Welcome to the IRS section of our website. For more than 25 years our tax attorney and accountant in Greenville have been helping people solve the many tax problems they encounter with the IRS. Since the IRS is a federal agency, our firm can deal with IRS Revenue Officers on your behalf no matter where you live in the United States.
We even have clients whose problems began with income earned overseas! We are happy to help people with very small to very large IRS problems. However, NOT ALL IRS PROBLEMS CAN BE SOLVED, although we are able to resolve more than 95% of the cases we handle. We cannot know how to resolve your IRS problem until we know all about your problem and your situation.
UNFILED TAX RETURNS
People who do not file their returns usually fail to do so due to some traumatic occurrence in their lives. For these people, a deal can usually be made within the collection division of the IRS. However, the IRS can and does treat failure to file as a criminal act in some cases. This usually results in imprisonment for the non-filer. If a taxpayer does not file his return, the IRS may file a return for him called an SFR or Substitute For Return. This always results in higher taxes than if filed by the taxpayer. However, the taxpayer may always file a return, no matter how late. Before any deals can be made with the IRS, at least the past six years returns must be filed.
RETURNS FILED BUT NOT PAID
Most people try to pay their taxes on time. However, I have many clients who have filed their return every year, but simply did not send in the payment with the return. This can happen for many reasons, but a very common one is when the taxpayer withdraws money from his 401K, IRA or other retirement account and the taxes are not withheld at the time of withdrawal. Many different penalties are assessed against unpaid taxes and interest is compounded daily by the IRS. Thus, it is wise to resolve this delinquency as soon as possible. For returns several years old it is not unusual for the interest and penalties to be more than the original tax!
PAYROLL TAX PROBLEMS
The IRS pursues the collection of unpaid payroll taxes very vigorously, whether the company is a sole proprietorship, corporation, partnership or LLC. The penalties assessed for these taxes can rapidly increase the total amount owed in a very short time. If the taxpayer is a corporation and goes out of business with the taxes unpaid, the IRS, under the Trust Fund Penalty doctrine, will pursue everyone it feels is responsible for making monetary decisions in the corporation. The Trust Fund Penalty consists of that portion of the total payroll taxes that are withheld from the employee paycheck and held in trust by the employer. This is a very complicated and dangerous area and anyone who has payroll tax problems should not talk to the IRS without proper professional representation. The IRS can literally put a company out of business due to unpaid payroll taxes. Levies should be avoided at all costs and can usually be avoided if prompt and prudent action is taken. A levy is the name for the actual collection action the IRS employs to forcibly take money from a taxpayer. However, the IRS cannot levy unless due process (notice and opportunity to be heard) has been followed. Here are some of the most common levies. A bank account levy occurs when the IRS sends notice to your bank and the bank must send them all of the money in your account. This is a one time occurrence and the IRS must send another levy to take money again. A levy on wages occurs when the IRS sends notice to your employer to withhold a certain amount from your paycheck each pay period. This is an ongoing levy and will occur each pay period until released by the IRS or the tax is paid in full. It usually results in the taxpayer not having enough to live on after the levy. It can also result in the taxpayer being fired because the employer does not want to have to deal with the extra collection work. A levy on a company’s accounts receivable occurs when the IRS sends notice to the company’s customers to send the IRS the money that otherwise would be coming to the company. This can quickly put a small company out of business. In any of these situations, the people or businesses to whom the IRS sends the levy notice must cooperate or they face serious trouble themselves. As you can imagine, these contacts do nothing to improve your relationship with your employer or customers.
The first type of IRS levy occurs when the IRS notifies your bank to freeze all of the money in your account or accounts at that bank as of the day the notice is received. The bank must hold the money for twenty-one days and then send the money to the IRS unless notified otherwise. This twenty-one day period gives the taxpayer an opportunity to appeal the seizure.
The second type of levy occurs when the IRS notifies your employer to send the IRS directly a portion of your paycheck. This is also called a garnishment. Again, the taxpayer has a short time to challenge this levy. In order for a levy by the IRS to be legal, several notices must be sent to the taxpayer prior to the actual levy, including two certified letters. However, the IRS only has to send the letters to the last known address, which may not be the taxpayer’s current address. Also, the certified letter does not have to be picked up by the taxpayer, it only has to be mailed.
The third type of levy is a levy against a company’s customers. This levy occurs when the IRS sends notice to the company’s customers to send the IRS all of the money that otherwise would be coming to the company. This can quickly put a small company out of business. The IRS has many ways to get a company’s accounts receivable and with this they can levy its customers.
In any of these situations, the people or businesses to whom the IRS sends the levy notice must cooperate or they face serious trouble themselves. As you can imagine, these contacts do nothing to improve your relationship with your employer or customers.
A lien is a public notice that a person owes money. A real estate mortgage is an example of a lien. Liens are filed at the county courthouse and also appear on your credit report. Thus they can destroy your credit and make it very difficult for you to borrow money. The IRS files a lien for the amount of taxes you owe, broken down by years. If you sell a piece of real estate, any filed and recorded lien must be paid before you can receive any money from the sale.
See IRS Levies
A seizure of property, either real or personal, is very similar to a
levy, except the thing seized is not money. The same notices must be sent to the taxpayer for the seizure to be legal. In the case of real property, a legal action, similar to a foreclosure, must be filed in federal court and the seizure approved by a federal judge. If the seizure is found to be legal, the IRS can then sell the property seized and keep all of the money to apply to the taxes owed. The only exception to this is that property that is exempt pursuant to State law is protected from seizure. See “IRS LEVIES” for more details.
An audit is simply an examination by the IRS of one or more tax returns that was previously filed by a taxpayer. This can either be a detailed examination of the entire return or, which is more often the case, an examination of one or more sections of the return. A field audit is one where you meet the examiner face-to-face at the IRS office. A correspondence audit is completely conducted by mail with the exchange of documents.
Any time a tax return of any type is not filed, filed late and/or not
paid, penalties are assessed against the taxpayer. This is separate
from interest which is charged when taxes are not paid on time. It is important to note that after the penalties are assessed, interest will be charged on the penalties until paid. There are many types of penalties which are charged against a taxpayer, such as non-filing, late filing and failure to pay penalties. However, under certain circumstances most and sometimes all of these penalties can be abated or forgiven. This can occur when the taxpayer has a reasonable explanation for doing or failing to do the action which resulted in the penalty. A special appeal must be filed for penalty abatement and the penalty usually cannot be abated until the underlying tax has been paid. On the other hand, interest is never reduced or forgiven unless the IRS made a calculation error which resulted in higher interest than allowed by law.
INNOCENT SPOUSE RELIEF
The 1998 tax law broadened the definition of “Innocent Spouse Relief” so that relief from IRS tax liability is now more available for those spouses who filed tax returns jointly, yet the circumstances demonstrate that it would be unfair for the IRS to hold both spouses equally responsible for the joint tax liability. In many of these tax cases, a spouse is relieved of responsibility to the IRS for tax, interest, and tax penalties on a joint tax return. This is called innocent spouse relief and is usually based on the fact that the spouse was forced in some way to sign the return, she did not examine the return and did not benefit from the money that was not declared on the return.
INJURED SPOUSE RELIEF
Whenever a taxpayer owes delinquent taxes and files a return resulting in a refund, the IRS will keep the refund to apply to the delinquent taxes. Injured spouse relief occurs when both spouses work and report income on their joint return, but only one owes delinquent taxes. After the IRS keeps the entire refund, the non-liable spouse can file an appeal for Injured Spouse relief. If the non-liable spouse can show the IRS how much of a refund she would have gotten on her own, the IRS will refund that portion of the refund they kept to her.