YES! The IRS can garnish your wages. The IRS can garnish up to 85% of your net pay. A wage garnishment is the most aggressive and effective way the IRS can take to collect a debt. When the employer receives an IRS Wage Levy Notice, your check should be affected on the next pay period. The garnishment will stay in effect until corrective action is taken by you as the taxpayer. An IRS wage garnishment can impact your life and family in several ways by reducing the amount of income each week. Contact us now to take corrective action and get your garnishment released!
When not cooperating with the IRS to resolve your tax issues they may issue a bank levy. A bank levy is another aggressive tactic taken by the IRS to collect debt. Before a bank levy is issued you will receive a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” This will give you the opportunity to pay the debt in full or come to a resolution. If not, a bank levy will be issued. The bank will be required to wait 21 days before sending funds over to the IRS. It is possible to get the bank levy released before the funds are sent to the IRS. A problem you may encounter is the IRS will be hesitant to work with you as you may be documented as a taxpayer who is unwilling to take corrective measures. Having representation before the IRS will show that you are taking positive steps to solve your tax matter. Call us now for a free consultation!
Taxpayers should file a return even if full payment can not be made at the time. Failure to file can result with the IRS tacking on huge penalties and interest on your tax bill. If you are due a refund on your return and wait to long to file, you will not get issued the refund. Continuance of non-filing may also result with the IRS filing a return on your behalf. This is called a Substitute for Return commonly known as a “SFR”. A SFR punishes the taxpayer by not accounting for deductions. As a result, the SFR liability is usually substantially higher along with the corresponding penalties and interest. Our firm uniquely employs CPA’s and attorney’s to handle the tax preparation and collection of before the IRS.
Liens give the IRS legal claim to your property as security or payment for your tax debt. A Notice of Federal Tax Lien is filed once the liability is assessed, a demand for payment is sent, and refusal to fully pay the debt within 10 days of the notification. When a lien is filed creditors are publicly notified that there is a claim against ALL of your property, such as a house or car and to rights to property such as accounts receivable. The lien also attaches to property required AFTER the lien is filed.
Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. Therefore it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary.
Payroll and Sales Tax
Employment taxes are the amounts an employer should withhold from employees for income, social security, and Medicare taxes (also called withheld or trust fund taxes), plus the amount of social security tax and Medicare taxes an employer pays on behalf of each employee. Paying employment late, or not including payment with a return if required, could result in additional penalties and interest on any unpaid balance. Failure to Deposit (FTD) penalties of up to 15 percent of the amount not deposited may be charged, depending on how many days the payment is late.
Unpaid employment taxes could cause additional collection action to be taken. IRS could require an employer to file and pay employment taxes monthly, rather than quarterly, or open a special bank account for the withheld amounts, under penalty of prosecution.
To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (TFRP). These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed.
The TFRP may be assessed against any person who is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and/or willfully fails to collect or pay them.
You may be asked to complete an interview in order to determine the full scope of your duties and responsibilities. Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.
If the IRS determines that you are a responsible person, they will provide a letter stating they plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal our proposal.
Once the IRS asserts the penalty, they can take collection action against your personal assets. For example, they can file a federal tax lien or take levy or seizure action against your personal assets.
Similar to payroll tax and individual income tax, states may hold an individual personally responsible for sales tax. States take similar collection action to that of the IRS, such as bank levies and liens. States also offer similar collection alternatives to that of the IRS. For example, offer in compromise, payment plans, and currently non-collectible. In many times, however, the state is much more aggressive than the IRS.
It is important to have an experienced attorney on your side when dealing with payroll and sales tax as the States and IRS are more aggressive when attempting to collect this type of debt.