IRS Tax Garnishment: What to Do

Facing an IRS garnishment is one of the most horrifying experiences in a person's life. When the Internal Revenue Service garnishes your income, you are forced into financial distress because they will take the majority of your earnings straight from your employer and also will seize your assets. This article will lay out the steps you need to take, at this time, to have your life back when confronted with an IRS tax garnishment.

What kind of garnishment?
If it is a bank garnishment, the IRS will freeze your bank accounts and take all money in the account equal to the total amount you owe. Initially the bank will hold the levied funds for 20 days before releasing it to the IRS, so you need to take action inside this time to have your money back.

If it is a wage garnishment, it is never too late to get the garnishment released, even if it has been on for years. Since the IRS will garnish significant portion of your income (and they won’t care about whether you have enough money to pay your monthly expenses), try to make use of all options available to get it removed as quickly as possible.

How you can get the garnishment released?
In order to get it back, you will need to contact the IRS staff who issued the garnishment to get all necessary information from them. Call up the IRS toll free number if your case is with the Automated Collection System. Anyone who answers can help you.

If your case is with a revenue officer, you will need to contact them in order to get your levy released.

 
What do you have to say?
The fact is, there is nothing much to speak about. Garnishments are serious business and are best left to tax attorneys experienced in negotiations. The IRS will do whatever they can to make you to pay an amount greater than what you can afford to pay. Remember, the IRS works for the government and not for you.  So do not think that they'll help you in some way. They least worry about your financial situation but will try to make you pay out as much as possible. You won’t be left much to pay your other expenditures and to support your family.

At times, a person might unable to hire a tax lawyer immediately who primarily specializes in IRS garnishments. So below are a few quick tips to help you. Do not ever agree for an unaffordable payment plan even if the IRS uses pressure tactics in forcing you. You have the right to ask for a taxpayer advocate. You might get a release of your tax levy but remember it is temporary only. What this means is, you'll need what is known as a 'collection alternative' with the IRS so that you can resolve your case. Typical collection alternative include payments plans, hardship status requests, offers in compromise, and Chapter7 bankruptcy.

It is really essential that during this respite from the IRS tax garnishment, that you really work towards a long-term plan to take care of your tax debt. In case you fail to do so, the IRS will issue another garnishment and you will have really a hard time getting it released.

Unfiled Tax Returns – Top Six Common Questions Answered

It's no surprise that there are several U.S. citizens who haven't filed their tax returns for years. Lots of people don't want to come forward and declare their unfiled taxes because they fear it'll bring in far more trouble to them. And many wonder how far back they need to go for their delinquent returns. People who don't have enough money to pay for the past tax dues wonder should they have to file the returns in any event or if it is better to wait until they can afford. Some are worried about whether they can be arrested and sent to prison for unfiled returns. People who plan to file bankruptcy or seeking out passport wonder whether they have to show filed tax returns or not. If you have similar questions like this about unfiled tax returns, read on the rest of the article to find the answers.

How far the Internal Revenue Service can go back to collect delinquent taxes?
Can you believe that in the event you don’t file a tax return, the IRS has forever to assess you taxes? That appears scary, but since the IRS has limited resources, the policy is that you should file for the past 6 years in order to become compliance. You need to know that every state has different statute of limitations and for certain cases, the IRS can look back even further. Here the expert assistance of a tax attorney is required.

Now, there is a complete turn-around. The IRS has become much better in finding US citizen’s income sources and actually, they can file Substitute Filed Return (SFR) on behalf of taxpayers. When you have SFRs against you, it is good to file return for those years, which may be well more than 6 years ago.

Do I have to file tax returns even if I am unable to pay the taxes I owe?
Without a question! It's not an offense to owe the IRS money, but it's a crime not to file your taxes.
And don’t wait until you can afford to pay the IRS to file your back tax forms. And the best time to have negotiation with the IRS is when you've got less amount of money to pay. This is called “Reasonable Collection Potential” (RCP) in IRS terms. Lower your RCP, the higher is going to be chance of getting favorable results.

What kind of penalties exists for unfiled returns?
The longer you wait to file your tax return the more money you will be charged in penalty charges as well as interest fees. This is how the IRS warns the non-filers:

“The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and pay as much as you can, then explore other payment options. The IRS will work with you.”

So not filing your tax return certainly will not make your situation any better. Always file and then you can make use of various tax solutions that help you to pay the owed taxes.

Would unfiled tax returns prevent me from getting a passport?
You won’t be denied a passport for having outstanding tax debts but the state government department may check with the IRS to see if you have unfiled taxes. The state government could refuse issuing a passport if your tax matters have been escalated. When the passport issuance is denied, you must pay the back taxes along with interest and penalties to have the denial removed.

Do I need to file my back tax returns when I'm filing bankruptcy?
Without a doubt! And also, did you know that you can file bankruptcy to discharge specific individual tax debts. But generally, it will only work if you filed for those years you expect the bankruptcy court to wipe out your IRS tax debts for. So even if the bankruptcy court didn’t ask you to file your old income tax returns, it is to your advantage to file any missing returns you haven’t.

How will I file the old tax returns when I don’t have all missing information?
The law only expects you to file missing returns that will be based upon the best of your knowledge. But you might ask “Where I can find the old income details?” Here, with the help of an IRS tax lawyer, you can find all the missing information. They will get the IRS W &I transcript and get all tax reporting forms like W -2’s and 1099s within couple of hours. The attorney will retrieve the old property tax bills from the city assessors. They will recreate profit and loss statements from your old bank statements.

Whatever your situation, do not ever ignore your tax return filing. Just file to protect yourself from getting nailed with big failure-to-file penalty.

Resolving IRS Garnishment and Other Tax Problems in Connecticut

Being the richest state per capita, Connecticut residents are facing the most difficulties when it comes to dealing with the Internal Revenue Service to get their tax problems resolved. This means that people in Connecticut are earning more money per individual than any other state in the United States. Therefore, if the IRS person who handles the tax issues is from another state, say Ohio, people will find very difficult to make them understand that earning $60,000 per annum will not make someone in Connecticut rich.

Since the fallout from the 2008 Wall Street crisis, Connecticut has been really struggling to regain its foothold. Also the dwelling cost continues to be increasing every year in the state and the local people were finding it hard to cope with it. To make the matter worse, taxes has been increased manifold as the government is paying more taxes per capita to maintain the states' quality lifestyle. But the fact is; we too have several poor people residing in the local towns whose earnings are much less that not even qualify for the taxes.

However the IRS is going after the taxpayers regardless of whether they reside in distressed areas like Bristol or in well-off metropolitan areas like Madison.

So if you contact an IRS agent for getting help with the release of an IRS tax levy or garnishment, you may not get the best solution from them since not every agent knows the actual costs of living in your city and exactly how much tax you can afford.

The IRS employees are trained to build strong cases against taxpayers who do not know about how to get their levy released and where to turn for tax relief help.  And this is where you the need the guidance of an expert tax lawyer. These tax specialists will try every possible way to transfer your case to one of the two Connecticut appeal offices- East Hartford and New Haven. This is important because a local agent will get to know about your financial situation and can provide the best decision on the levy/garnishment release.

After the case is moved to one of the Connecticut IRS appeals locations, the next job of a professional IRS negotiator is to prove as many expenditures as possible are essential living expenses. To make this happen, the tax attorney will do lot of negotiation with the IRS employee. And even more so, there should be no lies. The IRS will stop negotiating with the taxpayer if they discover anything deemed unethical in the financial statements and will also initiate legal measures against them.

To put it succinctly, the taxpayer have to make efforts to ensure that the case is handled by the local appeal officials in order to get garnishment release in the state of Connecticut. Then a clear explanation should be made about the financial obligations and the amount that the taxpayer can afford to pay each month without defaulting.

Part 6: The Offshore Voluntary Disclosure Program (OVDP) Process

Part 6: The Offshore Voluntary Disclosure Program (OVDP) Process

1500 word blog on the entire OVDP process. From pre-clearance to Title 31 warning letter. Writing about it nearly as exhausting as practicing it.  

Understanding the Gift Tax Exclusion

Understanding the Gift Tax Exclusion

Part Five: The Streamlined Offshore Voluntary Disclosure

Part Five: The Streamlined Offshore Voluntary Disclosure

5 Things You Didn’t Know About FBAR Penalty Negotiations

Recently, the FBAR is in the spotlight since the IRS is having a new focus on the FBAR penalty enforcement actions. There are few important things that you have to keep in mind when negotiating FBAR penalties. The following paragraphs will explain them in a detailed manner.

1. FBAR penalties are staggering
The penalty can be draconian for taxpayers who have foreign accounts and have not reported it to the IRS. Higher the amount you have in overseas accounts, bigger will be the penalty. When compared with other IRS penalties, FBAR penalties can create huge risks to your financial well being. Therefore you must take this very seriously.

2. The two different kinds of FBAR penalties
The “ugly” FBAR penalty is $10,000. This penalty is assessed if the IRS thinks that you did not deliberately neglect to file an FBAR. And worse, there isn't anything to stop the IRS from assessing this innocent mistake penalty several times. If you have 4 unreported offshore accounts, the IRS can penalize you $40,000 a year. This is definitely outrage to us, but this is just what the law says.

The next type, "disastrous" penalty will be 50% of the offshore account value and this is applicable if it is an intentional avoidance of filing the FBAR. And similar to the “ugly“ FBAR penalty, it too can be assessed several times. This kind of multiple assessments by the IRS can wipe out you entire savings in matter of seconds.

3. The Internal Revenue Service doesn’t have to prove “willful neglect”
You are obligated to pay whatever penalty the IRS puts upon you. They might simply assume the "disastrous” penalty for your case and there isn't any necessity for the IRS to prove willfulness. It will be the taxpayers who bear the big burden of proving that their failure to comply was as a result of reasonable cause and not from “willful neglect”.

4. Appealing to a higher authority
You could file a suit in district court but before that, you need to exhaust your administrative remedies within the IRS. Or alternatively, you could pay out all the taxes before filing a suit for a refund. We strongly advise you to exhaust administrative remedies that are available in the IRS appeals process as this has lots of advantages. First, it's not necessary to pay any penalty till the process end. Second, you can find remedies from the IRS appellate process itself, making tax court unnecessary. In case, if you're not able to find a solution inside the IRS administrative remedies, a tax lawyer can find a receptive audience in IRS counsel and do negotiations with them. So without going to court trial, the FBAR penalties can be lowered.     

5. The OVDP route
Earlier, people made use of Voluntary Disclosure Programs largely to avoid facing criminal prosecutions. The current OVDP/ FBAR Amnesty is there to help people by creating a standardized format for dealing with the threat of disastrous or ugly FBAR penalty charges. This is why it is important to make use of the OVDP to negotiate your FBAR penalties.

Initially by going through the OVDI, the review will be much more favorable to you during the discussion of your “FBAR reasonable cause" position. But outside the OVDP, the IRS does not treat people as favorably as those who make themselves visible under the OVDP. No matter whether you made an innocent mistake or made an unadvised “quiet” or “soft” disclosure, the ground will be much less sturdy when it is outside the OVDP.

Though criminal charges can be a threat to an individual, an IRS civil audit can do even more much damage to a taxpayer's financial well-being. While you may avoid facing prison time, these horrific FBAR penalties can easily wipe out your entire wealth as well. Within the OVDP, penalty charges are capped. You will never have to pay more than one 27.5% FBAR equivalent penalty.