IRS tax code is extremely complex and it is no surprise that so many people run into tax problems each year. With thousands and thousands of pages of tax code, there are many different problems that taxpayers run into for various different reasons. The IRS understands that tax payers and not immune to problems and they have created methods and processes to make things easier on individuals. The IRS is willing to work with individuals on resolving their tax tax problems provided the tax payer is upfront and fully transparent about their problems and taking the proper steps to correct the situation. Even if there is a problem that exists that the IRS does not have a solution for, there are tax professionals that can help. You can be assured there is a solution to every tax problem out there.

Unpaid Taxes, Penalties and Options

A tax lien is the first major step the IRS takes against taxpayers in order to collect delinquent taxes. The IRS uses the lien to secure claim to assets in order to ensure the taxpayer pays their taxes owed. Understanding how a tax lien works is important in order to figure out how to get the IRS to remove it.

IRS Bank Levy

An IRS bank account levy is the seizure of funds from your bank account to satisfy unpaid tax debt. The bank will freeze your account so you cannot do anything with your account for 21 days and then the bank sends the funds over to the IRS. Once those funds are seized it is highly unlikely that you will ever see them again. One important thing to realize is that the IRS does not want to levy your bank account and they would much rather settle your taxes in some other manner. It is likely that the IRS has tried repeatedly to make you pay and they have gotten no where so they use a levy as their last line of defense. It is important to understand how IRS bank levies work to ensure you take the appropriate actions to stop the levy while ensuring your future financial well being.

IRS Installment Agreements / Payment Plans

The IRS offers different tax payment options you can pursue if you have tax debt or you completed your tax return and you realize you cannot pay. You should always pay the IRS or your State as much as you can and be sure to FILE your taxes because failing to file penalties are more severe that failing to pay. There are no payment options if you fail to file.

If you can pay Federal taxes over time and you need longer than 120 days some type of Installment Agreement may be a good fit for you. Each differs slightly by the term of the period, amount owed to the IRS, and the paperwork required. With state tax debt, payment plans can also be pursued. See if you qualify for an Installment agreement because if you don’t there are other options. However, realize that Interest and penalties are reduced but are still effective with an Installment Agreement. Remember that as long as you have a balance due with the IRS, penalties and interest will continue to accrue.

IRS Tax Appeals

IRS tax appeals are available to those taxpayers that do not agree with particular decisions made by the IRS. The good thing about the office of appeals in the IRS is that it is independent of any other IRS office and is designed where disagreements concerning the application of tax law can be resolved on a far and impartial basis. Below are various tax decisions that you can appeal. Understand when you can appeal and how you appeal each of these types of decisions made by the IRS.

IRS Tax Levy

A tax levy is the legal seizure of property done by the IRS in full fill tax debt that is owed. A tax levy is something that shouldn’t be taken lightly, the IRS will continue to take assets until your tax liability is satisfied. It is important to understand how levies work to ensure you take the right actions to avoid them or to stop the IRS from property seizures.

IRS Wage Garnishment

IRS wage garnishment is the deduction of money from an employee’s monetary compensation resulting from unpaid IRS taxes. Most likely this should not be a surprise as the IRS will only garnish one’s wages after repeated attempts to collect through letters and warnings about the taxes owed. The wage garnishment is one of the IRS’s most effective tax collection methods and should not be taken lightly. The IRS would rather resolve taxes in a different manner but they will garnish wages if no other options have worked. It is important to understand how garnishments work to ensure you take the appropriate actions to avoid them or stop the IRS from taking your wages.

When individuals file a joint tax return, each spouse is equally liable for all tax, penalties and interest that come about from that particular year. The IRS or states can legally go after both spouses or just one spouse for the entire tax amount that is due even if the couple is divorced and the divorce decree states that one individual is responsible for the taxes owed.

The IRS created innocent spouse relief because it realizes that there are times when it would be unfair to hold both joint filers equally liable for the tax liability that was created. There are three forms of spouse relief that will allow one spouse to get out of paying their spouse or ex-spouses tax. If an individual does not qualify for one, it is possible that they will qualify for another type of relief.

IRS Hardship

Sometimes taxpayers come across unforeseen financial events and it puts them in a situation where they are simply not able to pay the IRS the taxes that are owed. The IRS understands that this happens and has the power to declare an individual uncollectible if they can prove to the IRS that the collection of the tax would cause financial hardship.

IRS Penalty Abatement

The IRS allows individuals to dispute interest and penalties that they have been charged for several reasons. If a taxpayer falls into any of the categories outlined by the IRS’s broad definition of abatement, it is likely that the majority of the penalties can be wiped clean. The IRS requires that the individual filing for penalty abatement meets one of three reasons which are reasonable cause, administrative waivers or a mistake by the IRS.

IRS Tax Debt Bankrupcy

Bankruptcy can leave a stain on a taxpayer’s credit with the 3 credit bureaus for several years. In fact, it (depending on the type) can be left on your credit report. It is arguably much more severe than if you have collection accounts or unpaid creditor accounts. When your credit shows bankruptcy, lenders are hesitant to loan money whether its a mortgage, car loan, credit card. Moreover, even landlords who see this on a credit report may be reluctant to take this type of tenant because it shows you are not reliable in making payments.

IRS Tax Penalties and Interest

IRS Penalties and Interest are exorbitant and add up quickly…in some cases as much as 25% of the total tax liability.  The IRS charges civil penalties as a way to scare taxpayers into staying in compliance with their tax filings and tax payments. The IRS has both civil penalties and criminal penalties. In fact, there are over 140 different civil penalty provisions that the IRS uses.The IRS will also charge interest on any past due tax amount. There are various types of penalties that all vary in amount and they typically increase with the severity of the infraction. Below are the common IRS penalties that are charged

Offer in Compromise

The IRS has a program called the Offer in Compromise that allows the IRS to compromise outstanding tax liabilities with a financially burdened tax payer for often less than the amount they owe to the Federal government. When the IRS accepts an Offer in Compromise they are allowing the taxpayer to pay what they can afford and the remaining balance is forgiven. The tax payer is then said to be in good standing with the IRS again.