LIENS, LEVIES, PROPERY SEIZURES

Liens

A Filed Notice of Federal Tax Lien is a public notice filed by the IRS. This lien attaches to all of your assets and can damage your credit rating. In some instances the IRS may withdraw, discharge or subordinate the federal tax lien. Moreover, the lien establishes the IRS as secured creditor thereby allowing them to seize your assets, if necessary.

Wage levies

A wage levy orders your employer to send to the IRS all of your paycheck beyond current withholding taxes, insurance, and a minimum exemption, which is not generous. A wage garnishment will generally result is a loss of one half, or more, of your take home pay. It will attach to each and every pay check until a release is issued. We advise you seek professional help if a levy has been placed on your wages.

Bank levy

There are no exemptions available for a bank levy. The bank will debit all of the funds from your account upon notice of levy. However, the law provides for a twenty one day waiting period before the funds are surrendered to the IRS. The waiting period begins with the date of notice of levy. We advise you seek professional help if a levy has been placed on your bank account.

Levy on Accounts Receivable

For self employed taxpayers, the IRS can levy your account receivables. This type of levy can be devastating because it can severely curtail cash flow needed for operations. There is no exemption available for this type of levy. We advise you seek professional help to get it released.

Property Seizures

The IRS can seize and auction your personal or real property in order to pay your tax liability. This includes your home, automobile, real estate, inventory, business equipment, or any other tangible asset. Proceeds from the auction are first applied to the expenses of the sale and then to the tax liability. If the sale proceeds are less than your tax liability and the expenses of the sale, you will still be liable for the remaining unpaid tax. We advise you seek professional help if you have received a Notice of Seizure.

PAYROLL TAXES

If you are a business owner with employees, you must withhold and deposit federal income and social security taxes from each employee's paycheck and deposit it with a bank qualified as a depository for federal taxes. The IRS is very aggressive when it comes to the collection of payroll taxes. In the case of a corporate taxpayer, the IRS may assess some of these taxes personally against the corporate officers or employers. It is called the "civil penalty" or the "trust fund penalty". We advise that you have an experienced professional to represent you in these types of problems. It could make a difference in whether you stay in business or are liquidated by the IRS.

UNFILED RETURNS

It is in your best interest to file your delinquent tax returns. If you do not file, you could be at risk of criminal tax evasion punishable by jail time plus payment of the tax, penalties, and interest. Moreover the IRS will not release levies or consider an offer in compromise or installment agreement until you have filed all of your delinquent returns. When filing late returns, the taxpayer should go back at least six years unless the IRS has filed a substitute return.

In the case of a substitute return prepared by the IRS, it may be in your best interest to file an original return yourself since oftentimes this will result in less tax owed. A word of caution; the IRS closely inspects these types of original returns and may audit it before acceptance. When filing a late return, it is to your advantage to have a tax professional help you with both preparing the return and in dealing with the IRS.

PENALTIES & INTEREST

The IRS assesses penalties and interest as a deterrent to comply with the tax laws. Interest compounds daily and penalties may be as much as 50% or more of the taxes owed. However, penalties may be reduced or abated to zero. The IRS follows guidelines which may allow the abatement of penalties under certain circumstances. If something other than financial difficulty prevents you from paying your taxes, please let us know and we may be able to help with the abatement of penalties.

AUDITS

An audit is the process by which the IRS determines whether you properly reported your income and took the correct deductions, exemptions, and credits. If the IRS finds that you didn't, you will be assessed additional taxes, interest, and usually penalties. An assessment is the official establishment of a tax liability at the IRS Service Center. You will start receiving collection notices within thirty days after assessment. You have the right to appeal a proposed audit adjustment if you do not agree.

Proving the correctness of your tax return may not be easy. The IRS proposes adjustments in a majority of the audits. We advise that you have an experienced professional to represent you if your return has been selected for audit.

IRS NOTICES

CP-11 WE CHANGED YOUR RETURN-YOU HAVE AN AMOUNT DUE

This notice was sent to you because the IRS has made an adjustment to your tax return. The top of the second page will indicate what caused the adjustment and the remainder of the notice will discuss added penalties and interest.

CP-14 REQUEST FOR TAX PAYMENT
This notice is your first bill for taxes due. It is the beginning of the collection process. Either you did not pay all that was due when you filed your return or interest and penalties have been added. The pages enclosed with the notice will explain which penalties and how much interest have been added.

CP-71A REMINDER OF BALANCE DUE

The IRS is required by law to inform you of your balance due at least annually. This is the notice they send to remind you of the balance due on your account if it is in a "currently not collectible" status. This is also referred to as a "hardship" or "53" status. You do not have to respond to this notice.

CP-503 IMPORTANT!! IMMEDIATE ACTION REQUIRED

If you have received this notice, it means you have ignored the initial tax bill (CP-14) or your case is back in collections after being declared "currently not collectible" for a while. If you owe for more than one tax period, you will receive this notice even if you made arrangements to make installment payments or you have been placed in a "hardship" status. It will say on the face of it to ignore it if you have entered into an installment agreement or paid the balance. If this is the case, you may ignore it.

CP-504 URGENT!! WE INTEND TO LEVY ON CERTAIN ASSETS

If you have received this notice, it means you have ignored previous notices. If you owe for more than one tax period, you will receive one of these notices each year. You may receive this notice even if you have made arrangements to make installment payments or you have been placed in a "hardship" status. If this is the case, call the number on the notice immediately and advise them. Be sure to write down the name and badge number of the person you speak to and the date and time of the call. If you ignore this notice, your case will be transferred from the Taxpayer Service to Automate Collections (ACS). This is often referred to as "Collections".

CP-515 REQUEST FOR YOUR TAX RETURN

If you have received this notice, it means you have failed to file a tax return. The type of return and tax period will be shown in the upper right corner as well as in the body of the notice. You received this notice because the IRS has reason to think you have a filing requirement and they have received no return.

CP-523 NOTICE OF INTENT TO LEVY -- YOU DEFAULTED ON YOUR INSTALLMENT AGREEMENT

If you have received this notice, it means you have defaulted on your installment agreement. This can occur because you failed to make a scheduled payment, filed your most recent tax return late, filed a return and did not pay the balance due or failed to make estimated tax payments as required. If you owe for more than one tax period, you will receive one of these notices each year.

CP-2000 WE ARE PROPOSING CHANGES TO YOUR RETURN

If you received this notice, it means that you have omitted income from your return or the amount of income or expenses on your return does not match the amount reported to the IRS. The following pages will provide an explanation of the changes followed by a detailed listing of the items that were left off your return or did not match the amounts reported to the IRS. The most common items are 1099s for non-employee compensation and dividends or interest omitted from your return, W-2Gs from gambling income, and 1098s for mismatched mortgage interest.

LETTER 2050 Please call us about your overdue taxes or returns

If you received this notice, it means you owe tax and have ignored previous notices CP-504 or CP-523 or you have delinquent tax returns. You may receive this notice even if you have made arrangements to make installment payments or you have been placed in a "hardship" status. If this is the case, call the number on the notice immediately and advise them. Be sure to write down the name and badge number of the person you speak to as well as the date and time of the call.

LETTER 1058 FINAL NOTICE OF INTENT TO LEVY AND NOTICE OF YOUR RIGHTS TO HEARING. PLEASE RESPOND IMMEDIATELY

If you received this notice, it means you owe tax and have ignored Letter 2050. This is the most serious notice the IRS sends to a taxpayer owing tax. It must be responded to otherwise you will lose appeal rights and the IRS will levy all available sources, including your bank account, wages, customers, etc. You could be left without the ability to pay your rent or buy food and you could have checks you have written bouncing. This type of collection action can be devastating to you and your family.

LETTER 3228 ANNUAL REMINDER NOTICE

This is an annual reminder of taxes owed. This is a notice required by Congress to let you know what taxes and years you owe for. You should receive this notice at least once a year as long as you owe taxes.

Form 668W

This is the form used to notify an employer to garnish an employee’s wages for unpaid income taxes. This form may also be used to garnish accounts receivables. Each and every paycheck will be garnished until the employer receives a release of levy.

Form 668A

This is the form used to notify your financial institution to levy your bank account. The bank will place the levied funds in a special escrow account for twenty one days before being surrendered to the IRS. The bank will place the funds back into the account if they receive a release of levy before the end of the twenty one day waiting period.

Letter 1153

This letter explains the IRS’ efforts to collect the employment taxes due from the business named on the letter. If the business does not pay all of the withholding and employee social security taxes back, then that amount may be assessed against the officers/owners of business in the form of a trust fund recovery penalty. If assessed, the IRS will ask you to sign Part 1 of Form 2551. If you do not agree, you can submit a request for an appeal conference. You need to file your appeal protest within sixty days from the date of the letter in order to appeal the proposed assessment with the Office of Appeals.

Letter 3172

This letter is to notify you the IRS filed a notice of federal tax lien for unpaid taxes. If you do not agree, you can request appeals consideration within 30 days from the date of the letter.