A tax problem doesn’t have to haunt you forever. The IRS actually provides many options that taxpayers can use to settle tax debt, but it’s important to know what’s in front of you before you can decide how to move forward. Here’s how to find the right tax relief option for your tax situation.

How Do You Qualify for Tax Relief?

The fact that you’re a taxpayer qualifies you for one of the IRS’s tax relief programs, but you’ll need to look into the specific programs available to determine which one fits your needs. People who are unable to pay or file taxes due to circumstances like illnesses and natural disasters can qualify for relief. In addition, the IRS extends relief options to people who are struggling to pay tax bills. 

You’ll need to request the specific type of tax relief solution that applies in your situation. When you apply, the IRS will consider your ability to pay, your income, your expenses, and your assets.

How Do Tax Relief Services Work?

Relief doesn’t necessarily mean that your debt will be wiped away, but the IRS can be quite reasonable when it comes to making sure you can manage tax debt. The IRS will assess your ability to pay what you owe based on the financial information that you submit. There is a chance that the IRS will settle your debt for much less than you actually owe. In addition, your requirement to pay back your debt may be suspended if you can prove hardship. The IRS may also provide you with a payment plan that allows you to pay back what you owe using smaller payments over a period of about six years.

What Are Tax Relief Solutions That You Can Look Into?

The IRS offers a range of tax relief options. You’ll need to look into each option to decide which one applies to your situation. Here’s the list of options that may be available for you:

• Offer in Compromise (OIC)
  
• Penalty Abatement
  
• Installment Agreement (IA)
  
• Currently Non Collectible (CNC)
  
• Innocent Spouse Relief
  
• Audit Appeal

• Fresh Start Initiative 

Bear in mind that the IRS will not consider you for any of its relief options if you’re not current with your tax returns. 

The good news is that the IRS simply wants you to file any returns that you owe, and the fact that you filed returns late won’t impact your ability to qualify for available tax relief solutions. Of course, it’s highly recommended that you get those late returns filed promptly to avoid more tax issues going forward.

How Do You Determine Which Tax Relief Solution Is Right for You?

Most people aren’t very familiar with the IRS’s relief options. That’s why it’s highly recommended that you seek help from tax experts while deciding which program is right for you. Working with a tax team that deals with the IRS regularly will ensure that you take the right steps and avoid more penalties. One of the most important things a tax professional can do for you is take measures to get interest and penalties taken away. This includes very harsh penalties like tax levies, tax liens, and wage garnishments.

Most taxpayers who owe money qualify for Installment Agreements because the qualifications are pretty basic. You’ll just need to be willing to turn over financial information to the IRS that proves that you don’t have the cash or borrowing power to pay off your debt right now. You may be able to apply for a more robust relief option like Offer in Compromise or Currently Non Collectible if you can prove that making payments on your full debt total would create financial hardship.

Tax Group Center Can Help You Explore Your Relief Options

Tax Group Center helps our clients get access to tax relief solutions that can turn their entire lives around. Let us walk you through the options that are available to you; we’ll make sure you’re complying with the IRS’s requirements to make the process go as smoothly as possible. We’ll also help you get set up to make sure your repayment process is completed correctly. We have a team of licensed tax professionals, CPAs, and lawyers waiting to dedicate time and attention to your case. Call today!

Do you owe the IRS money? You may be worried that there’s no escaping harsh penalties and interest charges. But relief could be available. The IRS Fresh Start initiative offers several relief options for qualifying taxpayers; there are also options outside of this program that will reduce or erase your debt. 

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What Is Tax Relief and How Does It Work?

In short, tax relief is the IRS’s willingness to work with you to get a debt settled or erased. You’ll need to apply to specific programs to qualify. Remember, you need to be fully current with your tax returns before you can qualify for relief.

What Are All of the Federal Tax Forgiveness Programs?

You have several options for settling an IRS debt. Some of them fall under the IRS Fresh Start initiative, while others do not. Here’s a look at each one:

• Installment Agreements (IA) allow you to make monthly payments for debts totaling less than $50,000 for six years. Additionally, taxpayers can apply for several types of installment agreements based on debt owed and repayment periods.
  
• Offer In Compromise (OIC) is a settlement agreement that allows you to pay significantly less than what you owe to the IRS.
  
• Currently Not Collectible (CNC) status could apply if you cannot afford to pay your tax debt. This temporary hardship status is available if you can prove that paying back your tax debt will leave you without the money necessary to cover basic living expenses each month.
  
• Innocent Spouse Relief status may help you to escape tax mistakes or fraud conducted by a spouse without your knowledge. While not technically part of the IRS forgiveness program, this option can be used to clear your name and avoid tax debt.
  
• A bankruptcy discharge could apply if you intend to file for bankruptcy.
  
• Statute of Limitations Expiration is a little-known loophole that could actually allow your debt to expire without full repayment.

Keep in mind that the IRS requires specific documentation and proof from taxpayers who apply for these options.

What Is the Process for Getting Tax Relief?

You’ll need to do three things before you’re ready to apply for a forgiveness program:

• Compile all tax documents
  
• File all tax returns
  
• Decide which program applies to you

The IRS offers the Fresh Start initiative program for people who owe unpaid taxes. If you’re dealing with unpaid tax debt, learning about this program could be the first step to getting on the right track with the IRS – but the IRS is very particular regarding how it handles applications for this multifaceted program. 

One big misconception is that acceptance into the IRS’s Fresh Start program means that your debt is going to be instantly wiped clean from the slate. This is not typically the case. The Fresh Start initiative should be viewed as a cluster of options for repayment that allow you to avoid IRS penalties. Under this initiative, you’ll be cooperating with the IRS to get your debt settled.

How Do You Know How Much You Owe?

Figuring out exactly where you stand with the IRS is the first step to working out a settlement or repayment option. You may be dealing with muddled records and confusion if you’re trapped in a cycle of late tax payments. It can be especially difficult to understand what you owe if you haven’t stayed current with filing your tax returns. IRS fees and penalties can also make it difficult to know exactly where your current debt tally stands.

The IRS allows taxpayers to inquire about current tax debt online, by phone, or by mail. You’ll need to provide the IRS with specific information regarding your identity, address, and accounts when inquiring about your current debt balance. If you’re feeling overwhelmed regarding the process for making an inquiry, you can work with a tax professional who has done this many times before to ensure that everything is handled properly.

What Are IRS Collection Actions to Look Out For?

Unfortunately, it’s impossible to “protect” your money and assets from the IRS; it can go around you to collect funds directly from your employer or bank. 

There are many ways that the IRS can try to collect on unpaid taxes, including:  

• Tax liens, which establishes the government’s right to claim your property or any profits from its sale. 
• Tax levies, which can seize your property directly.
• Wage garnishment, which can take a portion of your wages directly out of your paycheck. 

How Does the Fresh Start Initiative Program Work?

The Fresh Start program is a channel for debt forgiveness, not a one-size-fits-all option. You’ll need to explore the specific opportunities that may apply in your case. That said, anyone who owes a tax debt of $50,000 or less to the IRS will almost certainly be qualified to initiate repayment under the Fresh Start initiative. Here’s a look at what’s addressed under a payment plan:

• The full debt amount
  
• Interest
  
• Penalties
  
• Tax liens
  
• Seizure of assets
  
• Wage garnishments

The comprehensive nature of the program is beneficial to anyone who would struggle to pay back a tax debt under the weight of mounting penalties, fees, and asset losses. If you pursue the Fresh Start initiative program, take a look at these three options:

An Extended Installment Agreement (IA) is a “fast-track” repayment option for anyone owing $50,000 or less to the IRS. You’ll have six years to pay off what’s owed without incurring any new interest or penalty fees if you’re approved. You also won’t have to worry about tax liens, asset seizures, wage garnishments, and related penalties as long as you stay current with your payments during the repayment window.

An Offer in Compromise (OIC) is a less common option, but it may be applicable to you if you’re able to make a convincing case to the IRS. An OIC will allow you to make an offer to settle your debt for less than you owe. The amount you are responsible for could end up being significantly less than the full value of your tax debt.

A Tax Lien Withdrawal is something to consider if the IRS has already moved forward with a lien. It is possible to have an IRS lien removed if you act before seizure activity begins. You will be required to agree to pay off your entire tax debt to the IRS using a direct repayment option. You will be permitted to formally request to have an IRS tax lien withdrawn from your account once you have set up a direct debt payment with the IRS. The big benefit of pursuing this option is that you may be able to have a lien removed before it is reported to the three major credit reporting agencies. 

How Do You Know if You Qualify for the Fresh Start Initiative?

Determining whether you qualify for this program comes down to looking at your circumstances and your options. Most people with tax debts totaling $50,000 or less will likely qualify for an installment payment plan at the very least. You could qualify for a debt reduction if you can prove that paying back what you owe would make it impossible for you to meet basic life needs. It’s time to talk it out with a tax professional if you owe the IRS money.

One thing that’s guaranteed is that you will not qualify for the IRS’s Fresh Start initiative if you have any unfiled tax returns floating around. Your first priority needs to be getting current with all late tax returns. The good news is that the IRS won’t hold those returns against you once you get them filed. Make sure you’re working with a tax professional to ensure that you’re meeting all obligations and enrolling successfully in a payment plan that will serve your needs.

How Do You Apply for the Fresh Start Initiative Program?

You’re going to want to get serious about applying for the Fresh Start program as quickly as possible to ensure that you don’t incur any new fees or miss your opportunity to keep tax issues off your credit record. 

First, make sure you’re current with all returns. Remember that being accepted into the Fresh Start program also means that you’re agreeing to file all future tax returns on time. Once your filings are current, it’s time to assess your circumstances to see which relief or payment option you’re going to qualify for with the IRS. The IRS will require you to complete something called an IRS Form 9465 to apply for the IRS Fresh Start initiative. You may also use the IRS’s website to enroll. 

Of course, the enrollment process is by no means simple. Make sure you have a tax professional guiding you every step of the way to help you get the best outcome possible!

The Tax Group Center Can Help You Navigate the IRS Fresh Start Program

The team at the Tax Group Center helps people successfully enter the IRS Fresh Start initiative program every day. We understand the complexities of the application process because we’re tax professionals who deal with the IRS around the clock. Our experienced team of CPAs, lawyers, and tax professionals will help you to find a solution within the IRS’s generous program that works for your needs. Reach out today to put tax problems in the rearview mirror.

Taxpayers sometimes find themselves in the position of owing money to the IRS. This is understandably a very stressful situation, and the stress is compounded if you don’t currently have the cash on hand to pay the IRS in full by the due date. Unfortunately, penalties and consequences can mount pretty if you do not take swift action.

One of the worst mistakes a taxpayer can make is to simply ignore requests for owed taxes. The IRS isn’t going away. It can use wage garnishments, tax liens, and bank levies to collect. In addition, penalties and interest can make it more difficult for you to afford your tax debt as the months go on. You need to know about your options for paying off what you owe without getting caught up in a stream of mounting IRS penalties. 

If you don’t believe you are capable of satisfying your tax debt, a potential option to explore is an IRS Installment Agreement (IA).

What Are the Benefits of Paying Taxes on Time?

Many taxpayers are able to successfully set up Installment Agreements with the IRS when they owe taxes – but you should never look at this as your first option. An installment plan should be thought of as a resolution option if you cannot pay what you owe today. 

Staying current with all tax obligations can spare you from the stress and time it takes to deal with the IRS once you owe money. Unfortunately, failing to pay your taxes on time will most likely cause the IRS to file a notice of Federal Tax Lien or bring an IRS levy. Being on time with payments can help you do the following:

• Avoid accruing additional interest and penalties
  
• Avoid offset of your future refunds
  
• Avoid issues obtaining loans

We’re really talking about protecting your assets, interests, and financial future. Having your taxes prepared professionally is one of the best ways to ensure that you’re in good standing with the IRS. In addition, utilizing ongoing business support from tax professionals is the best way to make sure that your personal or business tax situation stays on the right track.

What Is a Payment Plan?

If you’ve ever paid off a debt over time, you’re probably already familiar with how a payment plan works. An IRS payment plan is an agreement you make with the IRS that allows you to pay the full amount of taxes you owe within a specific timeframe. Payment plans are available for taxes owed by individuals and businesses. 

Keep in mind that the IRS really means a “short-term” payment plan when it talks about a payment plan. This means that you agree to pay the amount you owe within 120 days or less. The benefit of qualifying for a short-term payment plan with the IRS is that you will not be on the hook for a user fee. The IRS allows you to make payments through a short-term payment plan using a checking account, savings account, or the Electronic Federal Tax Payment System (EFTPS). You can also pay by check, money order, or credit card.

A payment plan is referred to as an Installment Agreement by the IRS when the payment period is longer than 120 days. Taxpayers make monthly payments through this type of agreement. The big difference between a short-term and long-term payment plan is that you will be responsible for user fees with a long-term plan. However, the IRS may waive your fee if you can prove low income. The payment options for long-term plans are roughly the same as the payment options for short-term plans.

How Do You Establish an IRS Installment Agreement?

You will need to formally apply for a payment plan. You can’t assume the IRS will agree to a payment plan in every situation, but the good news is that many taxpayers have success when applying. You probably have some questions regarding the process of how to set up an IRS Installment Agreement, so let’s dig a little deeper.

It will be necessary to fill out an official Installment Agreement Request (Form 9465) with the IRS if you want to qualify to make payments. You may be able to apply online if you meet certain requirements. Take your time as you proceed; it’s important to look closely at all of the information the IRS has provided regarding what it claims you owe. There could be circumstances that would actually give you the ability to appeal the amount owed or settle the debt for less than what the IRS says you owe. It is highly recommended that you have a tax expert take a look at your returns and IRS correspondence to unlock all of your options.

How can you know if you qualify for a short-term or long-term IRS payment plan? The maximum you can owe when applying for a short-term payment plan is $100,000 in combined tax, penalties, and interest. The maximum you can owe when applying for a long-term payment plan is $50,000 in combined tax, penalties, and interest.

Different Types of Installment Agreements

There’s a high likelihood that you’re going to qualify for something called a Guaranteed Tax Payment Agreement if you owe less than $10,000 to the IRS. This means that you’re possibly going to get instantly approved for an IRS payment plan as long as you meet the following criteria:

• You have not filed late taxes or paid taxes late at any point during the previous five years (not including extensions)
  
• All of your tax returns are filed
  
• You agree to file and pay on time in all future tax years
  
• You permit the IRS to take any future refunds you may receive

Another option is the Streamlined IRS Tax Installment Agreement. Look into this if you’re trying to work out a larger IRS debt – but bear in mind the option caps out at debts of $50,000. Here’s a look at the criteria that must be met:

• You have filed all of your past tax returns. You will need to file any outstanding returns before you can qualify for this type of agreement
  
• You have not entered into any installment agreements within the last five years
  
• You are not in the process of filing for bankruptcy
  
• You agree to pay setup fees

Taxpayers who are approved for a streamlined installment plan will have up to 72 months to pay off $50,000 or less to the IRS. The IRS added an updated streamlined option for people owing up to $100,000 in 2016. The extended option provides qualifying taxpayers with up to 84 months to pay off balances between $50,000 and $100,000.

People who owe larger amounts to the IRS can still qualify for installment agreements. It will be necessary to explore your options regarding Non-Streamlined IRS Tax Installment Agreements in this case. The big thing to know about taking this avenue is that you will be required to provide the IRS with a financial statement. The IRS will go over your current finances to decide if you are a good candidate for a non-streamlined option. 

The timeframe for this type of agreement depends on what the IRS determines is fair and appropriate based on your financial picture. There’s no getting around the fact that applying for a non-streamlined agreement can be complex. Make sure you have a tax expert working with you to increase the likelihood that you’ll get a workable offer from the IRS.

You may be at a point where paying off your tax debt using any type of conventional installment agreement simply isn’t an option. In that case, the IRS may agree to give you what is known as a Partial Payment IRS Tax Installment Agreement. You will enter into an agreement to pay a portion of your full tax liability to the IRS if you are approved for this type of plan. Be aware that the IRS will be assessing your case again in two years to see if your situation has improved. You should also be prepared for the IRS finding out whether you have any assets that can be sold to pay off your tax debt. 

A partial payment plan is a complex matter that should only be explored with the help of a tax expert who can anticipate and explain the IRS’s next move every step of the way.

What Are the Costs and Fees for an IRS Payment Plan?

It’s understandable if you’re concerned about adding any extra fees to what you already owe the IRS if you’re about to apply for a payment plan. Some taxpayers can essentially walk away without paying any extra fees, but others are required to pay fees before they can enter into IRS payment plans. What should you expect?

You won’t be responsible for any user fees if you qualify for a short-term payment plan. However, any accrued penalties and interest could apply until your balance is paid in full. You should also keep in mind that some fees could apply if you make your payments using a credit or debit card.

Fees do apply for a long-term payment plan. The setup fee when applying online for a direct-debit payment situation is $31. The fee climbs to $107 if you set up your account in person, by phone, or by mail. Setting up your long-term payment plan using a payment method other than direct debit online will cost $149. That same setup fee is $225 when setting up your account in person, by phone, or by mail. Your fee may be reduced if you qualify for a low-income waiver.

The IRS will charge you a fee if you need to revise your payment method in the future. The fee can range from $10 to $89. This is one of the reasons why you’ll want to make sure your payment plan is set up correctly the first time around. A tax professional with knowledge of IRS payment plans can help to make sure that happens.

Do You Have Questions About an IRS Installment Agreement?

You should investigate your eligibility for an IRS Installment Agreement if you owe money to the IRS. This option could make it possible for you to get back in the good graces of the IRS without any additional penalties. The team at the Tax Group Center can help you to determine the best payment option, apply directly to the IRS, and begin making payments that will prevent your debt from hurting your financial future. We can assist you with a payment plan for personal or business taxes. We understand how to apply for IRS payment plans using the language of the IRS. Reach out today if you need to find a way to pay off what you owe to the IRS!

Are you facing a tax penalty? One misconception is that nothing can be done about penalties once the IRS puts them in motion. The reality is that taxpayers have options to eliminate, reduce, or even freeze penalties. This is important because penalties can quickly bring about a “snowball” effect, turning a tax debt that you could reasonably pay off into a serious burden that can crush your finances. 

Is penalty relief on the table in your situation? Take a look at what you need to know about IRS penalty relief.

What Is Penalty Abatement?

Penalty abatement is when the IRS removes a penalty from the table if you can prove that you did not intentionally neglect your tax duty. The IRS has special rules in place that make it possible for first-time offenders and cooperative taxpayers to have penalties lifted somewhat easily. This is what’s called first-time penalty abatement (FTA). The IRS’s FTA program is open to people and businesses with clean compliance histories.

Do you qualify for IRS penalty abatement? You’ll need documentation, a willingness to work with the IRS, and an ability to understand its requirements. 

What Penalties Are Eligible for Relief?

The IRS is pretty consistent in granting penalty relief for “mild” tax offenses. Here’s the list of tax offenses that typically qualify for abatement:

• Failure to file your tax return
  
• Failure to pay your taxes by the due date
  
• Failure to deposit certain taxes

Just because the IRS often provides penalty relief somewhat generously in these cases doesn’t mean that you can’t get relief for other causes. However, the IRS typically looks at other tax issues on a case-by-case basis when seeing if penalty relief can apply. Let’s explore the types of penalty relief that could apply to you.

What Are the Types of Penalty Relief?

The categories of relief are pretty broadly defined by the IRS, which means you may be able to prove that you qualify for relief if you look closely enough at your situation. Let’s discuss the types of relief that may be applicable.

Administrative Waivers

An administrative waiver often applies in the case of a first-time penalty, but certain details will help you build a stronger case:

• You weren’t required to file a return for three years prior to the penalty year
  
• You had not incurred any penalties for three years before the penalty year
  
• You complied with all requirements for submitting forms or a filing extension
  
• You have already paid or made arrangements to pay overdue taxes
  
• You have received incorrect verbal information, instructions, or advice from the IRS

You may be in the clear if you qualify for first-time penalty abatement. However, relief isn’t going to apply automatically unless you prove your status to the IRS. Working with tax professionals to take care of the situation as soon as possible can help you walk away from penalties quickly.

Statutory Exceptions

The IRS will grant statutory exceptions for specific circumstances that account for why you were unable to satisfy a tax obligation. A statutory exception could be in play if you received incorrect advice or instructions from the IRS in writing. The IRS may also grant a statutory exception if the tax amount involved is less than $1,000. Other causes for exception include being newly retired, newly disabled, or in a combat zone. 

Does your situation qualify? You won’t know unless you ask the IRS. That means you’ll need to go over the details of your case with a tax professional to discover the best way to proceed. You’ll also need to provide extensive documentation proving why you qualify to have penalties canceled.

Reasonable Cause

Reasonable cause relief is granted by the IRS when taxpayers can prove that they failed to satisfy their tax responsibilities due to circumstances that were beyond their control. You must prove that you exercised care and prudence when doing all within your power to take care of your tax duty. Here’s a look at some of the common occurrences that qualify under reasonable cause:

• Fire, natural disaster, or some type of catastrophic event
  
• An inability to access your records
  
• Death, severe illness, or incapacitation
  
• Some other extraordinary circumstance or hardship

Forgetting to take care of a tax obligation will not qualify as a reasonable cause, and a lack of funds does not automatically qualify you for relief. However, an exception could be made if the lack of funds is related to one of the qualifying circumstances. 

Building a case that showcases all of the facts that support your claim is essential when applying for penalty relief based on reasonable cause. In addition to proving that a situation occurred, you’ll need to be able to prove how circumstances specifically prevented you from satisfying your tax duty. You may also be asked to prove that you took action quickly to try to fix the situation. Be prepared to supply hospital bills, insurance records, and other forms of documented proof.

How Do You Know Which Penalty Relief Option Is Best for You?

One of the qualifying causes for penalty relief listed above may be screaming out at you because it fits your situation exactly. Conversely, you may feel discouraged because you don’t see how you could qualify based on the criteria above. It is a mistake to believe that the situation is as cut and dried as it looks in either case. For instance, you may not realize that the IRS provided you with incorrect information until someone who understands tax codes and laws takes a look at your documents. That could take you from someone who doesn’t qualify to someone who does in an instant. There are many more details and stipulations that could impact your eligibility for IRS penalty relief.

Explore Your Options for IRS Penalty Abatement With the Tax Group Center

Do you want to find out if you qualify for penalty relief from the IRS? The Tax Group Center has a team of tax professionals, lawyers, and CPAs waiting to help you discover options for getting penalties wiped from the slate. Let us help you qualify for relief to ensure that you don’t miss your chance to walk away from costly IRS penalties. We help people get cleared for penalty abatement every day!

Do you know what the deadline is for your next tax bill? Unlike typical employees, business owners and self-employed individuals need to pay quarterly taxes throughout the year. To further complicate matters, not all types of businesses share the same filing deadlines for tax returns.

When Are Estimated Tax Payments Due in 2020?

Anyone who is a self-employed person serving as an independent contractor, sole proprietor, partner, or LLC member should be paying estimated quarterly taxes. Here are the due dates for quarterly taxes in 2020:

• Jan. 15
• April 15
• June 15
• Sept. 15

Don’t forget that your last quarterly payment for 2020 will be due January 15, 20201!

What Happens if You Don’t Pay Your Quarterly Taxes?

The IRS wants those quarterly taxes paid if you owe at least $1,000. The IRS will add on a penalty totaling 0.5 percent per month to any tax bill that isn’t paid by its due date. You’re also looking at an interest charge of three percent. It all adds up to being on the hook for nine percent extra if everything isn’t paid in full by April 15. 

When Are Business Taxes Due?

• Tax returns for calendar year partnerships or limited liability companies with two or more members are due by March 15 of 2020.

When Are Corporate Taxes Due?

• Tax returns for S corporations are due by March 15 of 2020. Use Form 1120-S.
  
• Tax returns for calendar year C corporations are due by April 15 of 2020. Use Form 1120.
  

When Are Personal Taxes Due?

• Tax returns for personal income tax are due by April 15 of 2020. Use Form 1040 or Form 1040-SR.
  
• Tax returns for Schedule C sole proprietorships and Schedule F farming businesses are due by April 15 of 2020.

If you don’t think you’ll be able to file your return by its due date for 2020, you can apply for an automatic six-month filing extension. Just make sure the request is filed before your return is due.

What Happens if You Miss Your Tax Deadline?

Fines, penalties, audits, and jail time could all result from not filing tax returns on time.

• You will be faced with a late fee that can total as much as 25 percent of what you owe for the year if you don’t make your deadline.
  
• Failing to file within 60 days of your filing due date will result in a minimum penalty of $210 that can go all the way up to 100 percent of the unpaid taxes you owe.
  
• Your best bet is to connect with a tax professional if you think you’ll need a filing extension this year.
  
• Getting an extension the right way can ensure that you will have more time to get everything organized without being subjected to fees, penalties, and other consequences from the IRS.

What Is an IRS Audit?

The IRS may examine the financial info and accounts of a person or organization to check for inaccuracies or discrepancies. This process is called an audit.

How Are Taxpayers Chosen for an IRS Tax Audit?

Random selection via a computer system is used to flag returns that deviate from the norm. Your return could be flagged if it involves transactions with people or partners who have been selected for audits.

How Are You Notified of an Audit?

If you’re selected for an audit, the IRS will only notify you with a paper letter via mail.

What Are the Kinds of Tax Audits?

• A mail audit will typically require you to provide additional documentation to back up a claim on your return. Submitting your proof will probably satisfy the IRS.
  
• An office audit is done at a local IRS office. You may need to provide additional documentation and answer questions posed by a field agent. Don’t forget that you have the right to bring along an accountant or representative!
  
• A field audit is conducted at your residence or business. All items on your return may be looked at.
  

What Documents Do You Need for an IRS Audit?

• Bills
  
• Receipts
  
• Canceled checks
  
• Loan agreements
  
• Logs
  
• Employment documents
  
• Insurance documents
  
• Medical and dental records
  

How Far Back Does an IRS Audit Go?

The IRS typically audits returns filed in the last three years. However, it can add additional years to an audit inquiry if major errors are discovered.

What Are Your Rights in an IRS Audit?

• The right to be informed
  
• The right to quality service
  
• The right to pay no more than the correct amount of tax
  
• The right to challenge the IRS’s position and be heard
  
• The right to appeal an IRS decision in an independent forum
  
• The right to finality
  
• The right to privacy
  
• The right to confidentiality
  
• The right to retain representation
  
• The right to a fair and just tax system

How Long Does an IRS Tax Audit Take?

Length of an audit depends on the nature of the case, how cooperative you are regarding documentation and meetings, and whether you agree with the findings. 

How Is an IRS Audit Concluded?

• “No Change” means that you have substantiated all questioned items sufficiently

• “Agreed” means that you agree with and understand the IRS’s proposed changes

• “Disagreed” means that you disagree with and understand the IRS’s changes

Possible Outcomes From an IRS Audit

You may walk away from an audit unscathed if the IRS simply needs some clarification. However, you could also face back taxes or penalties. You may need to pursue legal action to uphold your rights and avoid big losses. The bottom line: If you get audited, bring in professionals who understand how the IRS works.

The IRS may examine the financial info and accounts of a person or organization to check for inaccuracies or discrepancies. This process is called an audit.

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One of the most uncomfortable and serious consequences of having a conflict with the IRS is wage garnishment. You may be wondering if the IRS can come after your wages if you owe back taxes. Unfortunately, the answer is yes; the IRS can and will collect money from every paycheck until your debt is satisfied in full. You should know that your employer will have no choice other than to fully comply with the demands of the IRS if a garnishment is activated. This can create a very embarrassing, high-stakes situation if you rely on your full wages to cover living expenses. Keep reading to discover what to know about wage garnishment if you’re potentially facing this very serious consequence.

What Does Wage Garnishment Mean?

A garnishment is a legal standing order that instructs an employer to withhold earnings. A court order is usually required for wage garnishment in the case of loan debt or overdue child support. However, a court order is not required if the IRS wants a piece of your income. All the IRS has to do is send you a Notice of Demand for Payment as well as a Final Notice to activate a garnishment. You will have 30 days to pay your balance in full after you receive a Final Notice before garnishment becomes effective.

What Are the Types of Wage Garnishment and How Do They Work?

The IRS has a lot of power when coming after the money you earn. In fact, it can take much more via a wage garnishment than a regular creditor. A wage garnishment doesn’t just apply to hourly wages or salary totals that are earned; the IRS can and will come after any bonuses or commissions you earn during the period of garnishment.

How Much of Your Wages Can Be Garnished?

The IRS is legally allowed to take as much of your paycheck as it deems necessary to satisfy your debt. You may think you know how the garnishment process works if you’ve ever been targeted by a creditor before, but an IRS garnishment is a different animal entirely. The law puts limits on just how much a regular creditor can garnish from your wages – but the standard limits of the law do not apply in the case of an IRS garnishment. 

The good news is that the IRS doesn’t have permission to take your entire paycheck. The tax code requires the IRS to use a specific formula when calculating how much to take each pay period. You must be left with an amount of income that is deemed adequate for taking care of reasonable living expenses. However, the fact that the IRS can’t take everything doesn’t mean that it can’t take a lot of your earnings. It is actually possible for the IRS to take what amounts to 70 percent of your income through wage garnishment.

What Are Your Options When You Have a Wage Garnishment?

Most people aren’t in a position to hand over up to 70 percent of each paycheck to the IRS, and a setup like this could make it impossible for you to cover basic living expenses for yourself or your family. 

A wage garnishment is not something that you can ignore in the hopes that the IRS will forget about you. The reality is that your employer will be instructed to begin withholding some or most of your pay if you don’t act within that 30-day window following notice from the IRS. 

It’s important to know that you do have options if wage garnishment from the IRS is looming. The goal is always to get back in good standing with the IRS. This can be done by paying your full balance of owed tax or entering into some kind of IRS-approved resolution plan.

It is important to really consider whether you have the funds available to pay what you owe in full. Doing this could put a stop to the problem. Of course, it helps to seek professional assistance for tax resolution even if you do have the ability to pay your tax balance in full. Failing to handle every detail perfectly when paying late taxes could cause the problem to continue due to miscommunication with the IRS.

What if you cannot reasonably pay back what you owe to the IRS? That 30-day response window is still going to be very important even if you don’t intend to pay your balance in full to stop an IRS garnishment. Let’s take a look at the options that are on the table for stopping a garnishment.

File an Appeal

Do you disagree with the IRS’s judgment? You may want to consider filing an appeal if you do not believe you owe what the IRS claims you owe. It will be necessary to go through the process of requesting a Collections Due Process (CDP) hearing if you want to pursue this route.

Negotiate for an Installment Agreement (IA)

You may be able to stop the IRS from contacting your employer if you can get approved for an installment agreement in time. An IRS installment agreement works similarly to any other type of payment plan you might enter. You will be able to pay off your debt in chunks over a specified period of time if you successfully apply for an IRS installment agreement.

What Happens if Wage Garnishment Is a Financial Burden?

Would having a percentage held back from your wages sink you? The IRS does provide an option if wage garnishment would prove to be a serious financial burden for you. You have the option to ask for something called an Offer in Compromise (OIC). This arrangement essentially allows you to settle your tax debt with the IRS for less than the full amount owed. Getting approved for this program isn’t easy. The IRS will take a look at your current financial situation in relation to what is owed to determine if you qualify. What the IRS is essentially trying to determine is whether garnishment would make it impossible for you to meet your basic needs.

What happens if settling your debt for less than you owe still won’t leave you with enough money to live? Some taxpayers successfully obtain something called Currently Non-Collectible (CNC) status. Eligibility is usually achieved once your gross monthly income is lower than the allowable expenses determined by national standards. Taxpayers who qualify are protected from the IRS’s efforts to activate garnishments, levies, and other high-pressure collection tactics.

Help Is Available

Receiving notice that you’re facing wage garnishment is an intimidating, stressful experience. The main thing to keep in mind is that acting as quickly as possible may help preserve as many options as possible. The Tax Group Center is here to help you take action to stop wage garnishment before you lose one more dollar than you need to when dealing with the IRS. Our team of tax professionals will take a look at your situation, layout all the options for you, and move forward with a solution. We may be able to stop a garnishment in its tracks. Reach out today to get help from a team that works tirelessly, cares about our clients, and faces the IRS so you don’t have to.

Nothing about dealing with the IRS is easy when you run a business, but figuring out your obligations for payroll taxes can be especially difficult. The situation can get even more complicated when we’re talking about unpaid payroll taxes. 

The IRS takes payroll taxes very seriously. In fact, 70 percent of the annual revenue collected by the IRS comes directly from payroll taxes – and the IRS is especially aggressive when it goes after businesses that have failed to handle payroll taxes impeccably. 

Do you have questions regarding what unpaid payroll taxes could mean for your business? Find out exactly how the IRS addresses unpaid payroll taxes.

What Payroll Taxes Do You Have to Pay?

Employers have a big responsibility when it comes to making sure the correct tax totals are withheld from employee paychecks every pay period. In addition, employers must then transmit the totals that are withheld to the appropriate tax agencies. Here’s a list of an employer’s duties in regards to payroll taxes:

• Paying your share of payroll taxes
  
• Depositing the dollar amounts withheld from employee paychecks
  
• Preparing reconciliation reports to document your tax dealings
  
• Recording all payroll expenses through acceptable financial reporting
  
• Filing returns for payroll taxes
  

Employers don’t get to decide when to submit payments. The IRS maintains a deposit schedule that requires businesses to make precise payments. In addition, the IRS maintains a very tight schedule for reporting. Keep in mind that you’re not simply paying one type of tax payment – an employer has several different tax obligations when handling payroll taxes. Here’s a rundown of your obligations as an employer:

• Federal income tax withholding
  
• Social Security tax withholding
  
• Medicare tax withholding
  
• Additional Medicare tax withholding
  
• State income tax withholding
  
• Various local, city, and county tax withholdings

You must stay up to date with the tax percentages that you are required to hold back for each type of withholding. It’s important to note that these percentages can change from year to year. What’s more, there could be additional stipulations to know about when calculating how much to withhold from each employee’s paycheck. 

In short, handling payroll tax is a very heavy and serious responsibility for an employer!

Why Do Some Businesses Get in Trouble With Their Payroll Taxes?

There are many reasons a business can run into trouble with payroll taxes. Small businesses face a unique risk for delinquency due to the fact that there often isn’t a designated “payroll” department like you’d see with a large corporation. In fact, the owner of a small business is typically the person who handles payroll tax every single pay period. This is a difficult task that requires both time and knowledge of tax laws.

Did you know that an employer’s responsibility for payroll taxes continues even after paychecks are issued to employees? The biggest reason why businesses get in trouble with payroll tax is because they fail to take care of one of the many duties associated with payroll taxes. This can be anything from failing to pay the right amount to forgetting to report paid taxes correctly. 

Here’s a look at the extensive reporting requirements that fall on your shoulders:

• Annual federal unemployment tax return (Form 940 or 940EZ)
  
• Employer quarterly payroll tax return (Form 941)
  
• Annual return of withheld federal income tax (Form 945)
  
• Wage and tax statements (Form W-2)
  

Many business owners simply forget to make tax deposits by their due dates because they are wearing so many hats. Of course, business owners sometimes knowingly put off handling payroll taxes because they are in a desperate situation. It is not uncommon for business owners to “borrow” from payroll tax funds during lean times just to keep the business going. Issues like natural disasters or a change in your depositing schedule can also lead to unpaid or unreported payroll taxes. Both purposeful and accidental errors can land a business in hot water with the IRS.

Personal Liability for Payroll Taxes

A business owner can certainly be personally liable for delinquent payroll taxes. The Trust Fund Recovery Penalty (TFRP) enables the IRS to go after individuals when businesses fail to pay payroll taxes. The consequences of the TFRP are particularly harsh because the IRS is empowered to seize assets and force a business to close. What’s more, the TFRP can be applied in addition to any criminal or civil penalties a person faces. Even bankruptcy can’t make it go away.

Anyone who functions as a corporate officer or “responsible party” is seen by the IRS as being liable for unpaid payroll taxes. Unfortunately, you could still be liable even if you’ve outsourced payroll duties to a third-party company. The IRS can assess penalties and interest on your account if that third-party company fails to make payments on your behalf.

What Are the Penalties for Not Paying Payroll Taxes?

There is no hiding the fact that your payroll payments are missing or late when it comes to the IRS. Once payroll taxes are overdue, you can expect high penalties pretty quickly. Here’s a look at the penalty schedule:

• 2 percent when a payment is between one and five days late
  
• 5 percent when a payment is between six and 15 days late
  
• 10 percent when a payment is more than 16 days late
  
• 15 percent for additional lateness
  

Keep in mind that these are just the percentages you’ll be responsible for on top of whatever you already owe. Your failure to handle payroll taxes correctly could result in a full-scale investigation that examines all aspects of your company’s tax dealings. This could result in asset seizure, the shuttering of your business, and jail time. A criminal investigation for fraud could change your life irrevocably. 

Don’t let it go that far. Start exploring options for mending unpaid payroll taxes immediately.

What Are Penalty Exemptions?

You should know that penalties aren’t always automatic just because you’ve fallen short when it comes to your payroll tax obligations. However, navigating the landscape of exemptions for unpaid payroll taxes should be done very carefully. Is it possible to have payroll tax penalties waived? You may be able to have penalties waived if you can prove that your lapse is justified by reasonable cause. This means that you were unable to take care of your tax obligation as an employer due to circumstances that were beyond your control. This often includes things like fires or natural disasters. It will be up to you to present your case to the IRS in a way that proves you did everything possible to handle your payroll tax obligations.

You may also be able to receive a penalty exemption based on statutory or administrative waivers. This means that you can prove that a dramatic or sudden change regarding laws or regulations caused you to be unable to carry out your full obligation. This can include retroactive changes regarding how to calculate or deposit payroll taxes. In addition, confusion regarding compliance obligations could qualify you for a penalty exemption. It will be necessary to submit a letter to the IRS stating your predicament. It is possible that you’ll receive an administrative waiver automatically.

How Can You Avoid Penalties?

It is important to understand that the IRS views failure to submit payroll taxes as a form of theft. This is because you are holding on to money that never belonged to you. If the IRS is coming after you for unpaid or unreported payroll taxes, the best thing you can do is act quickly. The escalating. We’ll explore your options for getting interest and penalties waived. In addition, we can help you come up with a plan to make sure the right amount of payroll tax is paid to the IRS as soon as possible. The Tax Group Center has a team of lawyers, CPAs, and licensed tax professionals waiting to help you. Reach out today to get started with clearing up your payroll tax predicament.

If you’ve been notified of an impending tax lien by the IRS, the last thing you want to do is ignore the problem. What does a tax lien mean for your future? What happens next will depend largely on your ability to act quickly.

What Is a Tax Lien?

A tax lien refers to the IRS’s right to take possession of property belonging to a person until an outstanding debt is discharged. You should know that there’s no shielding certain assets when you’re facing a lien – it attaches to all of your eligible assets by default. That means that everything from your car to your savings will be targeted. Of course, lien activity isn’t limited to the IRS. State, city, and county-level government bodies can all enforce liens. A lien protects a government entity’s legal right to money or property if you do not pay taxes that are owed. A lien can be used to collect state taxes, income taxes, and back taxes of any form. Here are the three steps that can activate a tax lien:

• The IRS assesses your tax liability
  
• The IRS sends you a bill explaining how much you owe in the form of a Notice and Demand for Payment
  
• You refuse or neglect to pay the full debt amount in time
  

What comes next? The IRS will move forward with filing a public document called the Notice of Federal Tax Lien. This document alerts creditors to the fact that the government has a legal right to your assets and property. 

How Does a Tax Lien Affect You?

An unaddressed tax lien can make it hard to stay in control of your finances for the foreseeable future. There is some good news: tax liens no longer appear on credit reports. Still, that doesn’t mean you’re totally in the clear. The IRS has the option to file a public notice that will let creditors know that the government has a right to your property. 

What does that mean for you? A tax lien could very easily sabotage your efforts to obtain loans or financing in the future. Things like purchasing a home or starting a small business could be off the table if there’s a lien in your history.

You can still encounter financial headaches from a lien even if you already have a home. In fact, a lien could make it difficult or impossible to refinance or sell a home – there’s a good chance that a tax lien will pop up during a title search for a property.

The scariest consequence of all when it comes to a tax lien is that the lien could escalate into a tax levy. A tax levy allows the government to begin the seizure process. Your home, car, bank accounts, property, and paychecks are all on the table once a levy has been initiated. Of course, all of the negative consequences of a tax lien can potentially be avoided if you work quickly with a tax professional to mitigate the situation.

Tax liens can be applied to both individuals and businesses – in the latter scenario, a tax lien attaches to all property that belongs to a business. Even accounts receivable will be subject to a lien! Fortunately, tax lien help is available for both individuals and businesses.

What Are Your Options When You Have a Tax Lien?

You should never just close your eyes and ignore a tax lien! Acting quickly is often the only thing that stands between you and a full seizure of your property and assets. Even filing for bankruptcy won’t necessarily stop a lien – a federal tax lien can continue even after bankruptcy. Of course, you do have options for taking care of a tax lien in a way that satisfies the government. The big thing to keep in mind is that showing a willingness to work at paying what you owe will often be enough to keep the IRS from enforcing severe penalties. 

You have to be willing to follow the IRS’s rules when developing a strategy for clearing up the problem if you want to walk away with the best possible outcome. Here’s a rundown of some of the popular options that are on the table when fighting tax liens:

• Payment in full
  
• Offer in Compromise (OIC) may allow you to settle your tax debt for less than you owe
  
• An Installment Agreement may allow you to settle your debt using a fixed payment plan
  
• A 60-day or 120-day payment extension could be granted if you simply need more time to come up with the funds to pay off your tax debt
  
• Currently Non-Collectible Status (CNC) could apply if you cannot reasonably pay off your tax debt while taking care of living expenses
  
• Personal loans can sometimes be used to pay debt and interest

You may also want to explore the possibility of filing an appeal if you disagree with the IRS’s assessment of your tax obligation. The IRS Office of Appeals oversees cases where taxpayers feel that liens have been applied erroneously. This is a situation where knowing exactly how the IRS operates its appeals process can work to your advantage, and the Tax Group Center will move forward with an eye on options for penalty abatement that can save you money and prevent harsh consequences.

There is really no one-size-fits-all answer, as every option for clearing up a tax lien comes with its own list of pros and cons. You could still be on the hook for interest and fees in some cases. However, there’s also a chance that you could have penalties waived if you handle the situation correctly. Your outcome is going to depend on your willingness to act quickly, your understanding of how the IRS works, your financial standing, and your ability to negotiate. The big thing to remember is that you will be doing yourself a big favor if you get the ball rolling on a solution before your manageable tax lien turns into a very problematic tax levy.

How Should You Address a Tax Lien?

Don’t wait until the government is coming after your home, draining your bank account, or siphoning money from your paycheck to take action. The team at the Tax Group Center is here to help you explore options for taking care of your tax lien as quickly and easily as possible. We’ll work with you to create a custom plan of action based on the specifics of your situation. Our team is here to help you clear your tax debt without facing big penalties or interest charges. The Tax Group Center has been helping taxpayers clear up issues with the IRS for 30 years. We’re an industry-leading company because we use the expertise of lawyers, CPAs, and licensed tax professionals to handle tax issues from all angles. Reach out today if you need help with a tax lien!