July 9, 2019

You own a small business with a few employees. Business has been great in the past; but this month has not produced as much income as you wanted. Payroll is coming up soon. You are now faced with a dilemma; there is not enough money to cover the employees’ pay and the employment taxes. You think “if I don’t pay the employees, they will quit and I will have to deal with the department of labor.” So you choose to pay the employees now and pay the taxes later. Let’s say that business continues to decline and you have yet to pay the past due employment taxes. What’s going to happen to you and your business?

Employment taxes are amounts that are required to be withheld from employees’ wages and paid over to the federal government. An employer must withhold income, social secu...

June 24, 2019

Operating a successful business can be stressful. It takes careful planning on the part of the business owner to ensure that the business is moving in the right direction. One small mistake can cause major consequences. A significant mistake that I regularly encounter with business owners is the misclassification of workers. Classifying someone as an independent contractor instead of an employee may seem minor, but, may cause financial ruin.

Many business owners tend to classify workers as independent contractors instead of employees to save money. If a worker is an employee, the business must withhold income, social security, Medicare, and unemployment taxes on any wages paid. In addition, the business has to match the social security and Medicare withholdings. If a wor...

June 18, 2019

For months, I have been hearing radio and television advertisements about the “new” IRS Fresh Start Program. I always shake my head and chuckle when these ads broadcast. I would think to myself “If people only knew.” The fact is that the Fresh Start program has been around since 2011. Each year the IRS has made adjustments to make the program better.

So, what is the Fresh Start program? The Fresh Start program is an attempt by the IRS to relax its collection rules to allow more people to be able to repay or settle tax debts. It was created in 2009 after the recession and rolled out in 2011. The purpose of the program is to ease the burden of tax debt on the American people.

The Fresh Start program made distinct changes in the IRS’s collection practices. These changes made...

June 11, 2019

Innocent Spouse
When you file a tax return with your spouse, the law holds you “jointly and severally” liable for the debt. This means that the IRS is allowed to collect the debt from both of you, or each of you. This remains true even if you eventually divorce your spouse. In order to be relieved from liability, you must prove that you did not know or had reason to know about the tax debt. Take a look at Situation 1 below:

Situation 1
You receive a notice from the IRS stating that some income was left off of your joint tax return. You say to yourself “that’s strange.” You give the notice to your spouse because your spouse handles all of the tax matters, including filing and paying. Your spouse tells you “don’t worry about it.” Life goes on until you receive another noti...

June 2, 2019

You are under a monthly installment agreement and it seems as if the balance is not decreasing. You examine your statement and discover that you are not just paying the balance and interest, the IRS is also charging penalties. Many taxpayers are unaware that some penalties will continue to accrue until the tax debt is paid in full. The interest does not accrue on the original tax debt alone; it also accrues on the added penalties. Fortunately, the IRS does have special programs that will allow for penalty relief.

The IRS may provide penalty relief under its First Time Penalty Abatement policy. Relief is available if you failed to file a return, pay your taxes on time, or failed to make a tax deposit. To qualify for relief you must satisfy the following conditions:
1. You...

May 28, 2019

You owe the IRS a ton of money. You want to enter into a payment plan, but you are barely getting by. After paying all of your monthly bills, there is hardly enough money to put food on the table for your family. You think “I cannot afford another monthly bill, but I must do something about the taxes before the IRS starts taking my property.” No need to worry, you may qualify for Currently Not Collectible Status (CNC).

The IRS is well aware that there are times when a taxpayer owes a tax liability, but cannot pay due to their current financial situation. If the IRS determines that you cannot afford to pay your reasonable living expenses and your taxes, it may place your account in CNC status. The IRS will generally not try to collect the taxes from you while the account...

May 20, 2019

You have owed a significant tax debt for some time now. Thus far you have not received any threatening notices from the IRS; however, anxiety builds every time you check the mail. Then one day that anxiety becomes a reality. You receive a notice of federal tax lien from the IRS and your heart sinks. The thoughts of financial ruin start to creep up; “Will they take my house, my bank accounts, and my retirement?”

Most people confuse a tax lien with a tax levy. A levy is a legal seizure of your property to satisfy some or all of your tax debt. A lien, however, is a legal claim against your property. A lien secures payment of some or all of your tax debt when the property is sold; while a levy actually takes your property to satisfy the tax liability.

The IRS will place a fed...

May 13, 2019

Writing and mailing a check to pay bills is becoming a phenomenon of the past. Today, most individuals and businesses opt for the ease of making payments online. Like most vendors, the IRS has made the switch and is now accepting online payments. Whether you

are on a payment plan or would like to pay your tax liability in full, you can now conveniently make the payment from your smartphone or computer. You can either choose “Direct Pay,” or make a payment by debit or credit card.

IRS Direct Pay is using your bank account to pay your taxes. Direct Pay is available for all individual (personal) tax liabilities. There is no cost associated with this service and you can easily track your payment by signing up for email notifications. The email notification...

May 6, 2019

The 2018 tax season has left you with an enormous tax liability. The debt is so big that you cannot possibly pay it all at once and afford to take care of your family. Let’s face it; there are not many people that have that type of cash lying around. What can you do? Fortunately, the IRS does allow installment agreements so taxpayers can pay their debts over time.

An installment agreement is a payment plan with the IRS to pay your tax debt within an extended timeframe. It allows you to make monthly payments until your tax liability is paid in full. However, an installment agreement will not stop the accrual of interest and penalties on your tax debt. Interest and penalties are added to the amount you owe until the balance is paid in full.

Moreover, the IRS does charge use...

April 29, 2019

Owing the IRS is scary. The debt coupled with hearing what could possibly happen if the debt is not paid is downright terrifying. Then a commercial appears that offers a glimpse of hope; “settle your IRS debt for pennies on the dollar.” You let out a sigh of relief as you pick up the phone to call. According to the commercial, you will save a significant amount of money. You called without hesitation, but, is this true? Is it really that easy to settle a tax debt with the IRS for less than what you owe?

The truth is that most of the commercials are referring to a process called Offer in Compromise. Offer in Compromise is the process by which the IRS agrees to settle a tax debt for less than what is owed. However, it is not as easy as the commercials make it seem. There a...

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