May 7

IRS Payment Plan – How to get an Installment Agreement

The Internal Revenue Service will allow you set up what is known as an IRS payment plan to repay your tax debt over time. This is also called an installment agreement. An installment agreement can be used for most types of taxes including income tax, payroll tax, and all types of business taxes. However the standards for an installment agreement repayment plan in which the amount of your monthly payment is determined, can widely vary.

First thing. Get current.

If you owe back taxes you must first be sure that all of your tax returns are current. It is important to include the current year in case you owe any taxes for the present year. Generally the installment agreement you negotiate will be accepted by the IRS and it will put your account in good standing. This process will generally prevent IRS collection efforts such as garnishments or levies. The amount you can pay back to the IRS is determined by using a collection statement known as form 433. It resembles a credit application that you might complete for a bank loan. You can avoid this type of paper work if the taxes involved are from a currently filed tax return (1040) and you are offering to pay the taxes over a 12 to 24 month period. This request can be attached to the current year filing. The installment agreement payment must be a direct debit payment so you will need to give the IRS your bank info. You will then receive an acknowledgement as to your installment agreement request.Read More

Apr 22

How to handle IRS notice of bank levy or wage garnishment

If you are being threatened by a bank levy or wage garnishment there are a number of things that you can do to solve your problems.

File a Request for a Collection Due Process Hearing.

In the request, explain that you need an installment agreement, noncollectable status or some other collection alternative. Collection of delinquent tax begins with a series of notices asking for payment. If payment is not made, the IRS eventually mails a final notice, notice of intent to levy, IRS Letter 1058. This notice provides thirty days to pay, after which time the IRS may begin enforcement action. It explains that you have the right to file a Request for Collection Due Process Hearing within that thirty-day period. Use the IRS form 12153 to submit the request. But you should never wait for the final notice to take action.Read More

Apr 22

IRS Penalty Abatement

A penalty abatement request is a written request to the IRS to remove or refund the interest and penalties on taxes from your IRS account.

The reasons that the IRS will assess penalties and interest include: late filing of your tax return, underpayment of taxes due and fraudulent returns.

The most common penalty abatement is based on "reasonable cause", meaning that you faced a situation that was unforeseeable and beyond your control which caused you to fall behind on paying and/or filing your taxes.  A penalty abatement will be granted by the IRS if you can demonstrate reasonable cause. The IRS may also consider forgiving (abating) penalties if you can show them that a substantial hardship would have occurred had you paid the tax when due.

When considering a penalty abatement request, the IRS will usually accept as reasonable cause any circumstance that was beyond your control and had a direct impact on your ability to pay or file your taxes.  The penalty abatement rules cite several examples (listed below), but any situation will be considered provided it meets the requirements.Read More

Apr 22

How to Refinance with a Tax Lien

A tax lien on your property makes tax lien refinancing complicated at best, and often unattainable at all. The tax lien must be resolved and removed, or a request for the lien to be made secondary to the loan on the property may be submitted to the IRS. It’s common for taxpayers to have at […]
Apr 1

How to File an Amended Tax Return – IRS Form 1040X

Discovering new income information after a tax return has been filed can be confusing for many taxpayers.This prompts the need to file an amended tax return.Taxpayers often wonder if they should inform the IRS of the change in the first place or if that will prompt additional scrutiny on other tax returns.While some changes don’t […]
Apr 1

Tax Preparation – Settling Up with the IRS

Walter Wotmanby Walter Wotman, CPA

At the end of the year, it's time to watch the dust settle on all of your financial transactions. From making the money, to spending the money, to investing the money, taxes are sprinkled on almost every financial move we make. It's very rare to pay exactly how much you owe over the year. Filing a tax return summarizes for the IRS what you've done financially in a given year, in order to be sure that you have paid what you owe in taxes for your financial decisions and/or to be sure that you didn't pay too much. It's essentially a way to "settle up" with the IRS on a yearly basis.Read More

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