Tax Info

IRS Tax Liens

The IRS has the power to collect back taxes by levying on taxpayers’ property as a result of a Tax Lien. When a person owes back taxes, the IRS gains a Federal Tax Lien on all that person’s assets after meeting certain statutory requirements. The IRS tax lien attaches to all rights, title and interests of the taxpayer. Once the IRS has a tax lien on all of a taxpayers assets, the IRS may enforce that tax lien by administratively levying his or her assets.

An IRS tax lien is filed by the government to protect its interests. Recorded with one or several county recorders, a tax lien basically tells the world that you owe back taxes to the IRS, and is generally devastating to the taxpayers credit. An IRS tax lien makes it very difficult to obtain credit or to sell real estate.

The effect of the Federal Tax Lien statute is that when any person fails to pay any assessment of tax, plus interest, penalties, or costs, a tax lien in favor of the IRS arises upon all property and rights to property, whether real or personal, tangible or intangible, belonging to the taxpayer. Even if the taxpayer makes partial payment, a tax lien will arise for the balance of the tax.

Wage Garnishment and IRS Levy

Wage garnishment and IRS Levy stays in effect until the tax is fully paid or until the IRS agrees to release garnishment. IRS frequently uses garnishment to collect taxes owed through your employer. Once the IRS garnishment is filed, the employer is required to collect a percentage of each paycheck. Wage garnishment requires that a large percentage of the taxpayer’s wages be turned over directly to the IRS.

The amount that the IRS can keep from any wage garnishment is based on your marital status and number of dependents. Basically, the IRS keeps most of the money from a garnishment. The amount of your income that is exempt from an IRS wage garnishment is figured by adding the standard deduction you can claim on your taxes and the amount you can claim for exemptions, divided by 52. A family of three subject to a wage garnishment will only be allowed to keep about $325 per week.

Filing Late Tax Returns

Many taxpayers do not file IRS tax returns because they do not have the money to pay the balance due on the tax return. Our tax attorneys strongly believe that in most circumstances, filing the missing IRS tax returns is in the best interest of the client. Although there are numerous reasons for timely filing of the IRS tax returns, the IRS can impose a penalty of up to 25% of the tax due on a late tax return.

IRS Payroll Taxes & Trust Fund Recovery Penalty

Congress enacted the Trust Fund Recovery Penalty Statute to encourage prompt payment of withheld and other collected payroll taxes by allowing the IRS to assert a liability against responsible third parties [IRC 6672]. The amount of the penalty imposed by the statute for failure to comply with its provisions is measured by the payroll taxes required to be collected or collected and not paid over. That is why the liability is referred to as a “100% Penalty”. The IRS penalties is civil in nature, not criminal.

Tax Bankruptcy

Tax Bankruptcy or Discharging Back Taxes in Bankruptcy is often the last resort for dealing with delinquent tax bills. Generally, all income taxes, both Federal and State may be discharged in bankruptcy if they are old enough. There are two basic types of tax bankruptcies available to the average taxpayer to discharge delinquent taxes: liquidation under Chapter 7 and wage earner plans under Chapter 13. In Chapter 7 all of the bankrupt taxpayers assets and liabilities are marshalled. All assets, except certain exempt assets are liquidated and paid to creditors on the order specified by the bankruptcy code. To the extent non-exempt assets are insufficient to pay all creditors, most of the unpaid debts are forgiven; i.e., they are discharged.

Heier Weisbrot & Bernstein LLC, CPA Tax Services include:

  • Free Initial Consultation
  • Detailed Evaluation of Each Case with Specific Recommendations
  • Preparation of all Necessary Forms for the IRS
  • Direct Representation Before the IRS to Negotiate the Settlement
  • Detailed Experience in IRS Representation