When the IRS issues a notice of collections to anybody, it can be a very straining ordeal, especially, for a person who finds it difficult to pay up. For an Atlanta tax Attorney, however, having a client that is in collections is an avenue to render valuable assistance to a person who has so much federal tax debt so that they can explore alternative ways to halt the collection by the IRS.
The IRS uses liens, garnishments, and also levies as collection methods for federal tax debts. These measures will be used by the IRS to seize the defaulter’s assets, accounts at the bank, or any source that has the potential of settling the outstanding debt. That is why it is vital that a tax attorney has a deep understanding of the various collection methods used by the IRS when a tax debt becomes delinquent.
A federal tax lien refers to a claim which entitles the IRS to the property of a taxpayer as soon as a tax debt remains unpaid. A tax lien cannot be issued on sudden notice. It basically occurs once the deadline is not met and the taxpayer has been notified on multiple occasions warning them of a possible collection.
A warning called the Notice of Federal Tax Lien will be issued to the taxpayer implying that a document has been filed by the IRS to inform creditors of its right by law to the assets of the taxpayer. If a payment is not made by the taxpayer and there is no appeal or some other form of agreement between the taxpayer and the IRS, then the assets of the taxpayer (a home, a car, rental property, or a bank account) will have a federal tax lien issued against it. As soon as a lien is issued, the tax debt will be recovered by the IRS levying the assets so as to recover the debt.
Reporting the lien on the credit history of the taxpayer is important unless they can release or remove it by paying the debt in full or filing an application for withdrawal which will then take off the public record. By doing so, the credit report of the taxpayer will not carry the lien, however, the taxpayer still remains obligated to pay the debt.
A federal lien gives the IRS the authority to lay claims to the assets of a taxpayer while a levy is issued so that the property of the taxpayer can be seized in order to recover the owed debt. If the taxpayer avoids making a contact or payment to the IRS, then multiple levies will be issued against the assets of the taxpayer. The funds that are generated from the levied assets are put toward the debts owed. However, the account will have penalties and interest accrued on it. This is usually a very bad situation for a taxpayer in collections because they will have their assets seized and still continue to accrue penalties and interest.
This refers to a method whereby the earnings of a taxpayer are obtained to satisfy the existing debt. Here the employer of the taxpayer will take out a percentage of the taxpayer’s salary and remit it to the IRS in order to settle the tax debt. This will continue until the debt being owed has been paid in full or written off and garnishments sometimes last for a couple of years.
Garnishments can be issued on salaries, wages, retirement benefits, earned commissions, or work bonuses. Garnishments can sometimes extend to disability benefits from social security and also VA benefits.
Obtaining Relief For IRS Collection
Before a federal tax lien, a garnishment, or any form of levy is issued by the IRS, multiple notices will be sent to a taxpayer to warn them of an impending collection activity. Once the lien, levy, or the garnishment is issued by the IRS, a taxpayer will need professional help in order to have the seized assets released.
Most times these measures are applied by the IRS when the tax is underpaid, or not paid at all. What the taxpayer or tax attorney should do is contact the IRS and request a plan for payment (an installment agreement) or make an OIC (offer in compromise) to pay a lower amount that must be agreed upon. If a payment plan or an OIC is agreed, the levy, federal tax lien, or garnishment will then be released. This release can be revoked if the taxpayer defaults the terms and conditions of the agreement. The IRS will then hold the taxpayer liable to pay the full debt that is owed.
One other way by which tax debt can be accumulated is via missing returns or incorrect returns. If these returns are amended by the tax attorney or the taxpayer, then the debt will be lowered significantly. This shows the IRS the willingness of the taxpayer to comply and keeps them from going ahead with a collection activity. It will be a great error on a taxpayer’s part to avoid the IRS as this will only result in liens, levies, or garnishments.
An Atlanta tax attorney can taxpayers navigate through the IRS measures that are imposed on them. The tax attorney will draw on the standards of the IRS to offer advice and recommendations in terms of what to expect and will also enlighten you on the tools and methods that will result in a favorable outcome.
Tax attorneys are professionals with experience in tax resolution and also relief for IRS collection. Hiring an Atlanta tax attorney can assist you in saving your assets. Knowing and abiding by the rules of the IRS when dealing with them is highly important. Tax attorneys will guide you through this process in a professional manner. Do not hesitate to take the necessary step that will help to protect your assets.
