Tax faq’s
FAQ
What is the difference between a tax lien and a tax levy?
Firstly, a lien and a levy are two different tools the IRS can use to enforce the tax laws and collect unpaid taxes. A tax lien is used to secure interest in a taxpayer’s property. A federal tax lien attaches to all property and rights to property, whether real or personal, to the extent of the taxpayer’s interest in the property. The lien amount should equal the amount of taxes, interest, and penalties that the taxpayer owes for the period in question. Federal tax liens are public record and will reported to the credit bureaus, which can negatively affect credit scores and hinder the ability to borrow funds. Typically, the IRS will not release a lien until either it receives full payment of the liability or the collection statute has expired. However, in certain circumstances, taxpayers can apply to have a tax lien withdrawn, subordinated or discharged without the liability being fully satisfied.
A tax levy is very different from a tax lien. A levy is when the IRS forcibly seize or take property from the taxpayer. Bank accounts, salaries and wages, are the typical targets of a tax levy. Tax levies can either be one-time or continuing. One-time levies are typically bank levies, meaning that the IRS can only take the amount of money that is in the account at the time the levy is issued, not to exceed the amount owed. The bank is required to hold the funds for 21 calendar days before sending the money to the IRS. This holding period allows the account owner time to get the levy released or work out a payment alternative with the IRS. Levies on wages or salaries, are continuing levies. This means that the levy remains in force until it is released by the IRS.
In most cases, the IRS is required to send notice and demand of its intent to levy on the taxpayer. A letter titled, Final Notice of Intent to Levy and Notice of Your Right to a Hearing should be sent to the taxpayer 30 days prior to levy action. This letter usually comes certified so it is best to open all IRS mail, even though it may be intimidating. If the taxpayer timely files for a Collection Due Process hearing, the IRS cannot issue levies until the case has been processed through Appeals.
What happens if I don’t pay my taxes?
The IRS has the power to levy or seize the money in your bank accounts, brokerage accounts and retirement accounts. They can also send a Notice of Levy to your employer and seize your wages. It is never a good idea to just stop paying taxes. Under the Federal Payment Levy Program, the IRS can levy up to 15% of your Social Security benefits and can also take your house! There is no need to let this happen. If you receive a Notice of Intent to Levy with Right to a Collection Due Process Hearing you only have 30 days from the date of the notice to file for the Collection Due Process Hearing and stop the IRS from taking enforced collection action against you. Salinger Tax Consultants can help you file for a hearing and protect your assets while you work out a solution.
When should I hire a tax consultant?
If you are being audited, have received notices from the IRS, or owe back taxes, you may want to seek advice from a qualified tax consultant. Whether you are simply seeking preventative advice or need someone to negotiate with the IRS on your behalf, I can help.
Is there a statute of limitations regarding back taxes?
Yes, the IRS has 10 years to collect on your back taxes. Once those 10 years have passed, the IRS is legally prohibited from taking action against you. There are certain situations where the statute of limitations may be extended past the 10 years period.
I am married and my spouse or ex-spouse owes back taxes. Am I liable for these?
You may be liable if you filed jointly and the tax debt accumulated during your marriage. The IRS has policies to protect innocent spouses from this tax debt. Innocent Spouse relief or Separation of Liability are both options depending on your circumstances. I’d be happy to assess your situation and help you determine if you qualify for any of these forms of relief.
What do I do if I am a business owner and I can’t afford to pay my quarterly payroll taxes? (form 941)
Failing to pay your business’s payroll taxes will generally result in a financial penalty personally against the responsible officers of the business. Ignoring the problem just makes it worse. Addressing the problem as soon as possible and getting a tax consultant is the smartest choice in this situation. I can help you negotiate and communicate with the IRS and find a solution that will protect your business, your future, and your personal finances.
What is federal 940 tax and what does it mean to me?
The 940 tax is a federal tax that requires companies and individuals who employ workers to file unemployment tax payments for those individuals. If you haven’t paid 940 taxes and need help resolving this tax issues, call us today to set up a consultation.
What is an “Offer in Compromise?”
An offer in compromise is a settlement you make to the IRS to satisfy your tax debt. It is always recommended you use a qualified tax consultant to develop the settlement for you and submit it to the IRS on your behalf. The IRS often realizes you will never be able to pay in full, so accepting an offer in compromise allows them to collect some of the monies owed and allows you to fully resolve your tax problems. Not everyone is eligible for an offer in compromise settlement so be sure to give us a call to see if you qualify.
What tYPE of Tax DeBt Resolution Am I Eligible For?
Without reviewing your case, it is impossible to say what resolution you are eligible for, but the experts at Salinger Tax Consultants are specialists in this complicated field. We can review the specifics of your case to help you develop a plan to resolve your tax issues. There is no easy common solution when it comes to tax resolution, but we will work with you every step of the way, providing you with the expert tax advice you need to get your tax issues resolved.
How much can I save by using a tax consultant to help resolve my tax debts?
While we can’t answer that question without knowing the specifics of your situation and what the IRS will ultimately agree to, we will work hard to get the best resolution possible for your case. Give us a call to start resolving your tax problems. We can often get a resolution for you that costs pennies on the dollar!
How soon can Salinger Tax Consultants help me resolve my tax issues?
The moment you know you are in trouble with the IRS, it is a good idea to hire a tax consultant, but even if you have put it off, there is most likely still time for us to help you! Even if your finances have already been levied or there is a lien on your property, Salinger Tax Consultants can go to work on your case right away. Call us now to get started.
What is the Collection Information Statement (CIS)?
The IRS uses the Collection Information Statement (CIS) to gather the necessary information to determine the taxpayer’s ability to pay the taxes owed. Basically, the CIS is the taxpayer’s financial statement. The forms used are Form 433-A for wage earners and self-employed individuals and Form 433-B for businesses. The IRS has established standards for allowable and necessary monthly living expenses. For assistance with the 433-A or 433-B form, please call us to set up a free 30 minute consultation at 813-445-3815.
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SALINGER TAX CONSULTANTS
Phone: 813-445-3815
Email: info@salingertaxconsultants.com
7707 Merrill Road
Unit 8642
Jacksonville, Fl 32277