In the spring of 2017, the IRS will begin outsourcing the collection of not all, but some, overdue federal tax debts to private contractors. In early December of 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or “FAST Act.” The FAST Act provides funding for transportation project over the next ten years. Of course, any bill related to highways is likely to include provisions requiring the IRS to use private debt collection companies, which this bill, in fact, includes.
7 Deadly Tax Sins
When it comes to the IRS, some bad acts are worse than others. We have compiled below the top ones to avoid at all costs. However, if you should find yourself in the middle of one, you should certainly call tax attorneys to get you out of the bad situation (yes, it is a bad situation).
An IRS levy is the legal seizure of a taxpayer’s property to satisfy his or her tax debt. The IRS may garnish wages, seize and sell real and personal property, and take money in any bank or financial account under the legal authority of a levy, which is given to the IRS in I.R.C. § 6331. The IRS may levy any property owned by a taxpayer, or on which there is a Federal tax lien, unless the property is exempt from levy.
This is the last part of a three part series of blogs on IRS payment arrangements. While most taxpayers utilize an installment agreement to pay their tax debt, other payment arrangements exist for taxpayers to utilize in the settlement of their outstanding tax debt. Here are some other types of arrangements that are useful in paying delinquent taxes:
Currently not collectible (CNC) status
The IRS may place a taxpayer’s account in currently not collectible status. If a taxpayer owes more than $10,000, the IRS will file a tax lien, but it will cease collection activity. CNC is a temporary status which the IRS regularly reevaluates, usually on an annual basis.
This is part two of a series of blogs on IRS payment arrangements. Most taxpayers utilize an installment agreement to pay their tax debt for obvious reasons. Such an arrangement allows monthly intermittent payments at an affordable amount, while addressing the issue with some forward resolution. The IRS charges a modest setup fee for an installment agreement.
Individual taxpayers must complete and mail Form 9465, Installment Agreement Request and Form 433-F, Collection Information Statement before entering into any installment agreement. Taxpayers then make monthly payments usually by direct debit or payroll deduction. Interests and late-payment penalties continue to accrue during the installment period, but the late-payment penalty is cut in half for any month an installment agreement is in effect.
This is the first part of a multiple part series on IRS payment arrangements. This blog will discuss some general points of IRS payment arrangements while future blogs will deal with their individual details.
Individuals whot cannot pay their tax debt within a reasonable time frame may request to make monthly payment arrangement with the IRS to satisfy their tax bill. There are several options, including an IRS installment agreement. As long as the tax debt is paid in full, taxpayers can avoid the penalties and interests associated with their tax debt. It is essential to know that before applying for any payment agreement, a taxpayer must file all required tax returns.
Taxpayers with debts for back taxes have rights which are contained within the Internal Revenue Code. These laws limit the power of the IRS to collect and levy. These laws grant taxpayers rights that protect them from the collection enforcement powers of the IRS. Taxpayers should ensure that they invoke the protections of these laws to the fullest by retaining an experienced and knowledgeable tax professional.
Here are the most important collection laws that limit the IRS’ power to levy:
Taxpayers that qualify may take advantage of the federal “Offer in Compromise” program to resolve and settle their tax problems. The Offer in Compromise (“OIC”) program is not for every taxpayer and the IRS advises that taxpayers explore all other payment options before applying for an OIC. An experienced tax professional is absolutely essential in all steps of the process of formulating, making, and awaiting the IRS to accept, an OIC.
Taxpayers that retire with unpaid tax debt seemingly face a grim retirement because of the thought that assets reserved and necessary for retirement will be taken by the IRS. Here is the first part of our blog on what retired taxpayers may expect in dealing with the IRS regarding certain assets such as retirement accounts.
“Currently Not Collectible” (“CNC”) status exists when the IRS categorizes a taxpayer’s account as uncollectible. This status may occur when the ten-year statute of limitations for collecting a tax debt expires or the IRS is unable to locate a taxpayer. It may also occur if a taxpayer maintains that he or she cannot make monthly payments to repay tax debt because such payment is an economic hardship.