Category: Law Firms

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kienitz settling your tax debt with an offer in compromise

Settling Your Tax Debt with an Offer in Compromise

One of the reasons why tax debts are so challenging for taxpayers is because they’re so difficult to get rid of. They often can’t be discharged during bankruptcy. Then there’s the ability of the IRS or the California Franchise Tax Board (FTB) to place liens on the taxpayer’s property and garnish wages.

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when and why you need to hire a tax attorney

When and Why You Need to Hire a Tax Attorney

The tax laws and regulations in the U.S. can be confusing and frustrating at times. On occasion, this will result in taxpayers getting into trouble with the IRS. But not all disputes or tax questions require the help of a tax attorney. This blog post will examine situations when hiring a tax lawyer might be useful and the reasons for using a tax lawyer’s services.

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kienitz tax lien levy

The Difference Between an IRS Tax Lien and Levy

Having an IRS tax lien or levy imposed is one of the scariest situations a taxpayer can encounter. This fear is completely understandable given the immense power of the IRS. The good news is that the IRS won’t impose a tax lien or levy without first exhausting other collection methods. This means a taxpayer will usually have plenty of notice before things get so bad that the IRS will enact a tax lien or.  However, if you are unfortunate enough to be subject to a tax lien or levy, below is some basic information about IRS tax liens and levies that may help figure out what to do next.

What Is an IRS Tax Lien?

A tax lien is a legal claim the IRS places on a taxpayer’s property as a result of an unpaid tax debt. This legal claim will attach to basically all of the taxpayer’s present and future acquired property, including bank accounts, real estate and personal belongings.

This legal claim, also called a security interest, can create problems for the taxpayer. First, it can severely damage the taxpayer’s credit since any credit checks will reveal the tax lien and make it very difficult to obtain credit, such as a mortgage or personal loan.

Second, the tax lien will effectively make the taxpayer’s property the IRS’ property. This means if the taxpayer sells something that has an IRS tax lien on it, the cash proceeds belong to the IRS, not the taxpayer. This situation will exist until the tax delinquency is resolved.

 

What Is an IRS Tax Levy?

A tax lien is considered to be more “serious” than a lien. This is because the tax levy will result in the IRS taking the property, not just having a legal claim to it. The IRS will take the taxpayer’s property then use it to satisfy the unpaid tax debt.

A tax levy can occur in several ways. First, the IRS can physically possess the property, then sell it and keep the proceeds (assuming the proceeds from the sale are not in excess of the tax debt). Second, the IRS can withdraw money from the taxpayer’s bank account. Third, the IRS can take a percentage of the taxpayer’s income. This is referred to as wage garnishment.

 

How Can I Avoid a Tax Lien or Levy?

The best thing a taxpayer can do is to pay all the taxes they are legally required to pay. Only when the taxpayer fails to pay his or her legal tax bill, will the potential for a tax lien or levy arise. Assuming a taxpayer gets behind on his or her tax obligations, the IRS will send a series of written notices explaining the taxpayer’s tax debt and how to fix it.

The last thing a taxpayer should do is ignore the tax notices from the IRS. It’s when the IRS isn’t getting anywhere with recovering the outstanding tax bill will they take steps to impose a tax lien or levy against the taxpayer.

So even if the taxpayer cannot quickly settle his or her tax debt, they should respond to the IRS collection notices and arrange a way to pay off the tax debt. The IRS may agree to set up a payment plan or settle the tax debt for an amount lower than the full amount owed. There may also be other options, but it’s strongly recommended the taxpayer consult with a tax legal professional to discuss what they are and to decide which option is best.

 

 

 

 

 

tax scams

Tax Scams Following the 2017 Tax Season

The saying “death and taxes” is incomplete. What it really should be is “death, taxes and scams.” For as long as an organized society exists, so will scams. This tax season has been no different, with many victims falling prey to unscrupulous individuals. Even though the vast majority of us have already filed our taxes for the 2016 tax year, that doesn’t mean the potential for tax scams is over until next season. One of the more prevalent tax scams still occurring is the IRS telephone scam.

How the Scam Works

The scammer will call the victim pretending to be an IRS agent or US government official. The call will often appear very legitimate, with the scammer providing a badge number to the victim, the victim’s caller ID showing the call as originating with the IRS and fake background noises played to make the victim think the spammer is calling from a busy call center.

With the stage set, the scammer tries to scare the victim into sending the scammer money because the victim has an existing tax debt with the IRS. Sometimes the scammer requests payment in an odd way, such as gift cards or money orders.

If the victim challenges the scammer’s claim that an unpaid tax bill is owed, the victim is threatened with arrest, a civil lawsuit, driver’s license revocation, deportation or other arbitrary punishments. In the current political climate, the threat of deportation will be especially effective.

Other ways the IRS telephone scam may appear genuine include:

  • A follow-up telephone call from someone claiming to be from law enforcement.
  • The scammer will have some basic information about the victim, such as a date of birth or the last four digits of the victim’s social security number.
  • The victim may also receive a letter that appears to be from the IRS reminding the victim of an outstanding tax debt.

 

How the IRS Really Works

The IRS does try to collect its outstanding tax debts, but not in a manner used by most scammers. There are several methods the IRS will use when it attempts to collect an unpaid tax bill:

  • The IRS will always provide the taxpayer with an opportunity to dispute the tax amount owed.
  • The IRS will accept various methods of payment for a tax bill, not just one or two methods. Additionally, the IRS never asks for payment to be made over the telephone.
  • The IRS may assign the tax collection duties to a private company, but there are only four private collection agencies authorized to represent the IRS: CBE Group, ConServe, Performant and Pioneer. Even if a taxpayer’s unpaid tax bill is assigned to a private collection agency, before a phone call is ever made, the IRS and the private collection agency will mail written notices to the taxpayer.

Scams Aren’t Just Limited to the Telephone

Variations of the IRS telephone scam can easily exist in other realms, such as e-mail. Many scammers will try “phishing” or pretending to be an official IRS e-mail or website in order to obtain personal information or money. The IRS may use e-mail to communicate with taxpayers, but it will never use e-mail as a method of first contact about an outstanding tax bill.

What You Can Do if You Think You’ve Been Contacted by a Scammer

If you receive an e-mail or telephone call that you believe was made or sent by a scammer, you should report it to the Federal Trade Commission or the Tax Inspector General for Tax Administration.

 

 

 

 

 

 

Details for Tax Filing this Year

Details for Tax Filing this Year

Details for Tax Filing this Year

Tax season is here again with the dreaded April 15 deadline fast approaching. Some of the more proactive taxpayers out there have already filed their 2016 tax returns and maybe already have their tax refund checks, too. But for those who haven’t yet done the deed, here are a few pointers about filing your return this year.

What’s Needed to File?

By now, taxpayers should have all the necessary tax documents to file their taxes, such as any 1099 forms for contract work and W-2 forms for payroll work. These forms are usually sent by employers or clients in late January. If you don’t receive these documents, keep in mind it does not relieve you from the responsibility of declaring your income in your tax return. Also, if you already know what your income is (this can often be readily determined by looking at your invoices and pay stubs), you technically don’t need your W-2 or 1099 forms.

When to File?

The deadline to file your federal tax return is the same every year: April 15. An exception to this rule is when April 15 falls on a holiday or weekend. In that case, the tax filing deadline is actually the next business day. So the deadline for filing your 2016 taxes is Monday, April 17, right? Nope. April 17 is the Washington DC Emancipation Day holiday. Therefore, the actual deadline for filing your taxes this year is April 18.

What If I Need More Time to File?

Luckily, the IRS allows taxpayers to obtain an extension by submitting Form 4868 with their tax payment. However, taxpayers should still pay as much of their 2016 tax bill as they can by April 18. This is due to the fact that even though the IRS may grant an extension to file the return, they do not grant an extension to submit the tax payment.

So even if the IRS grants a tax filing extension, the taxpayer will still have to pay interest and late-payment penalties if their entire tax bill isn’t paid by April 18. The tax extension doesn’t sound so advantageous after all, and is all the more reason to get your taxes prepared and filed on time.

Ways to File?

There are two primary methods of filing your federal tax return. The first is the good ol’ fashioned way of mailing it in. If you do this, don’t forget to sign the return. When filing as a married couple, your spouse will need to sign as well. Keep in mind that when mailing in your return, it will often slow down the speed in which you get a tax refund check. On the other hand, it may theoretically decrease the odds of you getting audited, since the IRS must spend more time and effort to examine a paper return versus an electronic return.

The alternative way to file is electronically. It’s usually more accurate and faster with respect to the time it takes to get your tax refund check. By filing electronically, a taxpayer can expect a tax refund check several weeks sooner than if they filed through the mail with a paper return.

Conclusion

Taxpayers have an extra few days to file their taxes this year with a deadline of April 18. By now, taxpayers should be well on their way to preparing and submitting their 2016 tax returns. And if you need more time to file, you can often get an extension. But understand that the extension only applies to filing your return, not actually paying your taxes.