Can the IRS take your paycheck if you owe late taxes? Unfortunately, the IRS can claim a part of your income through something called an IRS wage garnishment. One of the frustrating features of a wage garnishment is that the IRS will contact your employer directly to have your earnings redirected. Fortunately, the situation isn’t hopeless if you’re proactive about reaching an agreement with the IRS. Many people get into garnishment territory because they’re avoiding the IRS out of fear of penalties after running into tax problems. The reality is that it’s impossible to hide from the IRS. They know how much you owe, which tax years you didn’t file, and all of the personal details needed to track you down. In fact, they will have no trouble finding your employer if they want to get money from you. Avoiding letters from the IRS often just means getting on the fast track to a wage garnishment. This is actually a shame because the IRS only uses wage garnishment as a last resort. If that’s news to you, take a look at the answers to questions that are probably on your mind about the IRS taking your wages.

What Does Garnish Wages Mean?

“Garnishing” your wages means taking a cut until a debt is paid off. A wage garnishment is the legal procedure the IRS uses to take a portion of your earnings by requiring funds to be withheld from each paycheck. Yes, it’s fully legal for the IRS to do this if it is determined that you have neglected your tax obligation. No, the IRS won’t ask nicely for permission to take your money. Your employer must comply when the IRS comes calling to demand that a portion of your paycheck is redirected through IRS Form 668-W.

Will the IRS Notify You If They Garnish Your Wages?

A wage garnishment from the IRS will never come as a surprise. The IRS must first send you a written note detailing the amount you owe using an itemized list of all charges for your tax debt, interest, and penalties. This notice should also include a due date for when the IRS expects your balance to be paid in full. It’s vitally important to contact a tax professional to go over your next step if you receive an IRS Final Notice of Intent to Levy and Notice of Your Right to a Hearing because a garnishment will be just around the corner if you don’t take the right action.

How Much of Your Paycheck Can the IRS Take?

First, it’s important to know that the IRS can’t take everything you make just because a wage garnishment has been issued. The IRS will leave you with something from every paycheck if your wages are garnished. However, a garnishment can still be steep. In fact, the IRS can potentially take your full pay from a single employer if you have more than one income stream. The IRS uses a formula that takes into account your filing status, pay period, and number of dependents when deciding your expected amount per paycheck. It’s not uncommon for the amount taken to be more than half of your pay. What really hurts is that the IRS can take all of a bonus that you are paid during the span of your garnishment. Again, your employer has no choice when it comes to complying with the IRS’s demands.

Can You Negotiate a Wage Garnishment?

The easiest way to fight back against a tax garnishment is to simply pay your tax debt off in full. However, there’s a good chance that you’re in this situation precisely because you lack the assets or borrowing power to do that at the moment. That won’t necessarily mean that you’re stuck with a wage garnishment. The next steps are crucial because you may be able to get a garnishment stopped in its tracks if you can convince the IRS to work with you.

You’ll need to approach a wage garnishment differently depending on how advanced your situation has become. If a garnishment has not yet been issued, you may be able to request a hearing to contest the IRS’s findings. Once you receive the Final Notice of Intent to Levy letter, time is of the essence. You will have just 30 days to request your hearing and petition the tax court.

What if a wage garnishment has already been issued? You’re not stuck if your garnishment is already in place. The IRS may be willing to negotiate a collection alternative with you. Here’s a look at the options that are available to taxpayers who owe money to the IRS:

• Offer in Compromise (OIC).
  
• Installment Agreement (IA).
  
• Currently Non-Collectible (CNC)/Hardship Status.
  
  

What’s the top thing a delinquent taxpayer should know before pursuing any of these potential relief options? None of these options are on the table if you haven’t filed all past returns. The IRS won’t work with people who are not current with tax returns. What’s more, you’ll be asked to make a commitment to file all future taxes under threat of having your relief plan revoked if you default.

What Happens After a Wage Garnishment Is Paid?

Hopefully, you’ll be able to work with a tax expert to avoid an IRS wage garnishment. However, it’s important to know what to expect if you allow your garnishment to progress. The IRS should notify your employer to stop deducting money from your wages once your debit is paid in full.

A Wage Garnishment Doesn’t Have to Happen

You don’t necessarily have to turn over a big portion of your paycheck just because you owe back taxes to the IRS. In fact, the IRS would prefer not to use this “last resort” option to collect what you owe. This is precisely why IRS tax relief options exist. Getting a tax professional working on your behalf immediately is often the first step to getting on the right course to avoid having your paycheck garnished.

While interrupting a wage garnishment is difficult, it’s not necessarily impossible. Your odds of being able to work out some type of payment plan with the IRS are much higher if you can intervene before the first penny is held back from your paycheck. It’s especially important to get tax help if you believe that the IRS has incorrectly initiated a wage garnishment for a tax debt that you don’t actually owe. Your levy may be stopped if you’re able to prove that your levy is erroneous or the IRS violated the law when issuing your levy.

What should you do if the IRS is trying to garnish your wages. At Tax Group Center, this is something we help our clients solve every day. We’ll help you understand your options for getting a wage garnishment stopped by putting a relief option in its place. If you have unfiled tax returns preventing you from seeking the relief options offered by the IRS, we can start by getting you fully current. Protect your income from the IRS. Call Tax Group Center at (800) 264-1869 to book a consultation today!

One of the big things tax experts see time and time again is the way that fear of the IRS can cause people to miss out on opportunities to properly handle tax problems before the situation becomes critical. If you owe back taxes, the situation may not be as bleak as you think. A tax settlement may be a viable option for getting your IRS debt settled. A settlement allows you to do the following:

• Pay less now.
  
• Avoid liens and garnishments.
  
• Permanently retire your debt.
  
  

A tax settlement is for someone who does not have the funds or means to pay off a tax debt in full even though they’d like to comply with the IRS. When working out a tax settlement with the IRS, you’ll typically qualify for one of two options. The first is a basic tax settlement where the taxpayer qualifies to pay back less than the full tax debt after it is established that the liability amount is too high to reasonably be paid back. The second is an installment agreement (IA) consisting of monthly payments that allow a taxpayer to pay back the full debt over time. Additionally, taxpayers can pursue options for declaring hardship or “uncollectable” status. However, these options focus more on “freezing” debt instead of creating a clear path to retiring debt to the satisfaction of the IRS. The first step to any type of settlement or relief is making sure that all tax returns up through the current year are filed. The IRS won’t work with any taxpayer on a relief solution if they have unfiled tax returns in their closet.

What Is a Standard IRS Tax Settlement?

A tax settlement is simply a mutual arrangement created by the IRS and a taxpayer that allows a taxpayer to settle an outstanding debt for less than the full, original amount owed. While there’s no guarantee that you’ll be granted a settlement, the IRS is often highly receptive in cases where it’s clear that a taxpayer is incapable of paying a full amount owed based on their finances. Both current tax laws and your specific financial details will help to shape the IRS’s decision in your case.

Why Would a Taxpayer Want a Settlement?

A tax settlement is often the fastest path out of legal and financial difficulties for delinquent taxpayers. Generally, tax settlements are approved quickly once a taxpayer files all unfiled taxes. That means that you’re able to begin making reasonable payments that will allow you to pay off your tax debt in a short amount of time. In addition, you can stop living in fear of late fees, wage garnishments, liens and other penalties that can be detrimental. The IRS won’t place liens or levies on your home, wages, business, property, or bank accounts as long as you have a settlement in place.

How Do Settlement Payments Work?

Once your tax debt is reduced, it may be possible to pay off the remaining balance in a lump sum. However, you may prefer to work out a settlement that allows you to pay off what you owe throughout a set, penalty-free window of time using scheduled payments. A tax professional should be able to guide you on the type of plan to request from the IRS.

What Happens After You Pay Off Your Tax Settlement?

Once your payment is complete, you’re considered to be in good standing with the IRS for all tax years covered in your settlement. This means that it’s essentially like your tax woes never happened! If you have a history of defaulting on tax payments, it’s important to get the help of a tax-preparation professional to ensure that you’re filing on time every year going forward. The IRS may not be as willing to provide you with a settlement again if you’re delinquent on future tax returns or payments.

How Does the IRS Determine If You Qualify for a Settlement?

When determining eligibility for a tax settlement, the IRS looks at a number of factors related to your income, expenses, assets and liabilities. In addition, circumstantial factors like job loss or severe financial hardships are explored to get a clear picture of how likely it is that you can actually pay off what you owe. If it’s determined that you are not capable of reasonably paying off your tax debt, the IRS may be willing to accept a reduced amount. It is simply better to get “something” instead of “nothing” from the IRS’s perspective.

Is There Any Downside to Accepting a Tax Settlement From the IRS?

Generally, it is to your advantage to accept a settlement from the IRS if you owe taxes you cannot pay. However, the IRS does claim the right to confiscate all of your future tax refunds to apply the totals to your debt until your debt is fully paid. You will also be back to where you started if you default on any of the terms of your settlement agreement before your debt is paid off.

How Hard Is It to Qualify for an IRS Settlement?

While it’s true that the IRS only grants settlements to a narrow spectrum of applicants each year, there’s room in the program for people who truly need relief. If you can reasonably pay off your debt using assets or borrowing power, you won’t qualify for a settlement. It’s important to get a payment in right away if you currently have enough money or borrowing power to cover your full tax debt because putting off payment will probably result in more needless fees and penalties.

Some Extra Tips for Getting a Tax Settlement From the IRS

There’s no need to “hide” from the IRS if you owe taxes because the IRS keeps close tabs on delinquent taxpayers. A better strategy is to contact the IRS before the situation escalates. If you’re unsure about how to handle the situation, bring in a tax professional to advocate for the best outcomes. The best way to help your odds of being granted a settlement from the IRS is to be as forthcoming and compliant as possible while working your way through the process. When vetting applicants for settlements, the IRS dives deeply into financial statements and records to assess your financial state. Trying to hide income or assets could nullify your application.

What to Do If You’ve Fallen Behind on Taxes

If you know you owe late taxes, don’t let another day pass by without seeking help from a tax expert who can steer you toward a solution. It’s a misconception that the IRS only wants to punish people with harsh penalties if they can’t pay their taxes. Tax Group Center can help you explore settlement options to get your IRS tax debt settled the right way. Our team of tax professionals and lawyers helps people work with the IRS to reduce or forgive back taxes every day using custom solutions. We speak the language of the IRS to the IRS on behalf of our clients. Fill out a Contact Form or call us at (800) 264-1869 if you need help from a Certified Tax Consultant today!

While serious, a tax levy isn’t necessarily unstoppable. You may be concerned if you’ve received an IRS levy notice. Taxpayers have a number of options when faced with the possibility of a levy. First, it’s important to file on time and pay all owed taxes if your goal is to avoid getting into levy territory. You may be able to file for an extension to file that will give you more time without incurring penalties if you’re concerned that you’re not going to make the tax deadline this year. However, you may already be past the point where the IRS is notifying you that it intends to come after your paycheck or assets to settle a debt that’s owed. When you owe unpaid taxes, the IRS will seize your property to cover the value of the taxes owed. This can include seizing assets, seizing bank accounts, and garnishing wages. The IRS will go around you to extract funds directly from banks and employers. This is where it becomes important to explore relief options that will allow you to resolve your debt in collaboration with the IRS. The first step is addressing the levy that’s in place to avoid some very disruptive and irreversible financial repercussions. Take a look at what a levy means for you, how to comply with the IRS, and options for relief that will allow you to stop an IRS tax levy.

What Happens When You Get a Tax Levy?

Tax levies never simply appear “out of the blue.” You will be notified by the IRS prior to the activation of a levy through a Notice and Demand for Payment that is followed by “final warnings” called the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. It is important to act quickly once you receive these notices because the IRS will begin seizures of your paycheck or assets if you don’t work out a relief plan.

Many people underestimate just how comprehensive and intrusive the IRS’s ability to seize assets to settle a tax bill truly are. Typically, the IRS will place a 21-day freeze on your bank accounts once a levy is activated. This is a crucial period for taking action because the bank may send some or all of your funds to the IRS if you do not resolve the issue during this “freeze” period. Similarly, the IRS can demand that your employer redirects most of your wages to the IRS for as long as it takes for your tax debt to be paid off. Even your home and car could be in jeopardy once you’re at the levy stage of your relationship with your IRS.

Is a Tax Lien the Same as a Tax Levy?

Don’t confuse a tax levy with a tax lien. A lien is the IRS’s legal claim to your property. A levy is the actual seizure of that property. If possible, it is recommended that you take remediation actions while your account is still in the lien phase.

Can an IRS Tax Levy Be Stopped?

The best advice on how to stop a tax levy is to act now. The clock is ticking once the Final Notice of Intent to Levy arrives in your mailbox. Taxpayers have several options for entering into agreements with the IRS that will stop levies.

Pay Your Tax Bill in Full

If possible, pay your complete tax bill to stop a tax levy. A lump payment is the fastest way to get the IRS to stop collection activity. However, relief options do exist if you cannot come up with the funds all at once.

Request a Collection Due Process Hearing

Do you believe the IRS has made an error? It’s possible that you received a Notice of Intent to Levy based on an error or misunderstanding. You should never ignore a letter from the IRS just because you assume that it was sent in error. While you may be aware that you’re fully current will all tax payments, the IRS may have you on record as being delinquent with your payments. That means that the IRS will proceed as though you do owe money. Get this untangled as early as possible to avoid unnecessary headaches! You can request a hearing with the IRS Office of Appeals to make your case within 30 days of receiving a Notice of Intent to Levy letter. Due to the complexity and urgency of this strategy, it’s important to seek the help of a tax professional when requesting a hearing to appeal your levy.

Get an Installment Agreement (IA) Worked Out

An IRS Installment Agreement (IA) is the most common relief option for taxpayers facing tax levies due to unpaid taxes. Generally, the IRS is receptive to requests for payment plans. Typically, a taxpayer is given 72 months to pay off what they owe through an installment plan. When applying for an installment plan, you’ll be asked to provide proof that you have the funds or access to funding that will allow you to comply with the terms of your plan. You must also be able to prove that you are not currently capable of paying off your debt in full by providing bank records. Lastly, Installment Agreements are only granted to taxpayers who are current with all tax filings.

Request an Offer in Compromise (OIC)

For some taxpayers facing levies, an Offer in Compromise (OIC) is the best option. An OIC is a request to settle what you owe in taxes for less than the full amount owed to create a more manageable route to full repayment. The requirements for requesting an OIC are being current with all filed returns an agreeing to stay current with all future tax payments. OIC is not available if you are currently being audited or processing a bankruptcy. It’s so important to vet your chances of being accepted into the OIC program before submitting an application because the IRS accepts less than half of all requests for OICs each year.

Pursue Bankruptcy

Yes, bankruptcy is technically an option for stopping an IRS levy. This is a complex process that requires lots of consideration regarding the weight of your debt versus the consequences of bankruptcy. Talking with a tax professional about the pros and cons of bankruptcy versus other relief options is highly advised.

How Tax Group Center Can Help

Don’t put off taking action for even one more day if an IRS Notice of Intent to Levy has arrived in your mailbox. Many taxpayers lose more than they need to because they think that ignoring the problem will make it go away. Our team may be able to show you how to stop an IRS tax levy before any of your assets are frozen or seized. Each option available for stopping an IRS tax levy requires very specific steps. At Tax Group Center, we’ll work hard to help increase your chances of being accepted into an IRS relief program or having your appeal recognized by the IRS. Our team of tax professionals, lawyers, and accountants has been helping taxpayers get tax relief and comply with the IRS for 30 years. We help clients avoid IRS penalties effectively because we speak the language of the IRS. Reach out today to have a conversation about how you can stop a tax levy!

Any experienced tax preparer will tell you that tax season isn’t an event. Tax “season” should be the lens that you view your finances through all year long. Let’s talk about how to prepare for tax season in a way that keeps you ready and shielded. Even a person who feels confident about filing their taxes may suddenly have questions if they’ve had their business or personal finances disrupted by things like unexpected business or school closures.

What Do I Need to Do My Taxes?

Getting and staying organized is crucial when it comes to preparing your taxes. You’ll need to compile a mix of IRS worksheets and your own personal documents when sitting down to prepare your taxes. Your state may also require you to submit a copy of a government-issued photo ID when you file your taxes.

The list of what you’ll need to have in front of you before you can start your taxes can actually be a little overwhelming if you don’t have a lot of experience with filing. Of course, the specifics of what you’ll need to produce in terms of documents and records will vary based on how you file. For instance, a person who owns a home or claims dependents will need to deal with extra paperwork that may not be in play for someone who doesn’t own any property or have any dependents. Here’s a rundown of some of the basic information you’ll need in front of you when preparing taxes:

• Social Security number and tax ID number.
  
• Dependent(s) information.
  
• Sources of income.
  
• Records related to deductions for home ownership, charitable contributions, medical expenses, childcare expenses, education expenses, state and local taxes, retirement savings, and K-12 educator expenses.

Successfully gathering all of the information related to these core tax-preparation categories will have you feeling pretty confident that you’re ready to dive into filing your taxes. However, you may not be fully ready just yet. The IRS requires you to use specific documents depending on how you choose to file. Next, let’s dive into some of the forms that you may need when getting your taxes done.

Documents Needed for Taxes

The common form used by taxpayers when filing tax returns is the W-2 form. This is the form that all employers must issue by the end of January. You won’t be able to file your taxes as an employed filer if you don’t have this form. That means that it’s time to contact any employer that paid you over the course of the previous tax year if you haven’t received yours. You may also need to deal with a 1099 form. 1099 forms come with a number of different suffixes that are used to differentiate how you were paid. Many sellers and freelancers who are paid through platforms like Amazon and PayPal need to file 1099-K forms that they receive from those platforms. However, someone who receives payouts for dividends may need to file a 1099-B. Let’s take a look at some specific forms that you may need to deal with based on particular tax circumstances:

• Employment income (W-2).
  
• Self-employment income (1095-A).
  
• Unemployment state tax refund (1099-G).
  
• Pension/IRA/annuity income (1099-R).
  
• Interest dividend income (1099-INT, 1099-OID, or 1099-DIV).
  
• Income from sales of stock or other property (1099-B or 1099-S).
  
• Health Savings Account (HSA) reimbursements (1099-SA or 1099-LTC).
  
• Marketplace/exchange health insurance (1095-A).
  
• Gambling income (W-2G).
  
• Royalty income (1099–Misc).
  
• Mortgage interest (1098).
  
• Student loan interest (1098-E).
  
• HSA contributions (5498-SA).
  
• IRA contributions (5498).

This is by no means an exhaustive list of forms that the IRS uses. The IRS provides a plethora of forms that cover specialized industries and filing statuses. Getting these forms in your hands and completed is just part of the job. You’ll generally need to produce receipts and records tied to the income or expenses being claimed on your return. Self-employed filers will need to provide details regarding income records, expense records, business-use assets, and records of estimated tax payments.

Unfortunately, the IRS does make you work a bit to receive deductions. This is one of the reasons why so many people simply find it worth it to hand over their taxes to a professional tax expert. The reality is that it’s so easy to miss what can turn out to be very lucrative tax deductions that can significantly reduce your tax burden. Yes, it’s more than worth your time to put the effort into tracking down every deduction possible. For instance, homeowners have the advantage of being able to submit records for things like property taxes and energy-saving home improvements to receive what work out to be very generous deductions. Similarly, someone who pays for childcare stands to receive a very generous benefit at tax time. However, it takes understanding what does or doesn’t qualify to maximize tax benefits. It’s also important to understand that not every deductible item is fully deductible. Many tax credits are only provided up to a certain percentage.

How to Prepare for Tax Season

Again, preparing for tax season should not be like cramming for a test at the end of the semester! The process really does require you to keep impeccable records to avoid missing out on beneficial deductions. What’s more, failing to report income fully and accurately can land you in hot water with the IRS in terms of penalties and fees. Unfortunately, the IRS doesn’t distinguish between “calculation errors” and fraud when scanning through tax returns to find mistakes and discrepancies. An inaccuracy on your return can trigger an audit even if you simply made a clerical error.

The first thing to do is to make sure you have every document needed. It’s possible that your employer, bank, or childcare provider has failed to supply with you the right forms needed for filing your taxes. You’ll need to reach out to request replacement forms if you notice that you’re missing anything. Employers and financial institutions have until Jan 31 to get that information to you. That means that Feb. 1 is often the best day to conduct a little “audit” to make sure you have all that you need to begin your tax journey in anticipation of the April filing deadline.

Tax Prep Checklist 2020

What should you focus on getting in front of you right now if you’re putting an essential tax checklist together? You’ve hopefully received the forms needed from your employer and financial institutions if it’s past January. However, you can still begin preparing even if the deadline for those key documents hasn’t arrived yet. Here’s your quick checklist for documents needed for taxes:

• Bring out last year’s federal and state returns. Giving them a good glance will help you to remember which documents you used to file in the previous year. They will serve as good guideposts if not much has changed with your situation since then.
  
• Gather up any Social Security numbers for yourself, your spouse, or your dependents if you can’t remember them off the top of your head.
  
• Get in gear for deductions by gathering records for charitable donations, state and local taxes, property taxes, mortgage interest, medical bills, education expenses, traditional IRA or self-employed retirement contributions, childcare costs, and any other deductible expenses.

Just how much time you end up devoting to tax preparation will come down to just how exotic your tax situation looks. One big thing to remember is that tax laws changed significantly after 2018. That means that your default formula for maximizing deductions may not be applicable any longer. It’s worth having your tax situation looked at by a professional to discover new opportunities that could significantly lower your tax burden this year.

Tax Group Center Can Help

Tax Group Center has been helping taxpayers file their taxes for 30 years. We’re here to help you comply fully with IRS requirements to reduce the odds of facing penalties stemming from errors. Let us comb through your records to discover tax deductions you may not have known applied to your situation. There’s no need to lose days and nights trying to get your taxes filed on your own. Reach out today to book your appointment to experience your easiest tax season yet!

Tax lingo doesn’t come naturally to people who don’t work for the IRS. That’s one of the reasons why there’s some confusion regarding the difference between a levy and lien. The two terms are not interchangeable. However, they are linked. Let’s break down what there is to know about these IRS penalties that should never be ignored!

Levy vs Lien

A levy refers to the legal seizure of your property by the IRS to satisfy your tax debt. However, a levy does not simply come out of nowhere without warning. You will be notified of a lien prior to a levy being activated. A tax lien is the IRS’s legal claim to your property that precedes an actual seizure. This is an important distinction because it’s wise to consult with a tax professional after a lien has been initiated to try to prevent a levy from being activated. The easiest way to look at it is that a lien refers to the IRS’s statement of intention for seizing your property. A levy is the actual seizure process.

What Is a Levy?

A levy is the IRS’s attempt to seize property to satisfy what you owe in unpaid taxes. The IRS is lawfully entitled to seize your personal property, real estate, cash, bank savings, and other assets. What’s more, the IRS can also activate a wage levy (garnishment) that forces your employer to hold back a certain percentage of your pay each pay period until your debt is satisfied.

Typically, you will receive a notice of intent to levy about 30 days prior to a levy being initiated. This is a very crucial period for reacting. You may be able to stop a levy in its tracks before harm is done to your finances or credit record by working with a tax professional to obtain a relief option.

What Is a Lien?

The IRS will notify you of a tax lien if you do not pay a tax bill after the agency assesses a tax against you. A lien is considered a “warning” from the IRS. However, it is far from an empty threat. An IRS lien is a public record that provides notice of the IRS’s claim to your property. An IRS Notice of Federal Tax Lien serves the purpose of alerting creditors to the fact that the government has a legal right to your property. As a taxpayer, you do have the right to appeal a tax lien.

What Is the Difference Between a Levy and a Lien?

A lien is a legal claim on the part of the IRS against your property. The IRS is asserting its claim to your property because you’ve failed to pay a tax debt. By contrast, a levy is the actual legal seizure of your property to satisfy the tax debt that you owe. A tax lien will precede a tax levy.

How Long Before a Tax Lien Becomes a Tax Levy?

This is where a document known as the IRS Final Notice of Intent to Levy is going to become crucial. A notice will either be mailed to you or delivered in person. The clock is actually already ticking loudly if you’ve received this letter. The IRS cannot seize your property within 30 days of sending you a notice of final intent. This 30-day window provides you with an opportunity to request a Collection Due Process (CDP) hearing with the IRS Office of Appeals. Unfortunately, the levy process may begin if you allow that 30-day window to come and go without action. There are some exceptions to that 30-day window. For instance, the IRS does not need to obey the 30-day window when it comes to levying your tax refund(s). The IRS may also circumvent the 30-day requirement if collection of a tax amount is in jeopardy.

Getting Help Before a Tax Lien or Levy Becomes a Problem

Looking at tax lien vs tax levy shows taxpayers that these two tax terms are not interchangeable. The one thing that a levy and lien do have in common is that no taxpayer wants to deal with either issue. That’s where Tax Group Center can come in to help you avoid the “snowball” effect that can occur once you receive a lien notice. It could take anywhere from a few days to a few months before the IRS tracks you down with a lien notice after assessing that you owe taxes. However, the truth is that most taxpayers who are late on tax payments begin suffering the consequences before a lien notice ever arrives. That’s because interest rates and late-payment penalties can begin accruing the moment you miss the tax-day payment deadline.

At Tax Group Center, we’re able to help you address or appeal liens and levies using the IRS’s own language. Our team of licensed tax professionals, lawyers, and accountants has been helping taxpayers understand their options regarding late tax payments for 30 years. Let us help you explore options for penalty relief or forgiveness if you have concerns about a lien or levy stemming from unpaid taxes. We can also assist you if you believe that an action has been improperly applied to your account. Call our office today for a consultation.

What does a Freedom of Information Act (FOIA) request have to do with your taxes? You might assume that an FOIA request is something that only happens in big court cases. However, this resource can be beneficial if you’re managing a tax issue with the IRS. Taxpayers use documents obtained through FOIA requests all the time to get a better picture of the data the IRS is using to pursue tax matters. 

Let’s discuss what all taxpayers should know about using the Freedom of Information Act for obtaining IRS documents.

What Is a Freedom of Information Act Request?

The Freedom of Information Act asserts that any person has the right to request access to federal agency records or information. Yes, document exemptions do exist, and we’ll cover the types of documents that you aren’t entitled to view in just a moment. The detail that’s important for you, if you’re dealing with a tax issue, is that all IRS records are eligible for FOIA requests. You don’t need the help of a lawyer to make an FOIA request for IRS documents, but many prefer to seek help from legal and tax professionals to ensure the process is handled correctly.

What Information Can You Request Under the FOIA?

You can make a FOIA request for any agency record. Both printed and electronic forms are available. The FOIA does not require agencies to create new records, conduct research, or perform data analysis. In addition, agencies are not required to answer any questions submitted along with requests for information – you’re only entitled to receive copies of documents that already exist without commentary.

Why would you want to submit an FOIA request when dealing with a tax issue? Many people pursue this option when they feel they are hitting a wall when communicating with the IRS. Taxpayers are often concerned that the IRS may be working off of files that contain errors. The information you dig up in your file may help you better prepare when working out a matter with the IRS. Getting documentation in your hands allows you to see the origins of the tax issue from the perspective of the IRS. You may also get access to a clearer breakdown of things like tax totals, penalties, and interest.

FOIA requests can help you to make a breakthrough if it turns out that an error or inaccuracy could be behind your tax problems. You’re essentially getting an unfiltered view of what the IRS sees when it looks at your case. This can be essential when trying to plot your next step for working toward a favorable tax resolution.

There is no initial fee to submit a request, but in some cases, charges may be added. You won’t be charged for the first two hours of search time. You will also receive up to 100 pages of duplication for free. However, some cases require additional search time and pages. You will receive written notification if the agency estimates that you will incur more than $25 in fees. You will have the option to either narrow your request to reduce fees or pay search fees. Keep in mind that agreeing to pay additional search fees does not guarantee that more information will be discovered.

You will receive a written response once your request is processed. All reasonable documents will be included in the response. You will also be informed if FOIA exemptions caused the agency to hold back specific documents.

How Can You Make a FOIA Request?

Any person can make a FOIA request – you don’t even need to be a U.S. citizen. The process varies based on the agency you are contacting, and there is a very specific process for making FOIA requests to the IRS.

All FOIA requests for the IRS must be sent in writing to the Disclosure Central Processing Unit. Written FOIA letters should be brief and direct, and there’s a specific formula to follow to ensure that your request can be processed quickly. A request letter should contain these four parts:

• A statement that the request is being made under the Freedom of Information Act.
  
• Identification of the records that are being requested.
  
• The name and address of the requester. Requests for tax records of any business or individual must be accompanied by a copy of the requester’s driver’s license or a sworn or notarized statement confirming identity.
  
• A statement of commitment to pay any fees that may be incurred during the search process.

Composing a clear, complete letter will help to ensure that the IRS accepts and processes your request promptly. This is important if you’re motivated by looming penalties and liens when attempting to settle a debt case. 

The IRS is required to determine its ability to comply with your request within 20 business days. The IRS will provide reasons for denial if your request is partially or wholly denied. Additionally, you will receive information regarding your right to appeal the decision. Options for both administrative and judicial appeals exist.

What Is Exempted From the FOIA?

There are nine exemptions in place for FOIA requests. There’s a good chance you won’t bump into any of the exemptions if you’re requesting your own personal or business taxes, but it’s essential to understand the limitations of FOIA requests if you’re counting on new information to overcome tax issues. 

Here are the nine FOIA exemptions:

• Classified documents pertaining to national defense and foreign policy.
  
• Internal personnel rules and practices.
  
• Information exempt under other laws.
  
• Trade secrets and confidential commercial or financial information.
  
• Inter-agency or intra-agency memorandums or letters.
  
• Law enforcement.
  
• Financial institutions.
  
• Geological information.
  
• Personnel and medical files.

Knowing your rights makes all the difference in getting the right information in front of you, and getting a tax professional who is familiar with IRS FOIA requests on your side can streamline the process. It’s recommended that you seek assistance from a tax professional if you feel that obtaining IRS documents will help you to dispute an IRS ruling or settle a case.

Do You Need Help With a Freedom of Information Request?

Do you want to find out if a FOIA request could be beneficial for solving your tax problem with the IRS? Providing help with FOIA requests is just one of the many services offered by Tax Group Center. Our team of tax professionals, lawyers, and CPAs will show you how to use information obtained through a FOIA request to support your claims. In addition, we offer a full spectrum of tax relief solutions to help you get your debt settled or forgiven. Give us a call today!

One common myth is that the IRS will never negotiate with someone who owes money. In reality, the IRS offers official channels for debt negotiation as part of its Fresh Start program. Are you unsure about how to negotiate your debt with the IRS because you’re unfamiliar with relief options? Let’s discuss three popular options that make it possible to negotiate your tax debt without incurring new penalties.

Can You Negotiate Your Tax Debt With the IRS?

Yes, you have several options for negotiating a tax debt. There’s no guarantee that the IRS will approve your request for debt relief. However, there’s a good chance that you’ll qualify for an option that at least creates a manageable way to pay what you owe. Here are three options that should be on your radar if you owe money:

• Offer in Compromise (OIC).
  
• Installment Agreements (IA).
  
• Penalty Abatement.

It’s important that you have a grasp on your current financial status before you pursue one of these options. The IRS will examine your finances closely to gauge your ability to pay what you owe. Additionally, you must be current with all tax returns before the IRS will even consider negotiating with you. Don’t be discouraged if you haven’t filed all previous tax returns. The IRS simply wants you to get up to date as quickly as possible. Yes, you should file even if you cannot pay what you owe.

Offer in Compromise

An Offer in Compromise (OIC) allows you to settle your owed taxes for less than what you owe. The IRS is looking for you to prove that you cannot reasonably pay your full tax liability before it reaches its expiration date. Most tax liabilities reach a statue after 10 years (120 months). As a result, the IRS will often reduce your debt as a way to at least get something from you. Here’s the full list of what the IRS takes into consideration when reviewing your application:

• Your income.
  
• Your expenses.
  
• Your asset equity.
  
• Your ability to pay.

You will submit an OIC offer to the IRS based on what you can reasonably afford to pay. The IRS weighs your monthly income against your reasonable collection potential to determine how much it will excuse from your tax liability. In addition, all liens will be removed once your offer is approved.

The IRS will expect a “lump” payment when you submit your offer. This payment can either reflect 20 percent of your offer amount or one standard monthly payment. It’s important to know that your OIC will only remain valid if you stay current with payments and file all future tax returns on time. The IRS will return any filed Offer in Compromise (OIC) application that does not contain all of the necessary information and estimated payments. However, the IRS will keep and apply any initial payment to reduce your balance. It’s very important to get help from a tax professional to ensure that your application is submitted properly to avoid rejection or delays. This is especially true when you consider that liens can be applied up until your application is approved.

Installment Agreements

The IRS may approve you for an installment agreement. This is actually the most common form of debt relief available. To qualify, you must prove that you don’t have the available cash, borrowing power, or equity to pay back what you owe to the IRS. The IRS will ask you to fill out forms detailing your income, debt, assets, and liabilities. You shouldn’t expect the IRS to offer much wiggle room if your finances reflect an ability to pay back the IRS debt that you owe.

Entering into an installment agreement with the IRS typically means that you’re agreeing to pay back what you owe over a period spanning six years. The big perk of an installment agreement is that you’re able to pay off your debt in manageable monthly installments without incurring penalties and fees. You’re also avoiding liens or wage garnishments that could hurt your credit score and financial reputation.

It’s important that you commit to making all payments on time once you’ve been approved for an installment agreement. Unfortunately, missing a payment means that you’ve violated the terms of your agreement. Violating agreement terms gives the IRS the right to move forward with seizing property and attaching liens.

Penalty Abatement

Do you feel that penalties have been harshly or unfairly assigned to your IRS bill? You may be in a position to petition for something called penalty abatement. Penalty abatement does not address any original tax debt or accumulated interest. It does address penalties that have been tacked on to your existing debt and interest. You have a few different ways to go about requesting penalty abatement. One option is a First-Time Penalty Abatement (FTA). This abatement applies if you have accrued penalties for failing to file your return on time, pay on time, or deposit taxes when due. Here’s what it takes to qualify:

• You didn’t previously have to file a return.
  
• You have no penalties for three tax years prior to the penalty year.
  
• You filed all currently required returns or an extension.
  
• You have paid or arranged to pay due taxes.

Another option is Reasonable Cause Penalty Relief. Did you fail to file or pay taxes because of a life event or natural disaster? The IRS will consider any sound reason presented for your failure to file a tax return, make a deposit, or pay due taxes. Here’s a rundown of causes that often qualify:

• Fire, casualty, or natural disaster.
  
• Inability to obtain records.
  
• Death, serious illness, or unavoidable absence of the taxpayer or immediate family member.
   
• Any reason that establishes that you used all ordinary care and prudence to meet your tax obligations to the best of your ability.

A lack of funds doesn’t count as a reasonable cause for failing to pay owed taxes. However, the criteria may be met if a lack of funds was caused by any of the factors listed above. Be prepared to back up all claims regarding a reasonable cause with documentation. The IRS will likely conduct an investigation to confirm your claim if you try to obtain Reasonable Cause Penalty Relief.

Find the Right Option for How to Negotiate Tax Debt With IRS Agents

Yes, the IRS will probably be willing to negotiate with you if you’ve failed to file or pay taxes for some reason. It’s so important to get ahead of the problem if you owe the IRS money. Tax Group Center is here to help you begin communication with the IRS for getting your tax debt reduced or sliced into payments. Our team can also pursue penalty abatement to help you avoid paying steep sums to the IRS. Our team of tax professionals, lawyers, and CPAs will help you discover and pursue the best option for your case. Additionally, we’ll help you stay on track with preparing your taxes on time and keeping up with payments to avoid the nullification of your relief plan. Give us a call today if you need a plan for settling a debt with the IRS. We help people negotiate tax debt with the IRS every day using the IRS’s own language.

People have lots of questions about the COVID-19 stimulus checks that are coming for Americans. You may be wondering if and when you will be receiving such a check. Let’s break down the basics.

What Is the Coronavirus Stimulus Package?

The United States passed a stimulus plan totaling $2 trillion on March 27. The goal of the stimulus package is to send direct payments to American taxpayers to help them get through the unprecedented COVID-19 situation. The lump sum you receive will be determined by the income claimed on your 2019 tax return – or your 2018 tax return, if you have not yet filed for the year. 

Who Qualifies for the COVID-19 Stimulus Checks?

First, you must be a United States citizen or resident alien in order to receive a check. Additionally, you will only qualify for a check if you filed a tax return for either 2018 or 2019. A Form SSA-1099, Social Security Benefit Statement, Form RRB-1099, or Social Security Equivalent Benefit Statement will also qualify you. You also must not be claimed as a dependent on another person’s tax return if you are over the age of 16.

How Much Will You Get From the Government?

The amount you receive in your COVID-19 stimulus check will be determined by your adjusted gross income for either 2019 or 2018. Even minors will be receiving checks. Here’s a breakdown of the key things to know:

• “Single” filers with adjusted gross incomes up to $75,000 are eligible for $1,200.
  
• For single filers, the payment amount drops by $5 for every $100 in income above $75,000.
  
• “Married filing jointly” filers are eligible to receive up to $2,400 if they have adjusted gross incomes below $150,000.
  
• Married couples will receive payments on a sliding scale up to $198,000.
  
• Married couples will receive $500 for each dependent under the age of 16 claimed on their tax returns.
  
• Anyone who files as “head of household” is eligible for a $1,200 check and $500 for each child claimed on a return if adjusted gross income is $112,500 or less.
  
• “Head of household” filers can also receive checks on a sliding scale if they earn up to $136,500 annually.

The caps are $2,400 for married couples and $1,200 for single filers. Those caps do not include the $500 per dependent under the age of 16 included in the stimulus plan. 

Do you qualify for a COVID-19 stimulus check if you receive a Social Security check? Yes, you qualify for a payment as long as you do not exceed the income limits mentioned above. Let’s move on to discuss how your check will be coming to you.

How Will You Receive Your Stimulus Check?

COVID-19 stimulus money will either be mailed or deposited directly into your bank account. If you receive a physical check, you can cash or deposit it the same way that you would any other type of check. The IRS will use the information in your 2018 or 2019 return to decide how your money should be sent to you. 

We also have word that the Department of Treasury is in the process of setting up a portal for people to use for accessing their payments electronically if they did not use direct deposits for their 2018 or 2019 tax returns.

Some Additional Things to Know About COVID-19 Stimulus Checks

Keep in mind that the IRS will first look for your 2019 return, so if you haven’t filed it yet, it may be important to do so. Your 2018 return will only be used if you haven’t yet filed for this year. Unfortunately, you may not be able to access a $500 payment for a dependent if you welcomed a new child unless you’ve filed for 2019. 

COVID-19 Stimulus Check FAQs

Do Self-Employed People Qualify for COVID-19 Stimulus Checks?

Yes, all self-employed people who don’t exceed the income threshold qualify for checks.

Will United States Citizens Living Abroad Receive Checks?

Yes, the IRS will use the Social Security numbers of qualifying people living abroad to issue checks.

Will the IRS Garnish My COVID-19 Stimulus Check If My Wages Are Currently Being Garnished Due to Debt?

No, the IRS will not touch your COVID-19 check.

Do I Have to Pay Taxes on My COVID-19 Check?

No, the money you receive from your COVID-19 check is not taxable. It’s possible that you could be required to pay back a portion of the payment you receive if your 2020 income is substantially higher than the income the IRS used to determine your eligibility. This is something to revisit when getting your taxes filed in 2021.

Contact Tax Group Center Today

If you have questions or want to file your 2019 tax return, get in touch with us. Tax Group Center can help you to get your taxes filed ASAP if you’re in this predicament. Filing your 2019 taxes before checks are issued will also give you an opportunity to make sure the IRS has the current information regarding your direct deposit. Our team of tax professionals is standing by to help!

Tax season 2020 won’t be like any tax season that’s come before – and as a result, there are some essential things to know about filing your tax return during the COVID-19 pandemic. The big thing to discuss is the tax deadline pushback: What does it mean for you?

What Does the Tax Deadline Pushback Mean for Taxpayers?

Here’s some key information: The deadlines to file and pay federal income taxes are extended to July 15, 2020. We’ve compiled some things you should know if you decide to use the July 15 deadline instead of the traditional April 15 deadline:

• Taxpayers who choose to push back their payments until July 15 will not be penalized.
  
• Taxpayers who choose to push back their payments until July 15 will not be charged interest.
  
• You do not need to file an extension to file past April 15 this year.
  
• Extending your filing date will also extend your refund date.

There is also a new deadline for contributing to your IRA that accompanies the change. You have until July 15 to make a 2019 contribution. 

You may be wondering if the decision to extend the federal tax deadline will impact your state taxes. Yes, many states are extending their filing deadlines for 2020. However, no change has been made across the board in regards to state deadlines. You’ll need to find out what officials in your specific state have decided.

What If You Can’t File by the New Deadline?

The usual late-payment penalties and interest will apply if you fail to make a tax payment by July 15 of this year. You can, however, file for an extension if you’re concerned that you won’t be able to make July’s deadline. This will push your new filing date to October. 

Being granted an extension doesn’t mean you have more time to pay what you owe – you’ll still need to make your tax payments by July 15 of 2020 even if you haven’t finished filing. This is the same policy that is in place every year.

Why Should Taxpayers Still File as Soon as Possible?

The decision to push back the filing deadline for 2020 will help many Americans during what is an unnerving and confusing time. The extended deadline has been implemented to ensure that Americans are not penalized for failing to meet a tax deadline that will land right in the middle of the COVID-19 situation. 

Of course, the fact that the COVID-19 tax deadline pushback has been put in place doesn’t necessarily mean that it’s your best option.

The reality is that it’s probably not advisable to wait to file your taxes beyond the standard deadline of April 15 if you don’t anticipate owing a lot of money. Most individuals and businesses will find that simply filing by April 15 will allow them to maintain better organization when doing financial planning for the rest of 2020.

The big reason to file as soon as possible is that you’ll receive your refund much sooner. The funds that you receive from your tax return could be extremely useful going forward – waiting until July 15 to file means that you’re deciding to postpone receiving your tax refund by months.

There’s a simple way to do the math to figure out if waiting to file until the new July 15 deadline would be beneficial for you. Start by taking a look at last year’s refund total. Is it greater than what you think you’ll owe at tax time this year? It’s wise to go ahead and file now if what you’ll get back is greater than what you’ll pay. Someone who made roughly the same income in 2019 as they did in 2018 will almost certainly be better off just filing by April 15.

Get All Your Questions Regarding the COVID-19 Tax Deadline Pushback Answered

It’s likely that you have questions regarding how the new COVID-19 deadline will impact your personal or business taxes specifically. The team at Tax Group Center is staying on top of the latest changes to ensure that our clients can file correctly by the correct deadline. We provide tax preparation services for both individuals and businesses, and we can even help you file electronically to get the quickest turnaround time for your refund possible. What’s more, our tax relief resources are available if you’re concerned that you may not be able to make payments on time this year. It may even be possible to set up a payment plan. Don’t hesitate to reach out today if you need help with your 2020 taxes!