Posted on Fri, Mar 30, 2012 @ 12:16 PM
When you have an income tax debt, there are several steps that the IRS can legally take to collect the money you owe. These include:
- Garnishing your wages, which involves seizing a percentage of your paychecks directly from your employer before you receive the check.
- Placing a tax lien on your personal property, such as real estate or vehicles.
- Freezing your bank accounts and taking the funds to apply to your tax debt.
Of these consequences, seizing your bank accounts are typically the most serious.
Notification of an account freeze
The IRS is required to give notice before they take this action. You will receive a final notice before a bank levy is issued. Failure to respond to this notice will result in a levy, at which point you will have a maximum of 21 days before the bank must turn the funds over to the IRS.
Which assets can the IRS claim?
Wage garnishment cannot exceed a certain percentage. However, if the IRS places a freeze on your checking, savings, or other bank account, they can remove all the funds that are in the account at the time of the freeze, up to what is owed. In order to collect further deposits to the account, the IRS would have to initiate the freezing process again.
Retirement funds are also fair game for the IRS, including social security payments and any other form of a pension. In addition, a tax lien placed against your property can allow the IRS to force the sale of real estate or other property, and collect funds from the sale to satisfy your debt.
What to do if a Levy is initiated
When the IRS announces an intention to levy your assets, the most important thing is to NOT ignore the notice. If you do nothing, you will lose your money. However, the good news is that the IRS wants to collect the full amount owed, and is typically willing to work out a payment arrangement.
If you receive notice, it's a good idea to consult with a tax resolution specialist regarding your options. Depending on the amount of taxes you owe, you may be eligible for an installment agreement, an Offer in Compromise or possibly be decalred currently not collectible. A tax resolution firm can help you get the best settlement possible with the IRS, without draining your bank accounts.
If you are facing a Levy and want help from the best, click on the form to the right or call 88-411-5389 (LEVY) and someone from our A+ BBB Rated staff will contact you immediately.
Remember, "YOU WANT A LEVY ON YOUR SIDE, NOT ONE AGAINST YOU"
Posted on Fri, Mar 23, 2012 @ 03:44 PM
What to do if you've been putting it off.
When you miss a filing deadline for your income taxes, it can be tempting to keep putting it off. In fact, many people find themselves in the situation where they're worried about what will happen if they file late, and end up simply not filing—and then skip the next year, and the year after that.
What happens when you build up a few years of unfiled taxes? Unfortunately, if you owe money, the amount will keep growing.
How the IRS assesses late penalties on taxes
There are actually two charges the IRS places on late taxes: penalties and accrued interest.
The interest charged on late taxes is “the federal short-term rate plus 3 percent,” which is accrued daily on the total amount owed. This interest adds up quickly.
Late penalties are also assessed against tax payments. This late charge starts at 0.5%, and increases by 0.5% each month until the maximum penalty of 25% is reached—where it remains until the tax debt is completely paid off.
Beyond late penalties: What happens next?
In some cases, if you have unfiled taxes and you owe money, the IRS may file a substitute return (SFR) for you. The substitute return will be based solely on your income as reported to the IRS, and won't include any expense deductions or exemptions to which you’re entitled. Typically, a substitute return overstates your actual tax liability.
When a substitute return is filed, the IRS begins a collection process. You'll receive a notice that you owe back taxes; if you don't pay the amount, the IRS may take action up to and including garnishing your wages, levying or freezing your bank account, or filing a federal tax lien against your real estate or other property.
Steps you should take
If you have unfiled tax returns, it's important to take action sooner rather than later. You should file past-due returns right away, regardless of whether you can make full payment along with the return.
The purpose of the IRS is to collect money that is owed to the federal government. To that end, they offer several options to taxpayers who are unable to pay the full amount owed. These include:
An Offer in Compromise is a settlement to pay less than what you owe. This offer is not available to everyone—qualification for an Offer in Compromise depends on your financial circumstances.
The best option for those with multiple years of unfiled taxes is to work with a reputable tax resolution firm. Tax resolution specialists can often arrange for better payment installment plans, and can file for an OiC for you, if you qualify.
Whatever method you choose, you should address your unfiled taxes right away—the longer you wait, the more penalties add up on the amount you owe.
Posted on Mon, Mar 19, 2012 @ 11:55 AM
Back in the beginning of February it was reported that Tax Masters, one of the most well-known Tax Resolution Companies, was on the verge of closing its doors but at the last minute, a white knight came in and gave them $25 million in financing to keep them afloat. Last week it was blogged about that the $25 million in financing was bogus and Tax Masters has fired its entire staff and is in the process of closing their doors. Today the word has come out that Tax Masters has filed for Bankruptcy.
The demise of several big name Tax Resolution Companies (Roni Deutch, JK Harris and now Tax Masters) from our perspective, can only be viewed as a positive since these companies have put into question the legitamacy of our industry and been a cancer to the honest and welll-respected tax resolution firms.
We at Levy and Associates take pride in our excellent customer service record which is evident by our continued A+ Rating with the Better Business Bureau. If you have been blindsided by the closings of any of these Tax Resolution Firms and want to speak to someone from our A+ Staff, please call us at 888-411-5389 (LEVY) or fill out the form to the right. Just mention that you saw our blog and you will not only get a free consultation along with excellent service, but we will work in a special discount to help cover the losses that you may have suffered at the hands of these closed companies.
Remember, "You want a Levy on your side not one against you!"
Posted on Tue, Mar 13, 2012 @ 10:24 AM
A taxpayer in Michigan retained the Levy office to assist with a payroll tax problem for their closed corporation. The taxpayer failed to mention that he had a personal income tax debt as well.
Last Friday the taxpayer called in a panic indicating that his personal bank account had been levied. Over $2400 had been removed from his account. The taxpayer had regular monthly bills to pay - such as their rent and utilities. Within one business day, the tax attorney at the Levy office was able to secure a release of the bank levy. The client couldn't been more relieved.
If you owe back taxes (personal or payroll) and or have not filed your tax returns, call the firm that truly cares about its clients: Levy & Associates Inc.
Remember: Don't fear a Levy - HIRE a Levy. Call 888 411 LEVY now for a free consultation or fill out the form to the right and someone from our A+ BBB Rated staff will call you shortly.