly. If you already know you can’t pay your tax bill, then ignoring it will only make matters worse. 

Tax Fraud and Jail Time

A deliberate attempt to avoid paying your taxes by lying or falsifying information is considered a crime. You could be considered guilty of tax fraud if you lied on your tax form intentionally, falsified records, or misrepresented certain expenses. Income tax fraud is serious. If you’re found guilty, then you could be subject to three to five years of jail time. 

But jail time isn’t the only thing you’ll have to contend with if you’re found guilty of tax fraud. You might also get hit with serious financial fines on top of the extra fines and penalties you’re already facing from the IRS.

Illegal Tax Shelters

Using an illegal tax shelter is evidence that you’re willfully and intentionally avoiding paying your taxes. A tax shelter is a type of investment that the taxpayer uses to reduce their overall income tax liability without actually changing the overall value of the taxpayer’s income or assets. Some tax shelters are legal, but many of them are nefarious. Putting money into an overseas bank account, for instance, doesn’t serve any legitimate purpose. Putting money into an employer-sponsored 401(k) program, on the other hand, would be considered a legal tax shelter.

Abusive and illegal tax shelters are investment strategies that reduce taxes unfairly. Sometimes large investors use specific counties, states, or regions that have a lower corporate or personal income tax rate. This is called a “tax haven.”

The IRS sees illegal tax shelters as abusive and fraudulent behavior. You could face a penalty that’s up to 75% of the taxes you underpaid if you’re found using an illegal tax shelter to reduce your tax liability.

How to Avoid Tax Consequences

The above scenarios are all pretty frightening, especially if you don’t earn a huge amount of money to begin with. If you’re currently facing a large tax bill, remember this: It’s not a crime if you can’t pay your taxes on time. So long as you are not willfully or intentionally lying or avoiding your taxes, the IRS can’t file a criminal case against you.

Rather than avoiding the situation, you should respond to the IRS and consider the tax relief solutions available to you. Obviously, the best solution is to pay your tax bill in full, but that’s not always possible. If you can’t pay your debt right away, then you can likely enter into an agreement with the IRS.

Installment agreements allow you to pay off your tax bill over time, and other options like penalty abatement can help you reduce any fees you’re facing due to late payment. If you’ve been struggling to pay off your back taxes for a while or you owe a very high amount, then you should research whether the IRS Fresh Start Program can help.

If you enter into any of these agreements, then the IRS is unlikely to continue attempting to collect from you. Instead, they’ll wait for you to adhere to your side of the agreement and start making payments. If you default on your payment plan, however, the IRS may re-initiate those tax consequences.

So, Can You Go To Jail for Not Filing Taxes?

So, can you go to jail for not filing taxes in the U.S.? To make the answer as simple as possible, you can get arrested for not filing your taxes. Your actions must be willful and intentional, though, which means you won’t simply get arrested off the street. You’ll have ample opportunity to settle your debt or at least get into contact with the IRS to prevent an arrest.

In most cases, you can reconcile your tax debt and avoid the consequences of tax crimes. There are legitimate tax planning and tax avoidance measures, but flat-out refusal to pay what you owe is considered a criminal act.

Leave your tax worries behind with expert guidance from a team that has 30 years of experience working with the IRS. Contact us today!