FAQ

What can I do if the IRS has sent me a demand letter?

Depends upon the nature of the demand letter. If a Final Notice of Intent to levy, the IRS can levy your bank account, wages or other sources of income. I would suggest consulting with a professional tax representative.

What's the best way to take control of my tax liability?

First of all, make sure that you file any tax returns timely or if the returns haven't been filed, file any delinquent returns ASAP even if you can't pay the taxes to avoid being liable for the failure to file penalty of 5% per month up to 25% on the timely filed returns. If the returns are filed late, the penalty will apply. We always suggest that you pay as much as possible to avoid accruing penalties and interest.

Why should I hire an attorney, can't I deal with the IRS on my own?

The reason for hiring an attorney or other tax professionals is to ensure that you have proper representation. You can deal with the IRS personally but you risk making statements regarding your bank accounts, assets, income, etc. that may not be in your best interest.

What is the difference between a levy and a lien?

A levy is a legal claim that the IRS can make on your wages, salary, commissions, or other payments. A levy typically attaches to your bank account that the IRS can take in total to apply to your outstanding taxes or a levy can be attached to your wages, salary, etc. whereby the IRS can require your employer to remit a fixed percentage of your earnings to pay the outstanding taxes.

A lien is a legal claim by the IRS that attaches to your property (such as your house or car) and to all your rights to property (such as accounts receivables for your business). The lien remains against your property until the tax is paid.

Can I go to jail for owing taxes?

Generally, you cannot go to jail for simply owing taxes. However, if you intentionally fail to file returns or failure to pay taxes and it is determined to be fraud the IRS can consider prosecution for tax avoidance or evasion.

How much can the IRS take from my paycheck?

IRS has a table that lists the amount that is exempt from levy on Wages, Salary and other income and is based upon how a taxpayer is paid (weekly, semimonthly, etc.) and based upon their filing status (single, married filing jointly, etc.) The exempt amount is intended to allow a reasonable amount for living expenses.

What is an installment agreement and will it help?

An installment agreement is a payment plan that allows the payment of your debt in smaller, more manageable amounts. Generally, the installment agreement requires equal monthly payments.

I got an IRS notice they were going to start collections on me, but they stopped after I called and told them I was not working. Is the tax gone?

Absolutely not. Generally, this means that the IRS has placed your account in an uncollectible status for the time being. The tax continues to be owed and will continue to accrue interest and penalties. If your personal situation improves whereby you are working, IRS can continue to pursue collection enforcement.

What is the biggest misconception regarding IRS tax problems?

That the IRS will "go away"and won't pursue collection enforcement, which is not the case. Many times, IRS may not aggressively pursue collection and then they determine that a taxpayer's earnings have improved based upon W-2a, 1099s being filed with IRS and then IRS proceeds with collection enforcement.