It is an unfortunate reality of our lives that tax controversies may arise when we least expect them.
The various tax laws one must navigate on a day-to-day basis are often filled with traps for the unwary. No one likes to get that letter in the mail from the IRS or Department of Revenue, but if it happens to you, depend on Ourednik Law Offices for help.
Our response to your tax controversy is timely and effective. We have helped numerous clients both legally and emotionally through this tough experience. We will deal with the IRS on your behalf and work to ensure that your property remains yours and that the settlement of your debt is manageable given your personal circumstances.
If necessary, our attorneys will fight for you in tax court or federal district court. Every case is different so contact Ourednik Law Offices today to find out how we can help you put your tax problems in the past.
IRS Tax Consequences
The IRS has several collection methods at their disposal if an individual does not pay their taxes. These include:.
Federal Tax Liens – When a taxpayer does not respond to an IRS demand for payment, the first step in the collection process is usually the filing of a federal tax lien. A lien is an encumbrance in favor of one party upon the property of another. In this case the lien is a “statutory” lien based on the power granted to the IRS under the Internal Revenue Code (IRC).
Under the IRC, the lien attaches to “all property and rights to property” of the person or entity liable for the tax, and broadly includes both real and personal property. This can make it difficult for the taxpayer to sell the property in the future. Additionally, notice of the lien appears on the taxpayer’s credit report and a tax lien has a very negative effect on the taxpayer’s credit, making it difficult to obtain financing.
Finally, since a tax lien is recorded in the area where the taxpayer resides, it becomes a matter of public record and can serve as a shameful stigma for the individual. A tax lien will stay in place as long as the IRS can legally enforce an action against the taxpayer (i.e. until the expiration of the statute of limitations), or until all outstanding tax liabilities have been paid or settled with the IRS.
Wage Garnishment – The IRS may also resort to wage garnishment if the outstanding debt remains unsettled. Wage garnishment is a form of levy (discussed below) favored by the IRS as a collection method for a salaried taxpayer.
Through the wage garnishment process, the IRS can compel an employer to take a portion of that taxpayer’s wages and send it to the IRS to satisfy the outstanding debt. Wage garnishment is an extreme step in the collection process and it is often successful in getting the taxpayer’s attention.
Once the taxpayer resumes communication with the IRS and starts working to satisfy the outstanding debt, it is often possible to get a wage garnishment lifted in a relatively short period of time, especially if the taxpayer retains the services of a tax attorney to assist them.
Tax Levy – Unlike the tax lien described above, where the IRS merely stakes their claim to a taxpayer’s assets, a tax levy constitutes the actual seizure and sale of the assets to satisfy the debt.
Nearly any property interest held by the taxpayer can be subject to levy. Real property (including homestead), personal property (e.g. cars, boats, jewelry), bank or brokerage accounts, and wages (see garnishment) can be taken by the IRS and liquidated to satisfy the outstanding tax debt.
A tax levy is the most powerful and feared collection mechanism of the IRS and should not be taken lightly. An individual facing a tax levy should contact a tax attorney right away.
What Tax Resolution Options Exist?
Tax Resolution Options
- Lump Sum Payment
- Installment Agreements
- Offer In Compromise (OIC)
- Currently Not Collectible Status
Worried? Start Here.
File Tax Returns: Individuals should always file the tax return whether or not they have the money to pay their taxes. Filing returns can alleviate any potential late filing penalty make it easier to work out a payment plan with the IRS.
As stated above, the larger the tax debt the more professional assistance will be required to negotiate a payment plan. Thus, it is often more cost-effective to file the returns and set up the plan early. Also, the failure to file a return can cause the IRS to revoke a previously negotiated installment agreement.
Talk to a Professional: Individuals should always consider consulting a tax professional if they sense that a tax controversy may be brewing. Even if the individual decides to ultimately go it alone in their dealings with the IRS, they should be aware of their rights and responsibilities ahead of time.
The IRS is a massive government organization with thousands of employees who are not all aware of the various legal issues that may arise under any given set of circumstances. Contacting the IRS before consulting with a professional can put an individual at a serious disadvantage and may ultimately foreclose the possibility of some of the relief options discussed in detail above.
How Can We Help You?
At Ourednik Law Offices, we understand that dealing with the IRS can be stressful. That’s why we do our best to put the client’s burden on ourselves while assisting them with settling their tax issues.
In these kinds of situations, it is always best to consult with an experienced tax professional who can help you to fully understand the situation.
Contact our office today if you are in need of tax assistance.
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