Top 10 IRS Tax Problems

1. Liens – Once the IRS assesses tax against you, they are required to give you a notice and demand of payment within 60 days. If you fail to pay, the IRS will send you a Notice of Federal Tax Lien. This public notice attaches to all your assets. The lien establishes the IRS as a secured creditor. This gives them the ability to seize your assets. However, if you know what you are doing, the IRS may withdraw, discharge or subordinate the federal tax lien.
2. Wage levies – The IRS will mail you a Notice of Intent to Levy. You have 30 days from the date on the letter before they can levy your wages. The IRS can levy your entire paycheck and it will attach to each and every pay check until a release is issued. If a levy has been placed on your wages, contact a professional immediately for tax relief.
3. Bank levy – Again, the IRS will mail you a Notice of Intent to Levy. You have 30 days from the date on the letter before they can levy your bank account. The IRS will seize all of the funds from your account upon notice of levy. However, the law provides for a twenty one day waiting period before the funds are surrendered to the IRS. If you do not get your IRS problem resolved within this 21 day period, the IRS will take all of the money in the bank account. Only in rare cases will the IRS return these funds. If a levy has been placed on your bank account, contact a professional immediately for tax relief.
4. Levy on Accounts Receivable – For self-employed taxpayers and businesses, the IRS can levy your account receivables. Without these funds for day-to-day operations, you could be forced to shut down. Just like a bank levy, the IRS will take the entire amount so contact a professional immediately.
5. Property Seizures – The IRS can seize and auction your home, automobile, real estate, inventory, business equipment, or any other tangible asset. Proceeds from the auction are applied to the tax liability. If the sale proceeds are less than your tax liability, you will still be liable for the remaining unpaid tax. If you have received a Notice of Seizure, contact a professional immediately.
6. Payroll Taxes – Employers are required to withhold and deposit federal income and social security taxes from each employee’s paycheck. The IRS is extremely aggressive when it comes to the collection of payroll taxes. The IRS may even assess some of these taxes personally against the corporate officers or employers. Contact a professional immediately to represent you in these types of problems.
7. Unfiled Returns – When dealing with the IRS, filing delinquent tax returns is step one. The IRS will not release levies, consider an Offer in Compromise or Installment Agreement until you have filed all delinquent tax returns. To become a tax compliant filer, you will need to file at least the previous six years tax returns.  When filing a late return, contact a professional to help prepare it and to deal with the IRS.
8. Substitute Tax Returns – If the IRS has filed a substitute tax return on your behalf, it may be in your best interest to file an original return yourself. The IRS prepares the substitute tax returns using the harshest tax rates and zero deductions which often times leave you with an inflated tax bill. The IRS closely inspects these types of original returns and may audit it before acceptance.  It is a good idea to contact a professional for this work.
9. Penalties & Interest – The IRS will assess penalties and interest for many reasons. The most common are failure to file tax returns and failure to pay the tax owed. Interest compounds daily and penalties are as much as 50% or more of the taxes owed. The IRS will abate penalties under certain circumstances. Contact a professional immediately if you owe a substantial amount in penalties and interest.
10. Audits – The IRS can audit only specific line items on the return or the entire tax return. Communication during an audit is vital. It will help make the process run smooth and could help save you money. Audits can take as little as a couple of weeks or as much as a couple of years. Typically the shorter the audit is, the better the outcome will be. Contact a professional immediately if you received an audit examination notice. Planning before the audit begins is the most important part of the process.