Some answers to more frequently asked questions (FAQs) appear below:

What Happens When I Just Don’t File?

Many people don’t file their taxes simply because they cannot pay their taxes. One important thing to know is that the penalties for not filing a tax return grow much faster than those penalties for not paying. Even if you are owed money on your return and you have not filed, the IRS can deny you a refund on those amounts if enough time passes.

What If You Can’t Pay What I Owe?

If you can’t pay the taxes you owe there are several options for you to consider. The first option is to try to find the money from alternative sources such as your savings, credit cards, equity in your home, others you can borrow from, etc. If you just need a little more time, you can also request short-term relief thereby allowing you additional time. You can also consider an installment arrangement where you can pay your taxes over time. In certain cases, you can even settle your tax debt for an amount less than you owe if you qualify.

What is Currently Not Collectible Mean?

An installment agreement is a payment agreement for the payment of taxes with the IRS. Installment agreements are generally structured to allow the IRS to collect the maximum reasonable amount in the shortest period of time necessary to pay your tax obligations

Where you are unable to pay your taxes and collection activity would create an economic hardship, the IRS will consider placing your account in a currently-not-collectible status. To the extent your income does not exceed reasonably allowable expenses for food, clothing, housing, medical, insurance and certain other expenses, the IRS may stop its collection activity on your account and reevaluate the collection potential at some future date

What is an Installment Agreement?

An installment agreement is a payment agreement for the payment of taxes with the IRS. Installment agreements are generally structured to allow the IRS to collect the maximum reasonable amount in the shortest period of time necessary to pay your tax obligations.

What is a Federal Tax Lien?

A federal tax line is where the IRS attaches a claim to proceeds that may be derived in the sale or liquidation of certain assets you may hold necessary to secure its position in the collection of taxes you may owe.

What About Tax Penalties?

There are a multitude of tax penalties that may apply in many situations. Perhaps the most common tax penalties assessed are for the failure to comply with the timely filing of tax returns and the failure to pay tax obligations as they come due. Generally, there are no tax penalties assessed for income tax returns where there are no taxes due. The most common failure-to-file penalty is 5% for each month the tax return is late up to a maximum of 25%. The failure-to-pay penalty is calculated at .5% for each month the tax is not paid in full.

What is an Offer in Compromise?

An offer-in-compromise is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax debt for less than the full amount owed. In most cases, the IRS will not accept an offer-in-compromise unless the amount offered is equal to, or greater than, the reasonable collection potential; or the taxpayer’s ability to pay combined with the value that can be realized upon the liquidation or sale of the taxpayer’s assets.

Can I Really Settle Back Taxes for Less Than What I Owe?

You may be able to settle your tax debt for less than the full amount of what you owe if you meet certain qualifications. The most common settlement agreement is referred to an offer-in-compromise which is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax debt for less than the full amount owed. In other cases, a series of payments may never amount to what a taxpayer owes, but may be justifiably the largest amount a taxpayer can pay throughout the collection period allowed by law.

Can’t I Just File Bankruptcy?

In some cases you may be able to obtain relief from taxes owed through bankruptcy. Using this strategy you must be able to show that the taxes you owe are not recent or are as a result of recently filed tax returns.

I Want to Pay My Taxes But Just Need More Time?

Often you can request a short-term payment extension from the IRS for the payment of taxes. Short-term extensions generally range between 10 and 120 days during which time you are expected to fulfill your payment obligations. Where taxpayers can pay their taxes in a period to exceed the short-term extension, installment agreements are the most common alternative.

How Does the IRS Compute Penalties?

There are over one-hundred and forty tax penalties that the IRS can charge the taxpayer. The most common penalties are the Failure to File Penalty, Late Payment Penalty, the Penalty for Underpaying Estimated Taxes, the Substantial Understatement Penalty, and the Penalty for Negligence or Intentional Disregard. Perhaps the most common tax penalties assessed are for the failure to comply with the timely filing of tax returns and the failure to pay tax obligations as they come due. Generally, there are no tax penalties assessed for income tax returns where there are no taxes due. The most common failure-to-file penalty is 5% for each month the tax return is late up to a maximum of 25%. The failure-to-pay penalty is calculated at .5% for each month the tax is not paid in full.

What Should a Business Owner Do Where You Owe Employment Taxes?

Unpaid employment taxes are perhaps the highest priority of all tax obligations with the IRS. Payroll taxes are considered a trust tax in which the employer ,or other responsible persons , may be assessed personal obligations on the failure to collect and remit these taxes to the IRS.

How Can I Owe Employment Taxes for Independent Contractors?

You sure can! Claiming your workers are independent contractors will not necessarily prevent the IRS from assessing payroll taxes and penalties where the worker classification is incorrect. This is a hot topic with the IRS of which employers can expect to see an increase in audits and reclassifications going forward.

What are the Most Common IRS Red Flags?

Ever wonder why some tax returns are audited by the IRS while others are simply ignored? The IRS audits only a small percentage (about 1%) of all individual tax returns annually. Perhaps the greatest likelihood that taxpayers receive a letter from the IRS is because of mathematical mistakes they make on their tax returns. A second popular error is the failure to report and appropriately match items of income that have been reported to the IRS by others such as wages, self-employment earnings, stock sales, interest, dividends, etc. Finally, the overstatement of deductions relative to the income earned should be carefully scrutinized prior to filing.

How Much Does Your Services Cost?

Probably a lot less than you think. Certainly much less than the unfavorable taxes and penalties you could face without professional representation. We’re not the cheapest, and certainly not the most expensive. Our professional services are priced competitively across all markets. Most importantly, we work for you and will work diligently to represent your taxpayer rights at all costs. Call us to find out more!

Where Can I Get Free Help?

In certain cases, lower income taxpayers can receive free assistance from the IRS. This is particularly useful in those cases where the taxpayer has little or no assets or income and simple tax problems to solve. The IRS also provides free assistance through the Taxpayer Advocate Office if you qualify.

What is An Intent To Levy Notice Really Mean?

Receiving an Intent to Levy Notice from the IRS most probably means you can no longer procrastinate. In all likelihood, you’ve been sent various notices before and your time to react has just run out. Don’t respond quickly and you’ll probably find that if you have any assets the IRS can go after, they probably will.

What About Off Shore Bank Accounts?

Strategists within the IRS have been attacking US taxpayers with off-shore accounts with greater frequency than ever before. Banks in foreign countries no longer keep confidential the identity of their clients like before. Fail to report your foreign holdings and get caught, be prepared not only to pay any taxes you may have under reported, but huge penalties and interest. Ignorance of the law is no excuse.