Representation Before The IRS

Stopping Wage Garnishments & Bank Levies

The IRS has the authority to take collection actions against you. This can include bank levies or wage garnishments. These actions may prevent you from paying your necessary bills and living expenses. Each has their own complexities in releasing, and Bailey Tax & Accounting has experienced professionals that specialize in getting these actions released.

A bank levy is a onetime action that seizes the balance of your bank accounts on a specific date. You only have 21 days from the date the letter was issued, or about two weeks from when you realize that your funds are missing, after considering the time it takes for mailing the levy notice and the time required by the bank to process it.

A wage garnishment is a continuous action. It will continue to take up to 100% of your net income until it is released. Once they start taking the money, those funds are not recoverable under most circumstances, so it is important to act quickly to get them released.

You may have to comply with certain requirements from the IRS before you can get a levy or garnishment released. You may be required to file delinquent returns and/or fill out a collection information statement that discloses your financial situation to the IRS. It is important to hire our company as soon as possible to allow time to for our professionals to comply with these requirements. Every day you wait is a day later that it will get released, and a higher chance that your funds will be unrecoverable or continue to be taken.

Assistance with Revenue Officers

Revenue Officers are the most active collection personnel at the IRS. A Revenue Officer is a single individual collection agent who has been assigned to your case. They are located locally to you, and they are required to make visits you your home or work. When a Revenue Officer is assigned to you case, you often will face shorter deadlines and more frequent levies and garnishments.

If a revenue officer has been assigned to your case, it is because of one of three possible reasons;

  • The IRS has classified your account as a “high dollar” case,
  • They have not been successful in collecting through other means, or
  • The IRS believes you have had a history of non-compliance or tax evasion.

It is imperative that you have representation as an intermediary between you and the Revenue Officer. Anything you say to this individual can be used against you and can be a very costly mistake. Bailey Tax & Accounting will talk to the Revenue Officer so that you don’t have to, and prevent enforced collections from taking place through bank levies or wage garnishments.

Filing Missing Returns

If you do not file your returns, then you are committing a crime, and you could potentially be facing up to a year in prison or a $25,000 fine for each unfiled year. It is not a crime to owe the IRS money if you have filed a return with a balance due. The IRS has taken a stance that collection is more important than prosecution, so they will typically try to get you to file or file a return for you if possible, rather than going through the hassle of criminal prosecution.

In many cases the IRS will file a substitute return for you if you do not do so yourself. They will file at the least favorable tax rate and not allow you the credits or deductions you deserve. If you owe money on a substitute return, then you can file the return yourself to replace it. However, the IRS will assume that you owe the amount they have assessed until your return is processed.

The expert tax preparers at Bailey Tax & Accounting will find every deduction and credit allowable under the tax code, giving you the most favorable return legally possible. We know the specific deductions allowable for your specific profession and life circumstances.

Penalty Abatements

Under many circumstances, the IRS will abate penalties assessed on your account if you did not file a return or pay the tax due for a reason beyond your control. In addition, they will often abate penalties on a single year if you have had a long and ongoing history of compliance, and that year was an abnormality.

The problem is that you can only abate penalties once for each balance owed. If you do not prepare the abatement properly, the IRS may not abate all the penalties that you rightfully deserve. It is important that you have a professional prepare the abatement(s) who has extensive experience in doing so. We know the verbiage that the IRS is looking for to abate the maximum penalties allowable.

In some circumstances, it is either required or more favorable to attempt a penalty abatement after setting up an installment agreement.

Offer in Compromise

In limited and specific situations, the IRS will accept a settlement for as little as 1% of what you owe. An Offer in Compromise requires that you have inadequate income and assets to pay the balance due to the IRS, and allows the IRS to accept a payoff that you can afford. The Offer in Compromise process takes extensive substantiation and can take up to a year or more to fully process an acceptable proposal.

Do not be fooled by most companies that promise an Offer in Compromise! Many companies will file an offer for individuals that do not qualify, knowing that they will be rejected, and then they will charge you more for additional services after the offer is rejected. Bailey Tax & Accounting will evaluate your case and see if an offer is right for you. We will not suggest an Offer in Compromise unless you really do qualify for one.

Payment Plans

Streamline Installment Agreements

In many cases, the IRS allows a specific monthly payment depending on your balance owed. The number is set by the IRS, and they will accept any amount requested over that number with little or no information needed to prove your financial situation. This kind of agreement will pay the balance owed in full within a six year period. This is the preferable and simpler solution if you qualify and are able to make the given payment. In addition, this method will prevent the filing of liens. A lien will be filed any time you are unable to set up a streamline agreement.

Partial Pay Installment Agreements

If you cannot afford a streamline or do not qualify, then you will be required to fill out a Collection Information Statement which requires you to disclose your financial situation to the IRS. If you do this yourself, you will inevitably pay more than you have to. Our professionals understand that the IRS has allowable amounts for various expenses based on where you live. These allowable amounts can be used to reduce the amount available on paper for the IRS to collect each month as an installment agreement. These agreements are based fully on your net expendable income after all allowable expenses and they will require you to pay whatever the statement shows you can pay. That is why it is important to have Bailey Tax & Accounting use our expertise in setting up installment agreements to your advantage. We will get you the lowest payment possible.

Currently Non-Collectible

If you are unable to make a monthly payment, and the Collection Information Statement shows that your expenses are greater than you income, then you may qualify for a Currently Non-Collectable status. This means that you will not have to make payments for a duration of time. This is a temporary status and can last anywhere from one to four years before you have to start making payments or fill out a new statement showing that you still qualify for that status. It is important to note that this status does not eliminate the balance due, but defers required payments on that debt. If you have an increase in income, or sell property or investments, they may require you to start making payments or remit the proceeds from a sale to be applied to your outstanding tax debt.

Tax Lien Negotiations

Tax liens are a normal course of business for the IRS when you owe taxes for an extended period of time. Liens are filed to protect the interest of the government. They are reflected on your credit report, and negatively affect your credit score. Unless you qualify for a streamline agreement, or owe under $10,000, a tax lien will be filed and will only be released in a handful of circumstances. Some companies buy lists of tax liens that are filed because a lien is a matter of public record, and they know that you have some issue with the IRS or state authorities. They use these lists to call potential clients, and often are misleading about what a tax lien means in order to win over business.

Misconceptions about Tax Liens:

  • A tax lien does NOT mean that you are necessarily in danger of collection actions.
  • A tax lien is NOT an indication that a company has not resolved your account.
  • A tax lien is does NOT mean that the IRS can seize your property or assets.
  • If you are in an agreement, most companies cannot release the lien without putting you into a resolution that is less beneficial for you (such as a much higher payment plan).

Truths about Tax Liens:

  • A tax lien is NO indication of if you are in danger of collections. If you are put into a partial pay installment agreement or a currently non-collectable status, then a lien will be filed even though you are in absolutely no danger of enforced collections.
  • A tax lien is often filed AFTER a resolution is complete, and your account is resolved.
  • A tax lien does NOT give the IRS the right to take your property. It DOES however affect the sale of property and assets. The IRS has first right to any proceeds AFTER the primary mortgage holder is paid. In other words, if you sell a property for $100,000 and owe $60,000 to the bank for a mortgage, the IRS will expect the other $40,000 and may be able to get these funds before they are disbursed to you.
  • There is only a small handful of reasons why a lien will be released, and it may require a potentially less beneficial solution if it is important to you not to have a lien filed.

When will the IRS release a Tax Lien?

It is important to know that there are two primary types of lien releases; Withdrawals and Subordinations. A withdrawal is where the lien is removed completely (but it still may appear on your credit score as “satisfied”). Subordination is where the lien stays in place, but the IRS puts another institution before them in the order of who will get paid when an asset is sold. These are the situations where you can get a lien withdrawn or subordinated according to the IRS.

  1. The lien was filed prematurely or not in accordance with IRS procedures.
    • This very rarely happens except in a small percentage of cases.
  2. The taxpayer entered into an installment agreement to satisfy the liability for which the lien was not required to be filed, but the lien was filed anyway.
    • This is if the file a lien AFTER you set up a payment plan, AND the lien was not required to be filed under the terms of the agreement.
  3. The taxpayer is under a Direct Debit Installment Agreement, and meets the criteria for the streamline program.
    • You can get a lien release on balances UNDER $50,000 if you set up an agreement that full pays in 6 years AND it is paid by direct debit from a checking or savings account
  4. Withdrawal will facilitate collection of the tax.
    • For instance, if you are selling a property, it is required to get the lien withdrawn before closing, and the proceeds will go to the IRS once sold.
  5. The withdrawal is in the best interest of the taxpayer and the government.
    • If your job requires you to not have liens, and it would affect your ability to pay on an agreement to the IRS, they will release the lien after thorough investigation.
  6. The IRS will receive an amount equal to the lien or interest to which the certificate of subordination is issued.
    • This applies when you are getting a loan to pay the IRS, and the bank requires collateral in the form of property or assets. They will subordinate the lien to the bank you are getting a loan in the amount of the payment that they receive. If you sell this asset, then the money would be paid to the primary mortgage holder, then bank used to get the loan to pay the IRS, and lastly the IRS.
  7. The issuance of the certificate of subordination will increase the government's interest and make collection of the tax liability easier.
    • The IRS leaves this option open to any other reasonable alternative. However, very few alternatives will actually be accepted.

Continued Support and Help Understanding Taxes

Bailey Tax & Accounting will make sure that you know what to do, even after you have a resolution in place. We will ensure that you go away more knowledgeable than before and that all your questions have been answered.

We will set you up with a reasonable solution to your current liability and enough knowledge to keep you out of that situation in the future. One way we do that is through continued annual bookkeeping, accounting, and tax preparation at a reasonable fee.

Business Support

Often times businesses will get behind on their income or payroll taxes for reasons beyond their control. It is important to understand that the liabilities can be assessed to you personally and will not just go away if a business is closed.

Bailey Tax & Accounting can help you get your business back on track with the IRS and state taxing authorities. We will set up a reasonable payment plan and advise you on how to keep up with current and future liabilities so you don’t fall behind again.

Accounting Systems

Bailey Tax & Accounting has a team of accountants that can help you set up an accounting system so that you will know where your business is every month, and know how much you should be setting aside for taxes so that you don’t owe at the end of the year.

Entity Structuring for Tax Minimization and Asset Protection

In many situations, a different business structure could be better for you. Bailey Tax & Accounting will help advise you on what kind of entity could minimize your taxes and protect your assets best. Every business situation is different, and there is no specific solution that is good for every business. Let our professionals evaluate your business and offer advice on what entity you should be using.