Tag Archive for: New Orleans Tax Attorney

The Methods Used by the IRS to Collect Unpaid Taxes

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Under federal and state laws, taxpayers are charged with meeting specific tax obligations. Taxpayers must file their returns in a timely fashion, enclose the precise payments and ensure the accuracy of the returns even if they were not the actual preparer. Even if you pay a tax preparer to do your taxes, ultimately you are still the person accountable for the data in your tax return. Should you find you have any outstanding taxes due, it’s important that you pay them quickly or at least as fast as you possibly can. Should you be unable to pay your taxes in a timely manner penalties and interest will continue to accrue, making your debt grow to truly alarming proportions. The penalties can be anywhere from 25% all the way to 500% depending on the kind of taxes you owe, therefore take past due taxes very seriously.

If you neglect to take care of your tax bill, you could receive any number of letters from the Internal Revenue Service. You might receive a relatively harmless letter of inquiry, an invoice for the taxes you owe, or a much more serious intent to levy. You must not simply put a letter from the IRS to the side thinking you will deal with it later.  You will need to pay the total due, appeal the bill or set up an agreement with the IRS where you pay in installments, but whatever course of action you choose, you must do it immediately. What you don’t want is for the collection division of the IRS to contact you, because this means it will make your situation much more difficult to resolve.

Actions the IRS May Take

The IRS has wide latitude in the methods they may use to collect your delinquent taxes. The collection division of the IRS can file a lien on any real or personal property even when the taxpayer has properly made arrangements to make monthly payments and is up-to-date on those payments. While this seems unbelievable remember that when a lien is filed your credit score could take a serious hit, and generally speaking you cannot sell or transfer the property with the lien attached until the amount you owe is paid in full. Further, liens which are filed at the local county courthouse become public record, meaning anyone can find out you’ve had an IRS lien filed in your name. If you live in a small community this could be potentially harmful to your reputation or ability to gain employment. Should a lien be filed it will remain on your credit report potentially for the next decade.

Seizure of Business Assets

The IRS has the power to issue a tax warrant which can effectively cause you to cease operation of your business and sell off all your business and personal property including any vehicles used for the business, business assets, inventory and equipment. The funds from the sale of these assets will be utilized as payment toward your tax debt. The IRS is obligated to notify you of the total amount you owe a minimum of ten days prior to seizing your property and they may not liquidate your seized assets for at least ten days. Of course any expenses relating to the seizure such as personnel expenses, towing, locksmith services, storage facilities, and even advertising   costs will be added to your bill.

Levies of Your Salary or Your Bank Account

Any compensation you receive from your workplace can potentially be levied including your regular wages, any bonuses you are entitled to and commissions should you work on commission. Once the IRS has issued a wage garnishment your employer is obligated to deduct a specific amount from your wages each payday. An additional fee of $55 may be added to your delinquent tax amount and is called a warrant fee. The IRS may also levy your bank accounts requiring your bank to send any funds you have deposited there to them up to the total amount you owe plus penalties and interest. If you have an outstanding balance with the IRS take it very seriously and contact a skilled attorney to help you sort it out.

Dealing With Unpaid Payroll Taxes

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One of the most serious tax violations involves the failure of an employer to send in payroll taxes which have been withheld from employee pay. Despite the seriousness of the issue this is also one of the most common tax problems. The IRS must give employees the benefit of all taxes which were withheld by employers no matter whether those taxes were actually paid into the government program. The payroll taxes held back are meant to go into a trust fund for the federal government and never, ever belong to the employer therefore every single employer who withholds payroll taxes from his employee’s paychecks is a trustee for the U.S. government in a sense. Should an employer fail to turn over all monies withheld, it is considered by the federal government to be theft of governmental money.

The Installment Plan Just for Business Taxpayers

Employers who have inadvertently gotten behind in their deposits for payroll taxes can count on the fact that the IRS will pursue them aggressively fearing the business owner might go out of business or will keep using the funds as their own. In fact, failing to pay payroll taxes is akin to being involved in a pyramid scheme. Businesses who can honestly say they have taken steps to correct the problem, can show how they plan to keep up with the tax deposits and can show they are turning a good enough profit to stay current while making regular payments on the unpaid balance may qualify for a monthly payment plan.

Penalties Assessed

Should you fail to pay your payroll taxes as you should have the IRS can assess a severe penalty against you which is equal to the payroll taxes you neglected to pay. This penalty can be assessed against more than one person in the business and can be assessed against those who were neither shareholders nor officers. In some instances of willful non-payment or misappropriation of payroll tax funds, the person involved may end up with criminal charges against them in addition to fines and penalties.

How Do Such Problems Arise?

In some cases a business is simply short on cash and rather than failing to pay the rent or the suppliers, the owner can rationalize that the IRS moves slowly and it will likely be some time before they catch up with the failure to pay. Hopefully by that time they will have enough money to pay the back payroll taxes. Although this sounds good in theory it is truly a recipe for disaster. The payroll problems keep growing steadily with penalties and interest adding up at an alarming rate. By the time the IRS agents actually show up, they are likely threatening to close the doors of the business. Other times incompetent or flat out dishonest employees may neglect to pay the payroll taxes, keeping the money for themselves and hiding the fact from their boss.

Getting the Help You Need

If you were a victim of a dishonest employee, if you meant to pay the payroll taxes but simply didn’t have the money, or even if you can plead ignorance and say you were unaware you were supposed to send in the money, you need a competent, experienced attorney to help dig you out of the IRS hole you are in. A competent tax attorney can negotiate a settlement with the IRS to reduce your penalties and may be able to prevent the IRS from closing your business. A knowledgeable tax attorney may also be able to stop the IRS from holding you personally liable in the event a dishonest employee failed to remit the payroll taxes. While the IRS has considerable power, you still have rights so work with your attorney to ensure your payroll tax issues are resolved.

Gulf Coast Tax Attorney Says BP Oil Spill Payments for Lost Wages are Taxable

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A significant number of individuals in New Orleans and other parts of Southern Louisiana and Mississippi have received payments for lost wages as a result of the Deepwater Horizon BP Oil Spill.  It seems established that the payments will be taxable as income.  However, very different tax consequences are possible depending on whether the individual is an employee or is self employed.  For self employed individuals, the IRS takes the position that the payment should be included in gross income, which would make the BP payment subject to the self employment tax.

See Gulf Oil Spill: Questions and Answers, Updated: June 25, 2010, at http://www.irs.gov/pub/irs-pdf/p4873a.pdf.

However, for employees, the IRS excludes the payment from the definition of wages, reasoning that the payments are not wages under the “social security tax and Medicare tax because it is not an actual payment for employment.”  Id.  The result is that self employed individuals will have a higher employment tax obligation than their employee counterparts.  Why the different treatment by the IRS is not clear, but the result under the IRS guidance does appear equitable.  Please note that the tax court has held that certain business interruption payments are not self employment income, and because the BP payments seem similar to business interruption payments, authority may exist for self employed individuals to treat the BP Payment as non-self employment income.  If this issue is analyzed and properly reported under the guidance of a qualified tax professional, self employed individuals could take this position on their 1040, contrary to the IRS guidance.

For a general discussion of the Oil Spill tax issues, See: Tax Issues and the Gulf of Mexico Oil Spill, at http://www.nationalaglawcenter.org/assets/crs/R41323.pdf.

If you need immediate assistance, please call us at (504) 302-4949.  We Can defend you during an IRS audit. Be protected and do not give in because you are afraid. Let our experienced IRS lawyers defend you.

IRS Wage Garnishment

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Generally speaking an IRS wage garnishment, or deduction of money from a taxpayer’s paycheck, should come as little surprise. The IRS has a series of notices they send taxpayers, each with a more serious tone than the previous one. The wage garnishment is one of the IRS’s more aggressive forms of tax collection and should be taken very seriously. You must understand how wage garnishments work in order to protect your livelihood and that of your family.

How Does the IRS Take a Portion of Your Paycheck?

If you have ignored the repeated warnings of the IRS in the form of letters and notices, then the IRS may contact your employer and order them take part of every paycheck and send that money to the IRS. Should your employer refuse to do so, they can be held responsible for any amount which was not levied therefore it’s a safe bet to assume your employer will comply with the orders from the IRS. The IRS is legally allowed to take a portion of your regular wages, any bonuses you might be entitled to, and in some cases even money from your retirement plan.

Typically the IRS will take 25% or more of your pay without a thought as to how—or if—you will pay your bills and feed your family. The wage levy will endure until a sufficient amount of your monthly paychecks have been seized to fulfill your tax obligation along with any assessed interest and penalties. Remember that it is entirely likely that the IRS will take greater amounts of your paycheck than they will if you cooperate with them and set up a payment plan or other alternate form of payment. Tax garnishments are costly to the IRS however they find them an extremely effective scare tactic and will not hesitate to implement this tactic if the taxpayer refuses to pay.

How to Get Your IRS Wage Garnishment Released

Of course the most obvious way to have the wage garnishment released is to pay the IRS in full, including any interest and penalties. Unfortunately most people who are in this situation simply don’t have the funds to pay the IRS in full. You could consider a loan from friends or family, the sale of an asset or even refinancing your home in order to pay the IRS the money owed them. You could also file for an offer in compromise with the IRS which is essentially your offer to make alternative arrangements.

Many times this will allow taxpayers to settle their taxes for only a fraction of what is owed, however it can be extremely difficult to reach such a settlement with the IRS. Filing for an offer in compromise is a complex matter, and if you are considering pursuing this option you should definitely consult an experienced tax attorney to assist you. The IRS would be more likely to agree to a payment plan which would allow you to pay your back taxes in the form of a monthly installment plan over a period of three years. So long as you continue to make your regular, agreed-upon payments, your wage garnishment will be suspended and you will be back in relative good standing with the IRS.

Claiming Financial Hardship

If you can prove that the wage garnishment against you by the IRS is causing you severe financial hardship, the IRS will be obligated to temporarily stop collection actions until your financial standing has improved. In other words, if the IRS wage garnishment leaves you unable to pay normal living expenses, then they will not be able to implement the garnishment. You must prove this fact, however, as they will hardly take your word for it. You will have to file specific paperwork and provide financial records in order to prove to the IRS that you don’t have sufficient income for a wage garnishment. Some people who have found themselves under an IRS wage garnishment either change jobs or simply quit. If you change jobs it will likely take the IRS a few months to catch up to your new job and start garnishment proceedings again. You could also file for bankruptcy, which automatically stops wage garnishment, however this is a major step and should only be used as a last resort. If you are under threat of IRS wage garnishment don’t wait—consult with a knowledgeable tax attorney immediately to discuss your options.


What to Do About an IRS Tax Lien

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Receiving notice of an IRS tax lien can strike fear in the hearts of almost anyone. If you have received notice of an IRS tax lien it’s important that you fully understand the lien process including the types of property the lien attaches to, the consequences of a tax lien, how long the lien can be attached, and the priority of the tax lien. You will also want to know what circumstances will prompt the IRS to remove the tax lien. Any time a taxpayer neglects to pay taxes owed to the IRS, a federal lien may be filed against real and personal property of the taxpayer. Bank accounts, as personal property, are often subjected to federal tax liens however difficulties can arise when the accounts are jointly held by the taxpayer and any other person. Generally speaking, if you have back taxes which remain unpaid and have ignored or failed to cooperate with IRS demands to make such payments, you will likely be slapped with an IRS tax lien.

How Does a Tax Lien Work?

The IRS will send you, the taxpayer, a letter detailing the amount unpaid along with late payment penalties and interest. If this first letter is ignored, a series of four more letters with serious titles (CP-501, CP-503, CP-504 and LT11 or L1058) will follow. Each letter will be more and more threatening, and the final one will note the IRS intention to place a lien on your property. Should you continue to ignore these notices, a Notice of Federal Tax Lien will be filed which prevents you from selling or borrowing against any assets you currently own. If you’ve received a Notice of Federal Tax Lien you can be assured that the lien has already been filed and made a public record.

What Does a Tax Lien Mean for Me?

Should you have an IRS tax lien placed against your assets you will likely be financially crippled for a significant period of time. You will be unable to receive credit in order to buy a car or home, and will have to rely on others for any financing needs. You will not be able to hold any assets in your name, and all your creditors, including your mortgage company will be notified. The IRS will keep a tax lien against you for as long as they legally can—typically ten years—or until you have paid your IRS bill. The IRS have made themselves the highest priority creditor, so selling your house or car would only mean the IRS would snatch any proceeds from the sale. Should you do nothing about the tax lien the IRS can begin seizing your assets, selling them at a public or private sale. Even after the tax lien is released you may find your ability to borrow, seek employment or rent a home still significantly hampered.

Getting Rid of Your IRS Tax Lien

The primary way to rid yourself of an IRS tax lien is to pay your tax debt in full at which time the IRS will release the lien within 30 days. Some taxpayers may qualify for subordination which does not remove the lien but allows other creditors to move ahead of the IRS, making getting a loan or mortgage somewhat easier. The IRS may offer you payment options in order to allow you settle your tax debt over time, and it is always a good idea to speak to an experienced tax attorney to discuss your options. Your attorney will be able to discuss the difference between a tax lien which secures the government’s interest in your property as opposed to a tax levy which actually gives the IRS the right to seize your property in order to pay your tax debt. Don’t wait until your IRS issues become serious—speak with an attorney to get the best legal advice before you take any action.


Negotiating an Installment Agreement with the IRS

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Over 210 million business and individual tax returns are filed on an annual basis, and many of us make the kinds of mistakes which end up costing us additional taxes and IRS penalties.  Most Americans fear an IRS audit nearly as much as they fear a potential root canal, and the fear of owing the IRS money is almost as bad. In fact, when most of hear the words “wage levy,” “bank levy,” “property seizure,” and “federal tax lien,” it brings about a severe level of stress in our lives. The fact is, if you simply cannot afford to pay all your taxes by the time given you by the IRS it is possible to contact them and negotiate an installment agreement for the balance owed.

Establishing an installment agreement with the IRS is one of the top ten reasons individuals contact the IRS. Many people feel that the IRS is somewhat negligent in providing the necessary information to those who need help paying their taxes therefore it is up to the individual to seek out the necessary information. The IRS will pursue collection through wage or bank levies if an installment agreement is not set up in a timely manner and they consider it to be your responsibility to set up your own installment agreement. If you have decided to request an installment agreement which will allow you to pay your taxes over a stated period of time, you can use Form 9465, Installment Agreement Request to send your request to the IRS. As governmental forms go, this happens to be one of the easier ones to fill out. You will be required to provide your basic information as well as the tax year you owe for, the amount owed and how much you are able to pay each month.

When Can You Use Form 9465?

You can use this form if you are unable to pay your current tax owed in full or if you owe back taxes. If you are unable to owe the tax amount on the taxes you are currently filing, don’t wait to file. Go ahead and file on time, but include Form 9465 with your return, and make sure it is right on top so it will be easily seen. Prior to finalizing the agreement the IRS may ask for financial information from you which proves you don’t have the current income or assets to enable you to pay your IRS bill in full. The IRS may ask you to complete Form 433-A if you are setting up an installment agreement as an individual or Form 433-B if you are providing financial information for your business in order to set up an installment agreement.

After The IRS Has Approved Your Installment Agreement

Once your IRS installment agreement is in place you can allow yourself a sigh of relief since the IRS is not allowed to enforce further collection beyond your agreement or to modify or terminate your agreement unless one of the following conditions applied to your agreement. If you provided incorrect or incomplete information on your 433-A or B form, if your financial circumstances have changed significantly since you signed the installment agreement, if you fail to make your payment as agreed or fail to pay another tax on time or should you neglect to provide updated financial data when the IRS requests it, your agreement could be nullified. If the IRS has good reason to believe that you are attempting to elude the payment of your taxes, hiding your assets or preparing to flee the country they may also nullify your installment agreement. Barring any of these issues, however, you should be able to successfully pay your IRS tax monthly until it is paid in full.

Should you have any other questions regarding your past due taxes or an installment agreement with the IRS it is a good idea to contact an attorney who can provide further information.

Work Opportunity Tax Credit – IRS Notice 2012-13

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In Notice 2012-13, the IRS issued guidance to assist employers with obtaining the Work Opportunity Tax Credit when hiring unemployed veterans. This notice explains the changes to the WOTC program as a result of the VOW To Hire Heroes Act of 2011.

The Act adds two new categories of qualified veterans to the WOTC, and modifies the wages that may be taken into account for claiming the WOTC. The credit is available to employers that hire qualified veterans that begin work before the end of 2012. Apparently recognizing the benefit of this tax credit provision and the desirability of having veterans in the workforce, on February 13, 2012, General Electric announced the hiring of 5000 veterans over the next five years.

See http://www.irs.gov/pub/irs-drop/n-12-13.pdf

Whether you’re experiencing trouble with IRS or state audits, or you just want to make sure you avoid such unpleasantries in the future, we’re there to help protect you, your money, and your business.

A member of the state bar in both Louisiana and Mississippi, Mr. Grego offers flexible appointments, affordable rates, and invaluable counsel that may easily save you a bundle.  If you’re ready to face your tax demons, call us to schedule a free consultation, and see how easy victory can be. When you need a tax attorney in Jackson, MS, Baton Rouge, New Orleans  or the surrounding areas, The Law Office Of Paul Grego is your one-size-fits-all solution for all your financial and tax-related concerns.

More Taxpayers Will Qualify as “Innocent Spouse”

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In Notice 2012-8, the IRS is proposing to expand how the IRS will consider abuse and financial control by the non-requesting spouse in determining whether the requesting spouse will qualify as an “Innocent Spouse.” The IRS seeks to use abuse or lack of financial control to mitigate other factors that might preclude the requesting spouse from equitable relief under the “Innocent Spouse” provisions. The IRS indicates that it will immediately begin using the new guidelines when evaluating “Innocent Spouse” cases.

See IRS Notice 2012-8, at http://www.irs.gov/pub/irs-drop/n-12-08.pdf.

Whether you’re experiencing trouble with IRS or state audits, or you just want to make sure you avoid such unpleasantries in the future, we’re there to help protect you, your money, and your business.

A member of the state bar in both Louisiana and Mississippi, Mr. Grego offers flexible appointments, affordable rates, and invaluable counsel that may easily save you a bundle. When you need a tax attorney in Jackson, MS, Baton Rouge, New Orleans  or the surrounding areas, The Law Office Of Paul Grego is your one-size-fits-all solution for all your financial and tax-related concerns.