10 Frequently Asked IRS Tax Debt Relief Questions
However, it’s not always clear when you need someone like Keith on your side.
So how do you decide? Read our Tax Relief FAQ.
Your Best Defense Against A Bank Levy
A Collection Due Process Hearing, also known as a CDP hearing, may be your last best chance to resolve a tax controversy and stop a bank levy with the IRS short of tax litigation.
The IRS does not allow taxpayers to request these hearings for “frivolous” reasons. That includes refusing to pay tax on religious or moral grounds.
What Are Some Legitimate Reasons to Request a CDP Hearing?
- You want to seek payment alternatives such as a payment plan or an offer in compromise. To get these plans accepted, you must file all delinquent returns.
- You have a terminal illness and overwhelming medical bills.
- You can’t pay because you’re living on Social Security or unemployment.
- You can’t afford to pay with your income—the IRS has strict guidelines on this type of hardship arrangement.
Generally, the IRS must issue a Notice of Intent to Levy and Right to Request a Hearing before it sends a levy. Requesting a Collection Due Process Hearing
Complete Form 12153 Request for a Collection Due Process Hearing, and send it to the IRS at the address shown on the lien or levy notice within 30 days.
The taxpayer should check the IRS actions that he disagrees with and explain why he disagrees with such actions.
If the taxpayer receives both a lien and a bank levy notice, the taxpayer may appeal both actions.
The taxpayer must identify all reasons for disagreement, and may raise the following issues relating to the unpaid tax:
a. Appropriateness of collection actions;
c. Appropriate spousal defenses; and
d. The existence or amount of the tax, but only if the taxpayer did not receive a notice of deficiency or did not otherwise have an opportunity to dispute the tax liability.
A federal lien is a public record on your property that says you owe the IRS money.
It tells creditors that the IRS has a claim on all your property, including property you buy after the lien is filed.
If a lien is attached to your property, you cannot sell that property without a clear title.
Another frequently asked questions is about filing past tax returns.
Filing your return is the first step in the IRS tax debt relief settlement process.
Taxpayers must be in compliance in order to negotiate IRS tax debt relief.
After your past due tax returns are processed, I will evaluate the possible solutions so you can make a fresh start!
The easiest way to avoid an audit is to completely and accurately fill out your tax return. This includes double checking your math and making sure you used all the correct forms.
Because the IRS flags items that look suspicious, you may want to consider attaching an explanation if you think a deduction or credit you are claiming looks too large.
You do not have to be liable for those taxes. The IRS offers Innocent Spouse relief to protect you.
This is one of the most frequently asked questions about IRS tax relief.
Getting an Offer in Compromise accepted is the closest one can get to have their tax debt forgiven or get IRS tax debt relief.
Although it is not easily obtained by anyone, taxpayers who get an Offer in Compromise approved can settle their debts for a significantly lower amount. The settlement amount is based on your income, expenses, and available assets.
As a tax professional, I use an interactive analytics software by Canopy that uses your responses to recommend the best course of actions to review.
We will go over the recommendations together and discuss options, outcomes, and other measures to qualify you for additional relief.
The IRS uses formulas rather than negotiations to reach payment plan or Offer In Compromise figures.
Negotiations with the IRS only tend to take place during audits, tax court, or Offer In Compromise appeals.
Everything else is done by way of formula.
In recent years, the Internal Revenue Service (IRS) has been more amenable to working out late tax payments, usually by installment agreements.
But you have to address the problem up front, be proactive in how you negotiate, and not keep Uncle Sam waiting too long for his money.
An IRS tax levy takes immediate actions against you. It requires the person receiving the levy to turn over all funds due you the IRS.
This could be the money in your bank account, the paycheck from your employer, or your accounts receivable if you are in business.
A federal tax lien is used as security for amounts owed to the IRS for tax liability.
It says that the IRS has the right to seize the property before other creditors.
According to tax law, if the IRS has a levy against your property, they can actually take your property to satisfy that debt.