Do you owe the IRS money that you just can’t pay? If so, you should know that you are not the only one. In 2018, the IRS collected more than $55.5 billion in revenue on underpaid tax returns. Fortunately, a good Washington state tax attorney, like Ken Schneider, can negotiate with the Internal Revenue Service to get you a settlement that you can live with. Mr. Schneider has been helping people come to terms with the IRS since 1993.
What to do When You Get a Letter From the IRS
Getting a letter from the IRS that says you owe money can be frightening. The IRS has a great deal of power. If the IRS wants to collect your money, you may face wage garnishment, bank liens, and even foreclosure on your home. Most tax debts are not dischargeable through bankruptcy. However, some tax liabilities are dischargeable in bankruptcy. We can assist you in determining what debt can be discharged in bankruptcy.
Stopping Liens and Garnishments
The only way to stop a lien or a garnishment is to talk to the IRS, or better yet have an attorney do it for you. Ignoring a tax debt won’t make it go away. Unlike a private company, the government does not need to obtain a judgment against you before garnishing your wages or seizing your assets.
A lien on your property is a matter of public record. If an employer does a background check on you or if you apply for credit, they will be able to see your lien and you may be denied a job. If you try to sell your property while there is a lien on it, the IRS will take the money you owe them out of your profits. The IRS can also put a lien on cars, artwork, and other valuable property. When a lien is on your property, the IRS can take possession of that property. Fortunately, if they do put a lien on your property, you are entitled to a hearing. You must apply for this hearing within 30 days of the initial lien. It is a good idea to have the assistance of an attorney for such a hearing.
Wage garnishment means that a party to whom you owe money is entitled to a portion of your weekly pay. Normally, a creditor who has a judgment against you can garnish your wages for 25 percent of your income, but the IRS can take a much larger portion of your wages.
There are several different agreements that can be arranged with the IRS. A 120 Arrangement promises the IRS that you will pay them in full within 120 days. If you make this arrangement, you will not have to pay fees, just your tax bill, plus penalties and interest. This is obviously the easiest way to settle your debt, and you will not need an attorney for this type of arrangement. However, if you owe a significant amount of money, it is probably not realistic.
If you feel that you can pay the IRS, but it is going to take you more than 120 days, you may be able to make an “installment agreement.” When you initially contact an IRS agent, you will review your pay stubs and your bills to determine what a reasonable installment amount would be.
If you believe that you will never be able to pay the IRS what you owe them, your attorney may be able to get you an “offer-in-compromise.” This is a settlement in which a tax debtor pays a portion of what they owe. In order to get this kind of settlement, the IRS must conclude that they would get more money by making a settlement with you than they would over the course of ten years of normal collections. You must have filed taxes every year of the period in question in order to qualify for this type of arrangement, and your attorney must establish that your financial situation is unlikely to change. If you have missed filing your taxes for even one year, you are not likely to qualify for an offer-in-compromise.
A “Currently not Collectible” status with the IRS is issued when you prove to them that you cannot pay both your tax debt and basic living expenses. The IRS is going to need a great deal of documentation to let you have this kind of arrangement. You may want to talk to an attorney who has a keen knowledge of tax laws to understand exactly what evidence is necessary to convince the IRS that you simply cannot pay.
Consultation with Our Attorney
If you have received collection notices from the IRS, or if they are garnishing your wages or have put a lien on your home, you should consult with an attorney. Ken Schneider is an experienced and knowledgeable tax attorney in Everett, Washington. In addition to helping you with any late payment of taxes or tax debt you may owe, Mr. Schneider can help you with, estate planning and minimizing your business’ tax liability to the government.
Getting a letter from the IRS isn’t fun, but good negotiation skills and a solid payment plan can put you back on track to leading a financially stable life.