What is an IRS Wage Garnishment?

An IRS wage garnishment is one of the more powerful and perhaps, most preferred method of collecting tax debts. The Internal Revenue Service or IRS has the authority to encumber any property that may lawfully be applied as payment for delinquent back taxes owed by the taxpayer. Understanding the amount to be deducted in the taxpayer’s paycheck in an IRS wage garnishment can be very complicated. This is why many taxpayers will seek the help of a qualified tax attorney to lift the wage levy.

Defining “wages” under the IRS wage garnishment

The IRS wage garnishment can affect all wages, including incentives, bonuses and commissions. In addition, the actual computation of the amount to be levied depends, in part, on the marital status of the taxpayer. The amount to be deducted from salary of a taxpayer who is married/with dependents should not exceed 50% of their net income and 60% if single. Also, for taxpayers with income of 30 times the federal minimum wage, only 25% of their disposable income of a wage will be levied.

Ways to avoid an IRS wage garnishment

The final notice of demand for payment sent by the IRS will list the options a taxpayer has to avoid or stop the wage levy. The first and most obvious one is to pay the back taxes owed in full. But for most taxpayers in this situation this is simply impossible. The agency may also offer an IRS installment agreement in which the taxpayer will agree to pay the delinquent tax debt on a monthly basis until the amount is fully paid.

Another way of negating the effects is by proving that the wage levy causes financial hardship to the taxpayer. It is important to know that this will not remove the IRS wage garnishment; it will only temporarily stop collection and will resume once the taxpayer’s hardship is overcome or they have enough money to pay back the taxes owed to the IRS.

Other options to avoid an IRS wage garnishment

The Offer in Compromise or OIC is another option. This is available only if the IRS is satisfied that the taxpayer cannot pay back taxes and that the tax debt is uncollectible or that there is a doubt that the amount is actually owed by the taxpayer.

Caution: The agency will normally first send a series of notices advising taxpayers that they owe the IRS delinquent back taxes. And, the IRS will typically only levy wages if there are no responses to their notices by the taxpayer—so it’s important to take respond and deal with the problem early. Furthermore, the IRS will send notices to the taxpayers last known address of record. Not receiving the notice will not protect or exempt you from having your wages levied or otherwise avoid the IRS wage garnishment.

What is an IRS Bank Levy?

One of the ways the Internal Revenue Service can collect tax debts is through an IRS bank levy. This is but one of the types of collection methods the IRS uses in order to nudge taxpayers back into compliance. The IRS is very aggressive in hunting down taxpayers with back tax debts and the agency has a variety of strong-arm methods to make them pay.

An IRS bank levy is similar to other levies. The IRS will usually fist try sending a number of notices to the taxpayer about the back taxes they owe to the federal government. If the taxpayer takes no action the IRS may put a tax lien to the taxpayer’s properties as security that the tax debt will be paid. The tax lien will be followed by a levy of personal property. An IRS bank levy falls under this personal property category.

Once the IRS issues a final notice of demand to pay the debts incurred, the taxpayer has thirty days to pay or contact the agency for payment arrangements. But if there is no response from the taxpayer, this is a red flag for the IRS to begin looking to the taxpayer’s personal property such as their wages, investments, bank accounts, real estate properties and the like. An IRS bank levy is the next preferred collection strategy used by the IRS after the wage levy because it is very easy to collect through the taxpayer’s bank account. An IRS bank levy does not require a court order.

How The IRS Bank Levy Works

If the IRS manages to identify the taxpayer’s bank account, the agency will send a notice to the bank stating that the account holder must pay back taxes owed to the federal government. The bank will freeze the account or accounts for 21 days and if there are no responses from the taxpayer, the bank will send the frozen funds to the IRS up to the amount that the taxpayer owes to the government.

However, this can only be done once, so if the account holder or taxpayer deposits some cash to the account after the IRS bank levy, the new balance will not be sent to the IRS. But, the IRS may issue another notice to freeze the account and they can also monitor the transactions in the bank accounts of the taxpayers so they will know if there are additional funds to be extracted from the taxpayer.

Lifting An IRS Bank Levy

In order for the IRS bank levy to be lifted, the taxpayer should pay the amount in full. If this is not possible, the taxpayer can try to work out a tax settlement with the IRS. An IRS installment agreement can be set up in order for the tax debts to be more conveniently paid. The taxpayer will send monthly payments to the IRS for a period of up to three years. The monthly payment amount and exact term will be determined by the IRS depending on the capability of the taxpayer.

Another option that would lift the IRS bank levy is to apply for an offer in compromise or tax settlement in which the taxpayer must prove that the delinquent taxes cannot be paid due to financial hardship and/or that the tax debt is incorrect. Needless to say, in order to avoid being hunted down and facing an IRS bank levy in the first place, taxpayers should to pay their taxes on time if at all possible.

Tax Settlement: Getting Help From The IRS

The IRS has programs that offer tax settlement to taxpayers who want to clear their tax liability. These programs can be availed of by those who have a hard time paying their tax debts as long as the IRS can see that they want to settle their delinquent taxes. There are different types of options that taxpayers can choose from. In most cases there should a convenient program applicable to their situation. The IRS wants taxpayers to pay their IRS back taxes in full but they are often willing to make an exception for those who are economically distressed.

Types of Tax Settlement Available

One tax settlement that you can avail of is an offer in compromise. This is usually the most advantageous settlement. It can be difficult to qualify for and you have to commit to pay a certain amount upfront to the IRS in order to be considered. You must also get the IRS to agree to the amount you will “offer” pay to settle your delinquent taxes.  This can be quite difficult at times because you have to demonstrate that you cannot otherwise pay the full amount AND that you can afford the proposed tax settlement.

The IRS installment agreement is a form of tax settlement wherein you can pay your tax debt through monthly installments provided you pay the whole amount within 3 years.  If your debt does not exceed $25,000, you can generally easily avail of this. But if you owe more than that you should seek the help of a tax attorney or other tax professional to guide you. There is also the partial payment installment agreement wherein the taxpayer agrees to pay back taxes to the IRS incurred way back.  For those who cannot remit the monthly payment stipulated in the installment agreement program, they may be able to avail themselves of the partial payment tax settlement installment agreement.

The penalty abatement on the other hand is a tax settlement that gives you the chance to waive some if not all of your tax penalties. However, you are still required to pay the whole amount of the tax you owe. You can only qualify for this if you would be able to justify your reason why you were not able to pay your dues. Your reasons must be serious, for example, hospitalization or death of you or any family member, bankruptcy in your business, if you were a victim of a calamity, accident or civil disturbance, or if you were wrongly advised by IRS personnel causing you to not pay or to underpay your taxes. But you have to prove and show evidence to support your claim.

Find Out If You Qualify for A Tax Settlement

If you are able to prove that you will pay your taxes once your financial problems are solved, you can apply for the non-collectible status or financial hardship agreement. If you qualify for any of these, apply immediately. You have to remember that the IRS will always diligently pursue their job of collecting taxes and they will not let anything or anyone stand in their way. But, they also are willing to work with people in financial difficulties. That is why they offer tax settlement programs and why you should get help if you need it.

IRS Help For Those Who Can’t Pay Back Taxes

There are a lot of people who can’t pay back taxes to the IRS. If you think you are the only one who cannot remit payments, think again because it is estimated that more than ten thousand people owe taxes to the IRS every year. As your unpaid taxes pile up annually, the interest and penalties also increase. The more you run away from this problem, the more money you owe the government, and the more the IRS will have grounds to run after you. But did you know that if you coordinate with the IRS to solve your unpaid taxes, they will gladly help you out and find a way for you to pay your tax debts?

The IRS is also concerned about the citizens’ welfare, and they do have solutions to offer people who can’t pay back taxes. One advice the IRS gives to their clients is to pay the whole tax debt at one time. This will avoid additional delays and interests caused by procrastination. If you have a huge tax debt, one strategy is for you to apply for a home equity loan for you to pay the whole amount. The monthly amortization of this will be a lot lower than the extra fines and penalties incurred by the debt.

Professional Help When You Cant Pay Back Taxes

When you (and your tax attorney) confront the IRS and tell them your dilemma, they may advise an IRS installment agreement for you to make monthly installments with them instead. They actually have a program wherein taxpayers who can’t pay back taxes divide their tax debt into equal monthly installments for a period of 3 years or less. The IRS would settle for this rather than not being able to receive remuneration at all.  If you can also prove to them that you do not have enough means to pay your tax debt now and in the future, they will allow you to give a reduced amount instead –known as an offer in compromise. You can also file for an extension to pay where you commit to give the needed amount after such time when you can raise enough money.

Can’t Pay Back Taxes - Thinking Out-Of-The-Box

This may sound extreme but while may think you do not have money at all and can’t pay back taxes you owe the IRS but if you go through your house there are some things you no longer use that you can sell. Try checking if there is a neighborhood garage in your area and see if you can participate. If there isn’t any, organize your own because people love going through garage sales and getting cheap stuff. You can also advertise on the internet things that you would like to sell because there are websites that do this kind of business. Without you knowing it, you may even make more money needed to pay your taxes.

The IRS is there to help taxpayers come up with solutions in addressing unpaid taxes. What is important to them is that the taxpayer is responsible enough to face them and look for answers to the problem. If you can’t pay back taxes, don’t run away from the problem; rather, speak with a tax professional at Tax Slashers, the people who will help you solve the problem.

Five Tips For Avoiding An IRS Tax Audit

Some taxpayers inadvertently raise a red flag making them more likely to be the subject of an IRS tax audit. In particular, home businesses, small business owners and other self-employed taxpayers seem to be more likely to face an IRS tax audit. But the risk of being audited can be reduced with proper planning. Here’s 5 tips that may help:

1.      File your income tax returns on time even if you cannot pay the full amount: While interest and penalties may accrue, not filing your tax returns will get you in hot water and may even lead to criminal charges. If you have not been filing your tax returns promptly you should consult with a tax attorney before the problem gets worse.

2.      Professional Tax Preparation vs. Reliable Tax Preparation Software: We highly recommend that you have your taxes prepared by a competent tax professional. The additional cost is usually well worth it. However, if you choose to use tax preparation software, try to use good quality software such as TurboTax or H&R Block. This software will analyze your return for problems that could trigger an IRS tax audit before you file. Not only that, they will also offer recommendations that may avoid an IRS tax audit altogether.

Whether you choose a professional tax preparer or software you should be aware that some tax audits by the IRS are randomly selected. No mater how careful you are, the risk of an IRS tax audit cannot be eliminated completely. If you are audited and you’ve done things right you have little or nothing to fear. Either way, consult with your tax attorney before the audit.

3.      Be sure that you report all income including child support, alimony and cash: Be aware that court ordered child support and alimony payments are traceable by the social security numbers of payers and recipients so while you may think you’re getting away with reporting taxable income, you’ll eventually face an IRS tax audit and will get caught.

4.      Report all 1099 income: Here again it’s important to realize that the IRS can easily trace 1099 income from both the payer and the recipient’s Social Security and Tax ID numbers. One of the most certain ways to be called for an IRS tax audit is to foolishly try to hide 1099 income.

5.      Filing Your Tax Return With The Crowd: While the best way you avoid a tax audit is to properly prepare and timely file your tax returns, the fact is that the IRS gets kind of overwhelmed when the masses file their tax returns on April 15^th. There seems to be a consensus that filing with the crowd will decrease your chances of facing an IRS tax audit. Perhaps this is true, but the best way to avoid an audit is to do things right from the start.

IRS Tax Audit? Get Help!

If you’re facing an IRS tax audit please contact one of our tax attorneys today to see if we can help.

What is the alternative minimum tax?

The alternative minimum tax, frequently referred to as the AMT was first introduced over 40 years ago. The authors of the alternative minimum tax designed is so the  AMT rates would target a certain class of taxpayers that were eligible for tax  benefits such that they ended up owing very little or no tax. The alternative minimum tax scheme has been criticized over the years and as a result has undergone many changes, for instance in 1980 and the year 1990, but after nearly a half a century it remains part of our tax system.

Currently, the AMT may be considered to be an “extra” tax that some taxpayers have to pay beyond their regular income tax obligation. Although a number of changes and modification have been made over the years, the original purpose of the alternative minimum tax remains today. That is, to ensure that certain high income individuals and households could not take advantage of special tax benefits such that they to avoid paying what the IRS sees as their fair tax obligation.

But the broad application of the AMT can have unfair consequences (perhaps too many). For example, high income individuals and households who do not require special tax advantages may still be exposed to the alternative minimum tax.

In theory, the AMT is supposed to fix the minimum tax that a person at a certain income levels would have to pay. That is to say that it should work out that that a taxpayer who already pays the minimum would then not have to pay AMT. If, on the other hand, their regular tax amount falls below the minimum they would be obliged to pay the difference between the tax rate and the AMT.

One problem with the AMT tax scheme is that it can be confusing and complicated to determine the actual tax owed. For example, in some cases a taxpayer calculating the alternative minimum tax may have to factor in a large item on their tax return such as the interest they claimed on a second mortgage or, perhaps, for a deduction taken for state income taxes.

Generally speaking, taxpayers of modest means should not be exposed to the AMT but changes in the law over the years have created several bizarre circumstances where this can occur. There have been demands for more changes in the alternative minimum tax to avoid this unfair outcome but, but as of yet this has not occurred in any meaningful way.

To determine whether you will be exposed to the alternative minimum tax you should have is to have a tax professional prepare your taxes, by completing Form 6251.

Why Risk An IRS Criminal Investigation?

…A Tax Attorney Can Help

Taxpayers facing an audit may unwittingly trigger an IRS criminal investigation. A taxpayer who is not represented by a tax attorney or other qualified tax representative may innocently provide the IRS auditor with otherwise unnecessary records and information that could raise suspicion sufficient to start an investigation.

Furthermore, your innocent ramlings and zeal to be cooperative may acctually be used against you.

We Offer a Free Consultation

We can handle most U.S. Tax Cases
No matter where you live or work

Call us Today at
1-888-839-5419

Or Click Here To Email Your Tax Audit Questions

There is an excellent article by CPA, Walter Wotman the underscores in detail the troubles unrepresented taxpayers sometimes face during the tax audit process.  We think it well worth  reading…

Protection With Tax Representation

By Walter Wotman | December 12, 2010

Your tax representative should know that the IRS agent conducting an audit or tax filing review is obligated by law to provide the information they receive in a criminal investigation without notifying the taxpayer or representative. Any information they are given may be passed over even if they are directly asked whether the information will be used in a criminal investigation. In fact -the IRS agent is under no obligation to inform the taxpayer or their representative that the information will be used in a criminal investigation. They are only required by law to let them know that it can be used by criminal investigators and that a criminal investigation is possible. But if there is a criminal investigation already in action they do not have to say anything about it even if asked directly. You should know that the laws protecting individuals who provide information in a civil inquiry is not protected from being used in a criminal investigation.

Taking precautions to protect clients is ultimately more important than attempting to predict how the courts may view the IRS’s new policies. If a client is facing an audit, or an IRS collection action, the tax professional or attorney can successfully resolve the matter without unknowingly sacrificing the client’s Constitutional rights by taking every effort to determine if, in fact, a criminal investigation may be lurking in the shadows. There are certain activities by civil agents that can be indicative of a simultaneous criminal investigation:

(1) the agent shows an undue amount of interest in a sensitive transaction;

(2) the agent requests copies of voluminous documents rather than merely asking to review the documents or review summaries; and,

(3) the agent poses questions that focus on the intent of the taxpayer, as opposed to the mechanics of a particular transaction.

What’s difficult is knowing what or when to ask the question. A tax specialist can’t just ask if his or her client is under criminal investigation because that might be akin to asking a police officer when being questioned for a traffic ticket if they are they interested in what is in the trunk of their car. The question would cause the officer to check the trunk. Similarly, if an IRS agent is asked if their client is under criminal investigation it could very likely cause the agent to increase the scrutiny the client is being put under. However, if they don’t ask – they could very likely be providing information that could cause their client to go to jail.

To minimize the chance of drawing undue scrutiny, the professional should ask the question but do it in a manner that is less likely to raise suspicion. Every CPA, attorney, and enrolled agent has a laundry list of questions that he or she asks at the beginning of every audit or collection inquiry.

The list should include such questions as: are you more interested in income or deductions? What are your primary concerns? What is the specific cause for this audit or review?

By having a list of questions posing an additional question about the potential for a criminal investigation makes it possible to receive important information for their client without causing undue scrutiny from the IRS agent. The best possible manner in which to ask the question about a possible criminal investigation is:

“Look, I have to ask this question, and I ask it in every audit whether I think it is necessary or not. In light of the new IRS policies allowing agents to conduct simultaneously civil and criminal investigations of the same taxpayer, it is important for my client to know whether or not he is also facing a criminal investigation.”

In response to the question that there is no parallel criminal investigation, the professional should immediately prepare a memorandum for the file that documents that the question was asked and the agent’s response was no. This way if the agent said no but it turns out the client was also under criminal investigation, the basis has been established to suppress any evidence received by the IRS agent . If the IRS agent responds in a way that is suggested in the recommended response as set forth in the IRS policy – “I am conducting a civil investigation, but the information I receive can be shared with criminal investigators”- then, it is almost certain that the taxpayer is also being investigated criminally and the representative should take all steps needed to protect the client and their Constitutional right to protect them from criminal prosecution.

In conclusion, if, “parallel” investigations are used sparingly and only in the most deserving circumstances and if the policies prohibiting criminal agents from directing the activities of civil agents are scrupulously followed, such investigations may withstand scrutiny. It is hard to imagine, however, that IRS agents, now explicitly authorized to conduct parallel criminal and civil investigations, will not fully avail themselves of that authority whenever the opportunity arises. The result of such new IRS policies that hide parallel investigations will make it difficult to receive compliance with the federal tax system, and to breed contempt. The answers, perhaps, lie with the IRS. If parallel investigations are widely and routinely used against unknowing and unwitting taxpayers, and criminal investigators begin relying on civil agents to gather evidence for criminal prosecutions, what might happen is that in cases where such actions are justified the courts will be more likely to offer opinions suppressing evidence. Public clamor over IRS abuses could force Congress to impose restrictions on the Service’s ability to solicit information voluntarily from taxpayers, which would create a greater and more costly burden on the Country to collect taxes. So it must be asked whether a tax system based on self-assessment and voluntary compliance can remain viable if the individuals charged with maintaining that system are free to hide information from and even mislead taxpayers?

IRS Policy can be a problem for taxpayers – having a tax representative is very important for your protection. We offer PREPAID ANNUAL TAX REPRESENTATION BY A CPA so don’t wait until you have a problem check it out today!

Just as CPA Wotman says, A simple tax audit can lead to and IRS criminal  investigation. Having a tax attorney or other tax representative guide and protect youis  a phone call away at 1-888-839-5419

Owe Delinquent Taxes?  Learn 5 Ways a Tax Lawyer Can Help

If you owe unpaid delinquent taxes you may be wondering about the best way reduce your tax bill and to pay them off, etc. A tax lawyer can guide you through the process.

Here are five ways a tax lawyer can help with tax problems:

1) You can actually save money and avoid overpaying your delinquent taxes when you use a tax lawyer. Tax attorneys know which deductions you are entitled and they know legal strategies that may significantly reduce your delinquent taxes. In addition, the legal fees paid to your tax lawyer are generally tax deductable.

2) A tax lawyer will meet or talk to the IRS on your behalf. You can stop worrying about phone calls and dunning letters from the IRS. Once you are represented, the only time the IRS can make you appear and provide information is if they summons you. This is not very likely to happen.

3) Tax lawyers are familiar with the tax code. Sure, you can sift through the tax code on your own, but you’ll likely need to spend at least several hours locating the applicable tax law. I’m sure you’ve heard that the U.S. tax code is extremely complex—this is true. A tax lawyer knows the law and, more importantly, know how to apply the law to your best advantage to help with your tax problem.

4) If you owe delinquent taxes and/or are being hounded or audited by the IRS, your, tax attorney will represent you and guide you through the process to provide only information that is required by the IRS. Taxpayers that are not represented may inadvertently offer unnecessary information that may end up worsening their case.

5) If you owe delinquent taxes, a tax attorney may be able to work out a modification in your favor to pay less than you owe and/or to eliminate or reduce IRS penalties and stop the accruing interest.

We Offer a Free Consultation

We can handle most U.S. Tax Cases
No matter where you live or work

Call us Today at
1-888-984-3357

Or Click Here To Email Your Delinquent Tax Questions

Remember, Your Delinquent Taxes Problem Will Not Go Away By Itself….