Late tax filing is extremely common. In many cases, people simply forget to file their taxes. Many people are surprised after they file a tax return and find out that they owe more than can pay. When many people find out that they have tax problems, they want to ignore them. However, your problems will only get worse if you ignore them.
The Internal Revenue Service can be very aggressive when they are pursuing collection. They are also increasing the number of audits that they do. They have a good reason for doing this. The government needs money in order to function. Most of this money comes from your income tax.
What Happens if you Have Missed Filing Your Taxes?
There are many negative things that can occur as the result of late tax filing. You could possibly be charged penalties if you do not file your tax return. Failing to file a tax return is a misdemeanor, so you could be sent to jail for up to a year. However, the IRS would rather collect the money instead of send you to... read article
If you have defaulted on your taxes, IRS will take all the necessary steps to ensure you clear your debt. After a tax lien fails to compel you to pay your overdue taxes, IRS will use a tax levy. A levy is simply the legal seizure of your assets to compensate for taxes owed.
While a tax lien is just a claim to a tax defaulter's assets, a levy gives IRS the right to seize your assets. IRS may levy your investment accounts, bank accounts, accounts receivable, social security, wages, insurance policies, pensions, and physical assets. Read on to learn about IRS property seizures.
The IRS Seizure Process
There are three steps that IRS uses when seizing taxpayer's property. The whole procedure ensures that a taxpayer has sufficient notice about IRS's intention to seize their property and has enough time to contest or appeal the tax levy. The IRS is legally required to follow these steps before seizing your property.
The first step that IRS takes when seizing property is sending a "Notice of Demand for Payment". This notice informs you about the tax assessment issues in question and demands that... read article
The Internal Revenue Service (IRS) can be very aggressive when collecting from debtors. The IRS applies certain tactics to compel the taxpayer to comply and to minimize the balance owed on a taxpayer's accounts. One of the tactics adopted by IRS for collecting from tax defaulters are the use of liens and levies. IRS can levy all the property that a taxpayer owns in an attempt to satisfy an outstanding obligation. However, there are some assets and property that IRS cannot seize or levy. The following web page will guide you on how IRS uses liens and levies, and the assets and property protected from IRS seizure.
If the IRS cannot recover overdue taxes through a lien, their next resort is to use levies. An IRS levy is the practical seizureof the assets of a taxpayer. It is the final way that taxation is enforced when all attempts at collecting taxes fail. IRS will issue tax levy notices to financial institutions and employers associated with the taxpayer.
Contesting an IRS Tax Levy
Before IRS seizes property or money, they must issue you with a notice of their intent to levy and a letter... read article
It's easy to get into a habit of not filing your taxes. If you happen not to file one year because you owe money, and then the next year you do the same thing because you're afraid you'll get into trouble, the years can add up quickly, and so can the severity of the need to file. The first answer you'll get from the IRS or any accountant is to file right away! Not filing your taxes is a crime known as tax evasion and there are penalties that you can receive from delinquent filing as a result.
Why It's Serious
We've all heard that if you don't file your taxes, you could go to jail, and as unbelievable as it sounds, it is true. However, the IRS cares more about getting the money they owe and very rarely send anyone to jail unless they find blatant fraud. However, they can punish you with some costly penalties. If you haven't paid your taxes, the IRS has much more power to try to get you to comply and get your taxes paid depending on how long... read article
If you owe back taxes, the IRS has the authority to do any number of unpleasant things such as seizing your bank accounts, personal assets, future federal and state income tax refunds, and anything else that has value and thus could be sold to pay off your tax debt.
Most people who have found themselves faced with this situation have negotiated an IRS Installment Agreement under which the back taxes will be paid in monthly installments. As long as the monthly payments are made, the IRS will agree to forego any further collection efforts.
Any tax attorney will tell you that the best way to avoid further troubles with the IRS is to, of course, make your installment payments on time and in accordance with the conditions specified in your agreement. There will be times, however, when unforeseen circumstances will make it difficult for you to make your payment. The IRS is aware that you might have such a problem, and even has policies that it will follow to help you through these rough times.
For whatever reason, or reasons, if you should breach the terms of your agreement with the IRS then that agency will exercise its right to declare the installment... read article
Procrastination is a way of life for many people. For some, it's the mundane and simple annoyances that are avoided. It's washing their dirty car. It's sorting through and condensing their email inbox that's overflowing. Or maybe it's not annoying at all and it's something like catching up on their favorite tv show. For others, it tends to be more substantial of an avoidance and one that can radically change their lives.
I'm talking about procrastinating with taxes.
There is no avoiding the IRS. It's impossible. Whether you embrace this idea sooner rather than later is completely up to you. If the IRS is on your list of things to procrastinate, my advice to you is to take them off immediately.
Here are 5 ways the IRS can ruin your life if you procrastinate filing and/or paying your taxes.
1) Direct financial penalties.
First of all, penalties with the IRS are "stackable" which means one does not void the other one out. If you filed late, you get a penalty. After you file, if you pay late, you get a penalty on top of that. So on and... read article
The Internal Revenue Code (IRC) imposes taxes on U.S. citizens’ income, regardless of where in the world that income originates. It also requires reporting of some types of assets located in foreign countries. Violation of these IRC provisions can result in jail time and substantial fines. For people who find themselves out of compliance with the law, though, there is still hope. The Internal Revenue Service (IRS) has offered a number of amnesty programs to encourage self-reporting of foreign income and assets.
Offshore Voluntary Disclosure Programs
In 2009, the IRS issued its first Offshore Voluntary Disclosure Program. Under the program, taxpayers who had undisclosed foreign assets or foreign income were encouraged to come forward and make disclosures. By doing so, they generally avoided facing criminal prosecution, and they were generally able to pay a settlement amount to resolve their past legal obligations. The program was continued with some modifications in subsequent years.
By 2012, the program had reportedly brought in over $5.5 billion in tax revenue, from about 38,000 taxpayers. This revenue was pure gain for the IRS, because it is unlikely that any of it would have been collected in the absence of the amnesty program. In 2014, in an effort to... read article
Over the past 6 months, my office has had numerous calls from taxpayers who have received a telephone that sounds like this- "We are from the IRS and you owe a certain amount in back taxes. If you do not pay us $25,000 in the next 2 hours, we are going to come to your house, business, etc. and arrest you."
That sounds frightening, doesn’t it? The taxpayers from whom my office has received calls are beside themselves with worry. Most of the time, they do not owe taxes. But they are afraid of being arrested, but especially in front of their family or co-workers.
There are several ways that you will be able to determine if you are the victim (or about to be the victim) of a scam. First, the IRS will mail you an official notice before they call. The IRS will not email you to tell you that you have a balance due. Second, the IRS will not demand that you pay taxes without giving you an opportunity to question the amount or appeal the amount that they say that you owe.
An Internal Revenue Service (IRS) notice of intent to levy is a last-resort collection method to shock and scare delinquent taxpayers into paying overdue taxes, but if they cooperate, even if they can't pay, they can stop a levy from going into effect and sometimes even reduce the arrearages or at least make tolerable arrangements to pay them over time.
Pre-Levy IRS Procedure
The Fifth Amendment of the Constitution prohibits the IRS from taking taxpayer property without due process of law. To comply with this prohibition, the IRS must notify the taxpayer of the impending levy and grant an opportunity to be heard about it. The IRS must send the taxpayer a notice "given in person, left at the dwelling or usual place of business of such [taxpayer], or sent by certified or registered mail not less than 30 days before the day of the first levy." [i]
The notice must include "in simple and nontechnical terms the right of the [taxpayer] to... read article
By the time you receive a tax levy notice from the IRS, the money you owe in back taxes is pending to be forcibly obtained from your available assets as a last resort.
Your employer’s hands are tied as well, since the IRS will aggressively pursue them to collect on your unpaid debt if they fail to comply with a garnishment of your wages.
When wages are garnished, the IRS will typically draft 25 percent of your income or more. This action alone can create extreme financial hardship, especially if you’re already struggling to make ends meet. However, there are solutions that can stop a levy from taking place if you handle your situation proactively.
Ways to Stop a Levy
The simplest and fastest way to stop a tax levy from going into effect is to pay off your tax debt. Depending on how much you owe, this can be done by borrowing the funds, selling some of your assets or paying the debt off with a credit card. Unfortunately, paying off your tax debt through these methods can create more problems unless you can receive the money free and clear.