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Straface Tax Law » Tax Relief

Tax Relief

IRS Installment Agreement

Installment Agreements are contractual arrangements where the IRS stops the collection process and allows taxpayers to pay liabilities over time, similar to other types of monthly bills you may already pay. If you do not have assets allowing for immediate payment of your tax debt or some other hardship factor, an installment agreement may be an option. The IRS has several levels of installment plans depending on the taxpayer’s situation and the number of tax liabilities.

If you received a tax collection notice, be it a lien, levy, wage garnishment, or bank seizure, and you are able to pay over time, you may qualify for an installment agreement. You have little time to stop the collection action and provide the IRS with a less invasive collection alternative such as an installment agreement. Our office will review the collection notice, stop collection activity, insulate you from the government, and work to resolve your tax issues. Call our office today for your free consultation to determine if an installment agreement will fit your circumstances.

Levy & Garnishment

As Bill Collectors, the IRS and state taxing authorities have few rivals. They have the power to collect delinquent taxes by way of the levy. The IRS may levy assets such as wages, bank accounts, Social Security benefits, and retirement income. The IRS may also seize property to sell the property to satisfy a tax debt. Such property may include your car, boat, or real estate. In addition, the IRS will apply future federal tax refunds that you are due to offset the amount you owe. Any state income tax refunds you are owed may be applied to your federal tax liability.

A wage garnishment is both stressful and financially devastating, not to mention embarrassing. Wage garnishment is a form of levy that continues until the back taxes are paid or resolved, paralyzing your way of life.

Bank account levies, unlike wage garnishment, are one-time levies on taxpayers’ bank accounts to resolve an outstanding tax liability. Banks have a 21 day holding period, time enough to contact the IRS and take steps to stop the collection activity.

If you received notice of levy, wage garnishment, or bank account seizure, you have little time to preserve your assets. Call our office today for your free consultation. We will stop the collection activity, insulate you from the taxing authorities and resolve your tax issues.

Tax Lien

If you received a NOTICE OF TAX LIEN, the IRS or state taxing authorities started collection procedures. The Government will use every tool at their disposal to find your assets and collect on the tax debt, such as levying your property, seizing your bank accounts and garnishing your wages.

A federal tax lien is a legal claim to your property that arises promptly when you fail to pay the taxes owed within ten days after the IRS sends a notice and demand for payment. The government invariably files a Notice of Federal Tax Lien (NFTL) in the public records. The NFTL publicly notifies your creditors the IRS has a claim against all your property, including property acquired after the NFTL is filed. The filing of a tax lien notice may appear on your credit report and may harm your credit rating. Once a lien arises, the IRS generally does not release the lien until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.

The IRS may, however, withdraw the lien if the IRS determines:

  • The Notice was filed too soon or not according to IRS procedures
    You enter into an installment agreement to satisfy the liability unless the installment agreement provides otherwise
  • Withdrawal will allow you to pay your taxes more quickly
  • Withdrawal is in your best interest and that of the government

Take steps now to protect your assets from being seized if you have received a tax lien notice. Our office will review the lien filing and work to have it released or subordinated. We can stop collection activity, insulate you from the government and work to resolve your tax issues.

Offer in Compromise

An “Offer in Compromise” (OIC) is just that, a compromise between taxpayers and the IRS that settles the tax debt. The IRS has the authority to compromise federal tax liabilities by accepting less than full payment where circumstances show the taxpayer owes an amount of tax that could not possibly be paid in full.

A taxpayer has three options when submitting an OIC:

  • A taxpayer may submit an offer based on “Doubt as to Collectibility.” In this instance, the taxpayer acknowledges the tax is owed but cannot pay it in this instance. The taxpayer must submit a financial statement (“Collection Information Statement”) with the OIC.
  • If the taxpayer disputes the amount of tax, he must submit an OIC based on “Doubt as to Liability.” A taxpayer does not submit a financial statement in this case.
  • The taxpayer may submit an offer based on “Effective Tax Administration.” In this instance, the taxpayer agrees with and can fully pay the tax, but doing so would create economic hardship.

The IRS is not bound by either the offer amount or the terms proposed by the taxpayer and may negotiate different terms and offer amounts when appropriate. Generally accepted, an OIC will include an initial payment of 20% of the offer amount on one of 3 other payment plans.

Paying tax

Collection Due Process

A “Collection Due Process” hearing and the “Collection Appeals Program” are two ways taxpayers may appeal certain collection actions.

Collection Due Process (CDP)
Receiving a tax notice that the IRS filed a tax lien or intended to levy on property provides taxpayers with a right to a Collection Due Process hearing. CDP is available if you received one of the following notices:

  • Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320
  • Final Notice: Notice of Intent to Levy and Notice of Your Right to a Hearing
  • Notice of Jeopardy Levy and Right of Appeal
  • Notice of Levy on Your State Tax Refund: Notice of Your Right to a Hearing
  • Notice of Levy and Notice of Right to a Hearing with respect to a Disqualified Employment Tax Levy

Upon the taxpayer’s timely written request for a hearing, the collection process will stop, and a CDP hearing will be scheduled within approximately 60 to 90 days. This is crucial as it allows taxpayer time to present the IRS with viable, less intrusive collection alternatives such as an installment agreement or an offer in compromise.

Collection Appeals Program (CAP)

CAP provides taxpayers with an opportunity to have collection actions reviewed outside the Collection Division. CAP is available for the following steps.

  • Before or after the IRS files a Notice of Federal Tax Lien
  • Before or after the IRS levies or seizes your property
  • Termination, or proposed termination, of an installment agreement
  • Rejection of an installment agreement

CAP hearings are generally expected to be held within two (2) business days of receiving the appeal closing the case within five business days. This short time frame allows taxpayers an almost immediate decision on liens, levies, seizures, rejection, or termination of installment agreements and discourages taxpayers from appeals that may be used to delay collection.

CAP is different from Collection Due Process (CDP) in that judicial review of an appeal determination is unavailable. However, the taxpayer does have a right to judicial review of a CDP determination.

Amended Return

If you were assessed additional tax you determined to be incorrect, one option to challenge the correctness of the assessment is to file an amended return. This tool is available if you have not gone through a previous examination and had the opportunity to challenge the correctness on a prior occasion. The IRS considers this a claim for a refund, and if the claim is disallowed, full payment is required before you can seek judicial intervention.
Tax return

Taxpayer Assistance Order

If you have incurred or are about to incur a significant hardship because of how the internal revenue laws are applied to your circumstances, the taxpayer advocate office may issue a Taxpayer Assistance Order (TAO) may be issued by the taxpayer advocate office to delay or suspend stop or speed up IRS action. This tool cannot be used to challenge or dispute the tax liability. Significant hardship includes :

  • An immediate threat of adverse action.
  • A delay of more than 30 days in resolving taxpayer account problems.
  • Substantial costs incurred by a taxpayer if relief is not granted, or
  • Irreparable injury or long-term adverse impact on the taxpayer in the absence of relief.

If you received a tax notice and you can show the basis of which is incorrect or are suffering or about to suffer substantial hardship because of actions by the taxing authorities, call our office today for a free consultation.

Audit Reconsideration

In certain circumstances, the IRS has discretionary authority after an audit to reconsider the merits of the deficiency assessment even after you receive a collection notice. Upon request, the IRS will consider the following grounds for relief:

  • Information that would change assessment was not considered
  • IRS error
  • Liability not entirely determined in prior proceeding or agreement
  • The taxpayer did not receive notice of tax due before the collection function
  • IRS filed a substitute for return before taxpayer filed a delinquent return
  • The taxpayer moved and never received notice of deficiency
  • Taxpayer failed to appear for examination or audit
  • Delinquency is due to unsubstantiated deductions, which can now be substantiated

Innocent Spouse Relief

Filing a joint tax return can provide certain tax advantages; however, with joint returns come joint liabilities, whether during a marriage or after divorce. Generally, you and your spouse are both individually and collectively responsible for paying the total amount of tax, penalties, and interest resulting from an inaccurate joint return.

If your current or former spouse filed an inaccurate tax return, you may be relieved of liability. The IRS provides innocent spouse relief for the inequities of joint liability when the resulting tax can be wholly attributable to one spouse.

Types of relief available:

    • Innocent spouse — there is an understatement of tax because your spouse omitted income or claimed false deductions or credits
    • Allocation — if you are divorced, separated, or no longer living with your spouse

Equitable relief — given all the facts and circumstances, it would not be fair to hold you liable for the tax.

If you received a notice of tax liability that may be attributable to your spouse or former spouse, you might be eligible for relief. Call our office today for a free consultation on your eligibility.

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