Top 10 Tax Relief Questions

By Sean Chi
Tax Attorney, The Law Offices of Spar & Bernstein

1. What is Tax Relief?

Tax Relief is a small number of programs offered by the Internal Revenue Service to facilitate effective tax collection for people with past due income tax liabilities. The programs were created by Congress to keep the IRS from unreasonably harassing taxpayers or creating undue hardships in their zealous collections mission. The most common programs are the Offer in Compromise, Installment Agreement and Currently Not Collectible Status.

Technically, the IRS is forced to work with each taxpayer to find a resolution to the taxpayer’s tax debt based on his specific financial situation. The reality is that most IRS agents are single mindedly focused on simply getting as much money as they can from the taxpayer regardless of their specific financial difficulties. However, someone familiar with the tax code can aggressively negotiate with the IRS. By making the IRS play by the rules Congress established, the best possible tax relief resolution can be obtained for taxpayers with IRS liabilities.

2. Why Would the IRS Settle My Tax Debt?

If it were up to the IRS, they likely would not settle your tax debt. However, Congress created rules the IRS must abide by to prevent them from unreasonably harassing or creating undue hardships to taxpayers. Congress has a vested interest in not creating a population of homeless and jobless Americans; something that could easily happen if IRS collection methods went unchecked.

With that said, the IRS does not go out of its way to make hard working Americans aware of their options when they go through hard times. Even if you are aware of tax relief options, they will likely make it as difficult as possible for you to get the tax relief you are entitled to.

3. Can the IRS Garnish All of My Wages?

YES! The wage garnishment is the IRS’ primary method of enforced collection actions. If you owe the IRS money and continue to ignore the problem, it is likely only a matter of time before the IRS garnishes your wages.

4. Can the IRS Garnish My Wages Without Warning Me First?

Yes and no. The IRS must first assess a tax balance against you and send you a notice and demand for payment. The only other step the IRS must take after this is to send you one Final 30 Day Notice of Intent to Levy before they can garnish your wages, levy your bank account, and any other enforced collection actions.

Additionally, the IRS only needs to send this notice to your last known address. If you have moved, you may never receive any of these notices and it is still legal for the IRS to garnish your wages. It is not uncommon for taxpayers to be suddenly garnished after months or even years of hearing nothing form the IRS.

5. What Can I Do About A Wage Garnishment /or Bank Levy?

Some form of resolution must be achieved before the IRS will release a wage garnishment or bank levy. A temporary release can be obtained by proving the wage garnishment or bank levy is causing extreme hardship for you, but it will not be permanent.

The only way to permanently remove the threat of a wage garnishment /or a bank levy is to enter one of the IRS relief programs or to full pay your balance. Remember, the IRS only has to leave you a predetermined amount of money on each paycheck. A person making $5,000 a month and another person making $1,000 may both be left with less than $500 a month after the wage garnishment.

6. The IRS Keeps Calling Me and Sending Me Certified Letters. How Can I Make Them Stop?

Be thankful they are only calling you and sending you letters. The IRS will not stop contacting you barring one of the following:

• Full pay your tax debt;
• Enter into a Tax Relief program;
• The Statutory Collection Period expires on your tax debt (ten years from the date the tax debt was assessed, not the tax year);
• Death

And the last one doesn’t even always apply.

7. How Much Can I Save?

It all depends on your particular financial situation. You could conceivably pay as little as $20 no matter how much you owed. Or you might have to settle for a minimal monthly payment plan instead. The simplest way to look at it is the less available monthly income you have and the smaller the value of your assets the more you could potentially save on your IRS back taxes.

8. I have unfiled tax returns and I have lost all of my records. Do I need to file them?

Yes, but only for the past six years. However, for those six years you will need to file a tax return for any year you earned income of at least $3,650 (this amount may vary depending on your circumstances).

There is one quasi-exception: the IRS will usually file a return on your behalf if you do not file within a certain time frame. This is called a substitute return and the IRS will simply assess a tax balance based on all reported income without allowing any deductions. This substitute return will likely result in a much higher tax balance than you would normally owe.

9. Can the IRS take my house?

Yes, the IRS can foreclose on any property they have a lien against to pay past due taxes. However, they usually do not resort to this extreme except for significant tax debts.

10. Can anyone get tax relief?

Most people will qualify for tax relief in some form; the question is simply what kind of relief can you get? A professional tax attorney will likely be able to get you the best relief you qualify for as quickly as possible. Contact us now to get a free consultation as to what you can do to relieve your tax burden.