Avoiding an IRS Tax Levy

A tax levy is a legal seizure of your property in order to satisfy a tax debt. According to the IRS, if you fail to pay your taxes or to make arrangements on how to settle your debt, the government may take and sell any real or personal property that you own or have an interest in.

 A levy may be issued by the IRS after three conditions are met. First, the IRS will assess a tax and send you a Notice and Demand for Payment. The second condition is that you neglected or refused to pay the tax. Finally, the IRS issued a Final Notice of Intent to Levy and informed you of your right to a hearing at least thirty days before the levy. This notice could be sent to your home, your place of business, or your last known address by registered or certified mail.

 In order to release a tax levy, you must either challenge the levy within thirty days of the final notice or set up a proper resolution for paying back your tax debt. Challenges to the levy include showing how the levy will create an immediate economic hardship. Being in bankruptcy at the time the levy was noticed can also create a stay of collections. Additionally, a levy might be released if the taxpayer can prove that the IRS committed a procedural error in an assessment.

A proper resolution for paying back your tax debt could include an installment plan whereby you make regular payments to the IRS until the debt is satisfied. For more information about your options for tax relief, contact us today. For More Information Click Here.

Understanding the Tax Levy, Tax Lien, and Your Options

The IRS is the most powerful collection agency in the world. Among the tools it has for collecting from people and businesses are tax levy and tax liens. Here is a bit of information on each of these issues, as well as the options you have if faced with either of these.

According to the IRS, a tax levy is the seizure of your property in order to satisfy your debt. If the IRS has assessed a tax against you and has sent you a notice and demand of payment and you still have not paid the taxes that are owed, you may receive a Final Notice of Intent to Levy. In addition, you will receive a notice of your right to a fair hearing.

If you've received one of these notices, it is very important that you react quickly. The IRS gives you thirty days from the final notice to either pay the debt in full or attempt a resolution. Resolving the debt may involve paying the debt off in installments over time.

If you can prove that the levy will cause you an immediate economic hardship, it may be released. Other ways to release a levy, besides making payments or paying the debt in full, include proving that you already paid the debt before the final notice was issued or that you were in bankruptcy proceedings when the notice was issued. Tax levies may also be released if there was a procedural error on the part of the IRS in the attempt to collect the debt or if the statute of limitations on the collection of the debt has expired.

A federal tax lien, the IRS states, is the government's legal claim against your property if you fail to pay your debt. Tax liens attach to all of your assets, including property, securities and vehicles, as well as any future assets you may acquire during the duration of the lien. Liens against businesses attach to all business property and rights to business property including accounts receivable. Tax liens, if in place before bankruptcy is filed, may continue even during and after bankruptcy.

Generally, the only way to have a tax lien removed is through a tax resolution, when the debt is paid in full. However, a new policy pertaining to tax liens speeds up the amount of time between when the lien is approved from approval and when it is erased from credit reports. It is important to note, however, that this only applies to federal-level liens and not to liens at the state level.

Like a levy, a lien can also be appealed and may be removed if the individual or business can prove that the debt had already been paid when the lien was issued, the IRS did not follow proper procedures or there was a bankruptcy proceeding already in place before the lien was filed.

The main difference between a lien and a levy is that the levy actually requires the taking of the property to satisfy the debt, while the lien secures the government's interest in your property when you don't pay your debt. Both issues are difficult to deal with. If you're facing a tax lien or a tax levy, the professionals at Optima Tax Relief can help. Contact us to begin working toward a resolution today.

IRS Trouble? Tax Attorneys in California Can Help

If you're in California and you owe a state or federal tax debt, you may be able to obtain relief from that debt with the help of a tax attorney in California. Tax attorneys, like other lawyers, are required to possess a JD degree and pass the state bar examination. However, in addition to being licensed to practice law, they also have additional education in tax laws and often have training and certification in accounting.

A tax attorney can provide representation for a number of reasons. Some of the reasons you may need the services of a tax attorney include attempts by the IRS to collect a debt from you via a wage garnishment, tax lien or tax levy. If you have years of unfiled tax returns, you've committed tax fraud or you need representation due to a criminal investigation that has been brought against you by the IRS, you might also benefit from a tax attorney.

The attorney can also provide representation in the event of an IRS audit, as well. Audit representation may become necessary if you've received a letter from the IRS requesting more documentation and you're unable to produce that documentation.

Representation also may be useful if you've been asked to meet with an IRS agent in person.  A tax attorney can help you understand your rights in the event of an audit and may -- with a power of attorney signed by you -- be able to meet with the agent on your behalf without you having to be present.

After the audit, if taxes and penalties are assigned, your tax attorney may be able to negotiate those penalties and a deal with the IRS as to how much you owe. Often, the IRS is willing to negotiate settlements with taxpayers via their attorneys rather than using the time or money required to take the case to court.

Not all of the services a tax attorney provides are related to IRS trouble or tax debt relief, however. A tax attorney can be helpful if you have a taxable estate and need legal advice or help filing an estate tax return. Additionally, you may need the help of a tax attorney if you have just started a new business and would like help on setting up the best structure for your new company, or if you're setting up an international business and need help with foreign tax treatment or contracts.

The IRS is the most powerful collection agency of the world. Because of that, it pays to have the most experienced tax attorney on your side. The professional tax lawyers at Optima Tax Relief have experience in both tax law and accounting. They can not only help you with current tax trouble, but can also use their experience to help you avoid tax trouble in the future. For more information, contact us today. For More Information Click Here.

Ten Things to Understand About the Offer In Compromise Option

An Offer In Compromise is just one option that taxpayers have for satisfying a federal tax debt. Here are ten things to understand about this option.

1. An Offer In Compromise is used when the taxpayer and the IRS both agree that the debt owed is more than what is financially possible for the taxpayer to pay, even via a long term payment plan or the seizure of assets. The components that the IRS uses to evaluate an individual's ability to pay include income, expenses and asset equity.

2. On average, individuals who settle their tax debt through an Offer in Compromise pay 20 percent less than the amount they actually owed to the IRS.

3. The Offer in Compromise is the maximum amount that the taxpayer can pay. If the IRS agrees to this amount, then the debt is considered "paid in full."

4. The acceptance rate for Offers in Compromise is relatively low, and offers are often rejected due to errors or omissions in their submissions. In order to obtain an acceptance, an individual must be able to prove that the payment of the tax debt would cause an economic hardship or would be unfair or inequitable.

5. In 2011, as part of the Fresh Start Initiative, the IRS announced that it had streamlined the investigation process involved in an Offer in Compromise in order for people to be able to have their offers accepted or rejected by the agency in a more timely fashion.

6. The new streamlined process includes efficiency measures such as fewer requests for information and the option to request information by phone instead of mail. In addition, the timeline for the repayment process was shortened to two years.

7. According to the IRS, offers can be paid in a couple of different ways, including a lump sum payment in which 20 percent is paid along with the offer application, with -- upon acceptance of the offer -- the remainder being paid off in five or fewer payments; or a periodic payment in which a payment is made with the application and monthly installments are made while the IRS considers the offer.

8. In order to utilize the Offer in Compromise option, one must not be in an open bankruptcy proceeding.

9. While your Offer in Compromise is being considered, the IRS may still be able to file a Notice of Federal Tax Lien. Tax liens are not released until the offer terms are satisfied. However, all other collection activities are suspended and the legal assessment and collection period is extended during the time of IRS consideration of your offer.

10. If your Offer in Compromise is rejected by the IRS, you may appeal this rejection within thirty days.

If you would like to know if an Offer in Compromise would be a good way for you to resolve your tax debt, contact the experts at Optima Tax Relief today.

Devin Finley is a freelance writer and tax relief expert. Devin writes on a multitude of financial and legal topics. He enjoys collaborating and strategizing with other professionals to ensure tax & debt clients receive competent and beneficial representation. For more information Visit http://optimataxrelief.com/

The IRS Audit Process Includes Taxpayers' Rights

You may not agree with the wry observation that an IRS audit letter is better than no mail at all, especially if you're the recipient. However, just because your tax return has been selected for special scrutiny, and you may need tax relief in California, it does not mean you are suspected of doing anything wrong. In fact, the IRS definition of an audit is this:

"An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate."

You may have just omitted some critical piece of evidence that you are entitled to a tax deduction, or you were selected randomly. Here are three possible reasons the IRS selected you for an audit:

• You fell within the parameters of a computer generated statistical formula. For example, your return shows higher than average tax credits or deductions based on the norm for other taxpayers within your income range.
• Your W-2 or 1099 forms don't match up with what your employer or clients reported.
• Your return involves another taxpayer, such as a business partner or investor who was also audited.

Whatever the reason for the audit, the IRS notifies you either by mail or by telephone. (Note: The IRS never uses e-mail to inform a taxpayer of an audit. If you receive such notification, it is a scam.)

Depending on the type of audit, your dealings with the IRS could be:

• Entirely by mail: The IRS audit letter requests you provide additional information about specific items on your tax return. Read the notification carefully and don’t put off complying.
• In person: The auditor could either show up at your place of business or you could be asked to come to the IRS office.

Whichever audit method occurs, taxpayers do have rights. Your audit letter or follow-up letter after a telephone notification will contain IRS Publication 1, which outlines your rights to:

• protection of your rights throughout the audit
• privacy and confidentiality and your right to know why certain information is being requested courtesy and professional treatment by the auditor
• pay only the correct amount of the tax required by law
• access to the Taxpayer Advocate Service if you have not been able to resolve a problem with the IRS
• review of your case by the IRS Office of Appeals as well as by Judicial Review
• representation by a tax specialist, who has your signed Power of Attorney

The final bullet point above may be your best alternative during a process that could well become complicated and stressful. Optima Tax Relief has experienced and qualified tax specialists who can represent you during an IRS audit and help with any subsequent negotiations.

Devin Finley is a freelance writer and tax relief expert. Devin writes on a multitude of financial and legal topics. He enjoys collaborating and strategizing with other professionals to ensure tax & debt clients receive competent and beneficial representation. For more information Visit http://optimataxrelief.com/

The Differences Between a Tax Levy and a Tax Lien

Levies and liens are two of the tools that the IRS uses to collect debts owed by taxpayers. Both can adversely impact the taxpayer, but there are procedures by which both can be released or removed.

A tax levy, as defined by the IRS, is the legal seizure of your property in order to satisfy a tax debt. Some property that can be seized by the IRS and sold to pay off the debt is your home, car or boat. The IRS can also levy wages, retirement accounts, rental income, and even the cash loan value of your life insurance.

If the IRS issues a notice to you that it intends to seize your assets, you have 30 days to challenge the levy or to attempt a resolution through a payment plan or by paying the amount you owe in full. If you need additional time to consider your options or to arrange payment, you can file for a stay of collections that will allow you an additional 90 days.

The IRS may also opt to release a levy if it determines that the levy would create an immediate economic hardship. While this release doesn't mean you don't have to pay the money, it does allow for you to work toward a resolution with the IRS.

A tax lien gives the government a legal claim to your property. Unlike a levy, the lien doesn't grant possession of your assets, but merely grants the rights to receive any income you receive from the selling of those assets in order to satisfy your debt. Having a lien placed on your property is harmful to your credit and may make it difficult for you to do business or to sell your assets.

A new tax policy allows for the process of "withdrawal" from a lien when the debt is paid in full or the taxpayer has enrolled in a payment plan that -- once completed -- will result in the debt being paid. Withdrawal of the lien causes the bad information to come off the taxpayer's credit report faster than any other detrimental issue. It is important to note, however, that the withdrawal process only applies to federal tax liens. State-level liens will remain as negative information on your credit report.

You may also have the opportunity to have the tax lien removed if you can prove in court that the tax has already been paid, the IRS failed to followed proper procedures, you were in bankruptcy when the lien was filed or the statute of limitations on collecting the debt has already passed.

If you have received a notice of the government's intent to file a levy or a tax lien, it is important to act right away in order to avoid the consequences of these actions. Optima Tax Relief has experience working with the IRS and can help you find relief from a tax debt by negotiating a solution for you. For a free consultation and to learn more about your options for resolving your tax debt, contact us.

Devin Finley is a freelance writer and tax relief expert. Devin writes on a multitude of financial and legal topics. He enjoys collaborating and strategizing with other professionals to ensure tax & debt clients receive competent and beneficial representation. For more information Visit http://optimataxrelief.com/

Getting Proactive Will Help You Avoid an IRS Tax Levy

If you have received an IRS final notice of an impending tax levy, you have undoubtedly not been answering your mail. Once that levy descends on you, its icy fingers can freeze your bank account, seize your personal and real property and essentially put everything you have at the service of the IRS until the debt is paid.

 Before the foregoing disastrous scenario plays out, and while there’s still time, you can avoid a tax levy through a number of proactive measures on your part:

• Do not ignore the IRS notices. If you get into what is known as the “IRS notice stream” and do nothing, the IRS occupies the high ground, and you have lost time. When you receive the first notice, follow the instructions and get busy clearing up the problem.
• Talk to the IRS rep and see about arranging a time payment agreement. The recent IRS Fresh Start Initiative might help in making it easier for you to arrange direct debit payments.
• Look into the IRS Offer in Compromise as a possible way of reducing the amount of tax you owe. If you are truly financially destitute and do not have the assets that can be liquidated to settle your debt, you might qualify.
• Don’t stall. If the IRS determines that you are dragging your feet, they have the option to immediately impose the levy, even while considering your request.

 On the other hand, if you believe your tax levy is based on an IRS mistake, get some professional tax assistance. Log on to Optima Tax Relief for a free assessment. For More Information Click Here.