Articles Posted in Tax Debt

How Can I Stop IRS Collection Actions?
The IRS is a fearsome creditor that can gain access to many of your assets to satisfy your tax debt. Unlike other creditors it doesn’t need to bring a lawsuit to go after you’re the bulk of your assets. The IRS has the ability to use any of the following collection actions against you:

  • Serve a levy on your bank account
  • Serve a levy on your wages

How To Apply for Currently Not Collectible Status
If you are unable to pay your tax debt, you can request that the IRS report your account as currently not collectible (CNC). This will temporarily delay all collection activities by the IRS.

Applying For Currently Not Collectible Status

The most common reason the IRS determines that an account is currently not collectible is due to economic hardship. You will often be required to submit a Collection Information Statement when applying for CNC status. This statement lists all of your assets, income, and expenses. The IRS will not take your word for it if you claim you have a financial hardship; they will make their own determination based on your financial information.

Do I Qualify for First Time Tax Penalty Abatement?
Many taxpayers are unaware that they may be eligible for relief from tax penalties under the IRS First Time Penalty Abatement policy. The penalty abatement is available for penalties due to a failure to file, failure to pay taxes, or a failure to deposit taxes.

Requirements for First Time Penalty Abatement

To qualify for First Time Penalty Abatement, you must meet the following requirements:

How to Negotiate an Installment Plan With The IRS
An IRS installment plan is an agreement to pay your tax debt back over time in monthly payments. When you owe a tax debt to the IRS, they have a number of ways of collecting from you, including levying your bank account or wages, seizing your state tax refund, or seizing your home and selling it at an auction. An installment agreement is one strategy that can be used to halt these collection activities.

Before you consider negotiating an installment plan, you should be aware that there are other options that may be able to reduce your tax debt. If you are unable to pay back your tax debt, you may qualify for an Offer in Compromise. You may also consider using a tax bankruptcy, obtaining innocent spouse relief, or disputing the amounts you owe to the IRS.

All of these strategies can be used to effectively wipe out some or all of your tax debt, and they can also be combined with installment agreements in some cases. Consult with a tax attorney before you commit to a monthly payment plan with the IRS.

How to Get California Income Tax Relief
California tax problems can come as a result of an IRS tax audit, if the IRS sends the result to the California Franchise Tax Board (FTB). The FTB can also initiate its own audit, or you can simply find yourself in a difficult financial situation and be unable to pay your California income tax debt.

The FTB offers a number of ways to get tax relief. If you have a complex tax situation that requires professional assistance, talk to a tax attorney before you agree to any tax relief programs.

Installment Agreements

Can You Be Liable for Your Spouse’s Tax Debt
Married taxpayers often choose to file joint tax returns because of the higher standard deduction amounts, marginal tax rates thresholds, and other benefits. One aspect of joint filing that taxpayers are sometimes unaware of is that both taxpayers are jointly and severally liable for the taxes due, as well as any penalties or interest that are imposed by the IRS.

Joint and Several Liability for Tax Debt

Joint and several liability means that the IRS can go after either taxpayer (or both) for the full amount of the tax debt. Even if you later divorce, the IRS can go after you for tax debt from previous tax years when you filed a joint return.

When to Work With a Tax Litigation Lawyer as Well as a Bankruptcy Lawyer
If you have a large amount of tax debt, it is possible that you also have other types of debt that are causing financial difficulties. You may be considering bankruptcy if you have a combination of tax debt, secured debt, and unsecured debt. In this case, you might be unsure whether to seek advice from an expert tax litigation lawyer or a bankruptcy lawyer.

When to Talk to a Tax Litigation Lawyer

There are certain tax issues that require assistance from a tax lawyer, regardless of whatever other financial problems you are experiencing. If you have any of the following issues, you should contact a tax attorney:

Can You Request the IRS Waive Penalties Based on Medical Hardship
The IRS may offer penalty relief for taxpayers who can show a reasonable cause for failing to file tax returns or pay taxes. IRS penalties can be waived in certain cases, but the IRS will examine all of the facts and circumstances to determine if a reasonable cause exists in your particular case.

A typical situation that the IRS will consider a sound reason for failing to file or pay taxes is death, serious illness, incapacitation, or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family. If you owe a substantial amount of IRS penalties, you may want to consult with a tax attorney.

Facts Need to Establish Reasonable Cause Due to Medical Hardship

Why You Should Consider an "Offer in Compromise" to the IRS
An Offer in Compromise (OIC) is a program that allows taxpayers to  settle their tax debt for a lump sum which is less than the total amount owed. The IRS will look at your ability to pay, income, expenses, and assets to determine how much they are likely to recover from you. If the IRS is convinced that you are offering them more than they can reasonably expect to recover from you, they may accept your OIC to settle your tax debt.

Why the IRS Accepts OICs

There are three reasons that they IRS will consider accepting your OIC. First, if you can show that you do not actually owe the money to the IRS. This is referred to as an offer in compromise based on doubt as to liability.