SERVICES
IRS MATTERS
- Help with Unfiled taxes
When you miss a filing deadline for your income taxes, it can be tempting to keep putting it off. In fact, many people find themselves in the situation where they’re worried about what will happen if they file late, and end up simply not filing—and then skip the next year, and the year after that.
What happens when you build up a few years of unfiled taxes? Unfortunately, if you owe money, the amount will keep growing.
We can help. Whether filing filing your taxes timely or catching up on unfiled taxes, do not hesitate to contact us for help.
- Offers in Compromise
If you can’t pay your full tax debt, or if paying it all would create a financial hardship for you, an IRS offer in compromise may be an option. An offer in compromise is an agreement between you and the IRS, where the IRS agrees to accept less than the full amount you owe.
The two main reasons the IRS may agree to accept less than the full amount you owe are for what is known Doubt as to Collectability or Effective Tax Administration.
Another reason the IRS may accept payment of less than the full amount of tax owed is Doubt as to Liability (that is, you don’t believe you owe the tax, or you don’t believe the amount is correct).
There are two kinds of payment options for an offer in compromise — Lump Sum Offer or Periodic Payment Offer. You must select one of them and include payment with your offer. The amount of the first and following payments will depend on the total amount you offer and which payment option you choose.
For the IRS to accept an offer, you have to file all tax returns due and be current with estimated tax payments or withholding. If you own a business and have employees, you must file all returns and be current on all your federal tax deposits.
After the IRS notifies you that it has accepted your offer and you pay the reduced amount you’ve agreed to, your entire tax debt is considered resolved as long as you fulfill the terms of the offer agreement.
Feel free to contact us to learn more about the IRS offer in compromise program and to discuss whether you would be a good candidate for an IRS offer in compromise.
- Installment Agreements
If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as the tax debt is paid in full, the payment of penalties or interest can be reduced or eliminated, and the fees associated with setting up the agreement can be avoided.
Before applying for any payment agreement, you must file all required tax returns.
The IRS will generally not take enforced collection actions when an installment agreement is being considered; while an agreement is in effect; for 30 days after a request is rejected; or during the period the IRS evaluates an appeal of a rejected or terminated agreement.
The IRS is also testing expanded criteria for streamlined processing of taxpayer requests for installment agreements. The test is scheduled to run through September 30, 2017.
During this test, more taxpayers will qualify to have their installment agreement request processed in a streamlined manner. Based on test results, the expanded criteria for streamlined processing of installment agreement requests may be made permanent.
Contact us at any time to see which type of IRS installment agreement may be the best fit for you.
- Tax Court Petitions
If you have received a Notice of Deficiency (90-day letter) from the IRS, you have 90 days (150 days if the Notice is addressed to a person who is outside the country) from the date of the Notice to file a petition with the Tax Court if you want to challenge the tax the IRS proposed.
An experienced tax attorney can be instrumental in making sure all necessary issues and arguments are properly raised and preserved in the tax court petition. This is very important, especially, during settlement negotiations with the IRS attorney.
If you are interested in seeing how we can help with your tax court petition, please do not hesitate to contact us at any time to see how we can help.
- Individual and Business Tax Audits
An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.
Taxpayers can randomly be selected for an audit or can have their returns selected when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.
Having an experienced tax attorney on your side to protect your rights and properly respond can serve as a great help to ultimately minimizing or eliminating any possible liability.
Please feel free to contact us to discuss resolving your audit.
- Levies and Wage Garnishments
A tax levy is an administrative action by the IRS to seize property to satisfy unpaid taxes. The IRS can issue a levy to take a taxpayer’s income and assets. The process to accomplish this follows several steps. First, the IRS is required by law to provide the taxpayer with: a Notice and Demand for Payment, a Notice of Intent to Levy and a Notice of a Right to a Collection Due Process hearing.
For most taxpayers, the IRS accomplishes these requirements by sending five letters, starting about six weeks after the taxpayer files a return. The five letters are often referred to as the automated collection “notice stream.”
If the taxpayer receives the last notice and doesn’t pay the balance or makes other arrangements to pay the balance, the IRS can levy the taxpayer’s income and assets, including garnishing wages and/or self-employment income and seizing funds in bank accounts. The latest annual figures show that the IRS has issued almost 3 million levies to taxpayers.
If you know you owe a tax balance (meaning the IRS didn’t make a mistake, you filed the return correctly, and the balance can’t be reduced by filing an amendment), there are ways to remove and avoid an IRS levy or wage garnishment.
If your wages have been garnished or are facing an IRS levy, we can help. Feel free to contact us at any time to discuss your options.
- Trust Fund Recovery Penalties
During tough times, businesses may resort to using IRS payroll tax money to stay afloat. With bank lending tight, employee tax withholding is a ready-but dangerous-source of immediate operating capital.
The IRS does not like being made an unwilling partner to a loan. The IRS feels they trusted the owners and operators of a business to protect the employee payroll tax withholdings and timely pay them to the government. This violation of trust is the basis for the trust fund recovery penalty.
The trust fund recovery penalty allows the IRS to collect the unpaid withholding taxes from the assets of the owners and operators of the business. It penalizes those who had control over the decision to divert the payroll money from the IRS to other creditors of the business.
The trust fund recovery penalty is equal to the income taxes, social security taxes, and Medicare taxes withheld from employee paychecks. The trust fund recovery penalty is authorized by Sec. 6672 of the Internal Revenue Code (IRC).
The Trust Fund Recovery Penalty is nondischargeable in the bankruptcy of the responsible person. If a taxpayer is held personally responsible, the IRS could pursue the individual’s personal assets to collect, including liens and levies. A responsible person can be an officer, employee, director, shareholder of the corporation, member or an employee of a partnership.
We represent taxpayers who face a proposed Trust Fund Recovery Penalty or have been assessed the penalty, and can seek to have the penalties reduced or eliminated. If you are or may be facing a Trust Fund Recovery Penalty, contact us for more information on whether you should be subject to this penalty and to see if we could be of assistance.
- Offshore Voluntary Disclosures for Foreign Bank Accounts
While many taxpayers initially may welcome government efforts to catch those who hide their money in offshore bank accounts, they are often surprised to learn that they themselves may be in violation of the law. The U.S. has a unique system of “worldwide income reporting,” whereby U.S. persons are required to report income that is earned outside the U.S., even if that income has already been taxed. As a result, if you have recently moved to the United States and maintain bank accounts in your home country or foreign income-generating assets, such as rental real estate (even if it is only partially owned by you or it was inherited) you must report the income from these assets and pay tax in the U.S. (including at the state level in many cases), even if tax has been paid in your home country.
In part because of the high levels of noncompliance with foreign tax reporting requirements (oftentimes out of innocent ignorance), the IRS has developed voluntary disclosure programs that allow taxpayers to come forward, correct their past mistakes, pay past-due taxes, and pay a set penalty (or, in some circumstances, pay no penalty). The first, the Offshore Voluntary Disclosure (OVDP), was initiated in 2009 and has changed over the years. The second, the Streamlined Compliance Filing Procedures was developed more recently as the IRS acknowledged that there are many taxpayers whose actions were truly innocent (non-willful) and should thus be penalized less.
If you maintain undisclosed offshore assets, feel free to contact us to learn more about these IRS programs and for advice on minimizing any potential tax liability or penalties.
- Foreign Bank Account Reporting (FBAR)
The Bank Secrecy Act (BSA), P.L. 91-508, requires certain U.S. persons who have a financial interest in or signature authority over a foreign financial account to report the account annually to the Department of Treasury by electronically filing Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (commonly called FBAR), through FinCEN’s BSA E-Filing System. An FBAR is a form required for any individual or business that has ownership or signatory authority over any foreign accounts, retirement accounts, business accounts, etc. that has an annual aggregate total that exceeds $10,000 at any time during the year. It does not matter whether you already reported the account and paid tax in a foreign country, or that the account is not taxed in the particular jurisdiction in which the account is held (for example, most Asian countries do not tax bank interest).
FBAR reporting requirements make it essential for taxpayers domestically and abroad to comply with U.S. tax laws. The penalties for noncompliance are harsh, hence, it’s important to be in compliance.
We are prepared to guide you through this process and help you understand that complying with federal income tax requirements does not relieve you of filing obligations for FBAR. Feel free to reach out to us at any time to help you with your FBAR filings.
- Collection Due Process Hearings
A Collection Due Process Hearing (“CDP Hearing”) is a hearing to determine whether an IRS Collections action is proper under the Internal Revenue Code. The hearing is conducted by the IRS Office of Appeals, which is an independent agency within the IRS that exists to resolve disputes between taxpayers and the government. The hearing is held before an impartial IRS Appeals Officer, who is typically a former IRS Revenue Agent.
The IRS must first notify the affected taxpayer in writing of his or her right to a hearing. As applied to liens and levies, these notices have historically taken the form of a Notice of Federal Tax Lien and Your Right to a Hearing or a Notice of Intent to Levy and Notice of Your Right to a Hearing. However, the Service has more recently begun to issue automated final notices (i.e., a Notice LT11, Notice of Intent to Levy) which, according to their terms, provide taxpayers with CDP rights. After filing the request, all collections activity on tax debt is put on hold until the hearing is resolved. These notices are time-sensitive, hence, taxpayers who receive these notices need to respond in a timely fashion so as to preserve their CDP rights.
The ability to file a collection due process appeal is probably the most powerful right you have in defending against IRS enforcement by levy or seizure. If you have received any of these notices, contact us to discuss how we can help put a hold on collection and preserve your rights to this hearing.
- Requests for Innocent Spouse Relief
Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows them. When filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce. Joint and several liability means that each taxpayer is legally responsible for the entire liability. Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns.
In some cases, however, a spouse can get relief from being joint and several liability through what is known as Innocent Spouse Relief. Generally, relief from additional tax is possible if a spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
If you believe you are potential candidate for Innocent Spouse Relief, contact us at any time to learn more and to see how we can help.