Frequently Asked Questions
Dedicated to Resolving your Tax Liability
What does it mean when I receive a ‘Notice of Federal Tax Lien?
A Tax Lien is often a taxing authority’s first aggressive step at pursuing collection for the tax debt. A Lien is essentially a claim against the assets of a taxpayer who has a tax debt with the IRS and signals to all potential creditors that the taxpayer has this unpaid debt to the tax agency for the amount listed. The lien filing thus puts everyone on notice that all of the taxpayer’s assets have a debt against them and if the taxpayer tries to sell or give those assets to anyone else then the taxing authority must release their lien or the new owner will only take possession with debt attached. The lien thus effectively acts as a roadblock if the taxpayer tries to dispose of any assets because the new owner would not get the asset free of the tax debt. The liens can be very bad for the taxpayer because they often will result in lenders refusing to loan to them or buyers that are unwilling to buy.
Arena and Associates is very familiar with the types of liens that the taxing bodies pursue and it is our first priority that once the liens are filed that our clients do not suffer the next step of actual seizure or taking of assets.
RELEASING AN IRS TAX LIEN
Don’t let anyone tell you differently. The taxing authority will only release all Tax Liens once you have paid the debt. Although the tax lien is a problem it is the more aggressive steps that a tax lien is a prelude to that a taxpayer should be most concerned with. A tax lien is the first salvo of many attempts the taxing authority will take to actually collect the money that is owed for back taxes. If, however, you need to sell or transfer an asset that is attached by a tax lien there are several mechanisms that Arena and Associates can pursue for you and we are experts at determining the best course of action to secure a lien release or subordination.
Arena and Associates is a team of experts that knows how to arrive at the optimal solution to address your tax debt. These resolutions can include one or a combination of several resolution strategies. One of the most important things we do as your representative is to stop the aggressive collection and give you time to consult with us about your case without fearing the aggressive collection action that these liens foretell. Once we get you on the proper resolution path we then ensure that the taxing authority releases the liens that you are entitled to have removed.
What is a Levy?
A Levy is the actual act the taxing authority takes to collect the balance due. The levy is a legal notice that is sent to your bank, employer, accounts receivable or anyone else that may hold or owe you money. The levy notice directs the recipient to forward to the taxing authority any money that they have in their possession that is owned by you or owed to you. If the amount received from the levies do not satisfy your liability in full then the taxing authority will continue to issue levies until your balance is satisfied. These levy notices can be one time levies or continuous. The latter is of course more damaging and you should find out which type the taxing authority has sent.
The levy notices are very technical and time sensitive. If you have received a levy notice you should act immediately or you will most likely see assets that belong to you forwarded to pay down your tax debt. Even if this levy will cause you an extreme hardship the taxing authority will have little sympathy unless you present your case properly.
Having been in business for many years and having dealt with countless levy situations, Arena and Associates knows how to best get your levies released and more importantly how to stop them from happening. If you have just received a levy then you owe it to yourself to call us for a free consultation and help in getting your money released.
What is a wage garnishment?
A Wage garnishment is a specific form of levy and is often the most damaging for individual taxpayers. A wage garnishment is a notice that the taxing authority sends to your employer and directs the employer to send a large portion of your pay check to the taxing authority. Specifically the notice directs your employer to keep sending money from all of your future paychecks until the taxing authority directs otherwise.
These wage garnishments can be extremely costly and result in your inability to pay your mortgage, rent, car payment or even the most necessary of expenses. If you have received a wage garnishment you should contact us and we will review your financial situation and get the levy released so that you can afford to take care of yourself and your family.
What is an Asset Seizure?
An Asset Seizure is the most extreme and severe action that the taxing authority can take to pay down your tax debt. A Seizure is the actual taking of a physical asset such as a car, a truck, furniture, land, a building or even god forbid your home. The taxing authority has the legal right, after proper notice, to physically seize your assets and sells them at auction to satisfy your tax debt. You should know that the taxing authority rarely receives a good price for these assets because they are taken and sold with little regard to market timing or the ready market for your assets. You as the taxpayers are forced to pay the cost of the seizure and auction sale and only the rather meager proceeds ever get applied to your tax debt.
If you are currently the target of an actual or proposed seizure of assets then you must act immediately to address the seizure. Please call Arena and Associates so that we can go to work on your case to address the seizure and present a plan to remedy the situation.
Are the Taxing Authorities difficult to get answers from?
YES ! If you don’t know the ins and outs of dealing with the taxing authority that you owe money to then you will be very much at a disadvantage with respect to any negotiation for repayment of your tax debt or for even finding out why you owe the liability. The Collection Division of the taxing authority is not there to help you figure out why you owe them money they are there to collect that money. With respect to giving you advice they are prohibited from advising you on your tax matter.
More often than not a call to the taxing authority will result in an unreasonable demand for repayment. It would be nice if there was a simple playbook for how you can negotiate your own best settlement but the reality is that your tax situation is unique and the proper resolution depends on many factors such as:
What type of tax do you owe?
How much do you owe?
How old is the tax liability?
What assets do you have?
How much money or profits do you make?
What kind and how much are your living expenses?
These and many more factors go into resolving a tax liability. Arena and Associates has dealt with tax problems from every State in the US. We know what taxing authority to contact and how to best address your situation. If you have tried to get to the bottom of your tax problem on your own and are tired of the red tape and hostile phone calls then let us handle the problem for you. We know how to fix your tax problem and can relieve you from the fear and frustration that can often accompany any interaction with the tax collectors.
How much time do I have to pay my tax debt and what about penalty and interest?
Often the tax collection statutes run 10 years or longer. In some states there is no expiration to the tax collection time frame. With respect to collection the tax collectors are not there to give you time to pay. Their job is to collect the full amount you owe as quickly as possible. Of course the amount you owe includes exorbitant amounts of penalty and interest. If that exorbitant amount of interest and penalty effectively doubles or more the amount you owe then too bad. The tax collectors don’t care that the penalty and interest is extremely punitive they just want you to keep paying until the debt is paid.
Arena and Associates can get you time to pay and will make sure that you only pay what you have to. We know how to fix your tax problem and can relieve you from the fear and frustration that can often accompany any interaction with the tax collectors. With respect to penalties and interest we know how to present your case in the light most favorable to you and we will handle all of the red tape so that you won’t have to. Let’s face it: the last thing the taxing authority is concerned with is that they reduce the amount you owe so that you have some chance of getting your debt resolved. The first thing Arena and Associates is concerned with is stopping enforced collection and working out a plan you can live with. Often we can reduce or eliminate much of what you owe. Give us a call for a free consultation and get the advice you can’t afford to pass up.
Who qualifies for a ‘pennies-on-the-dollar’ settlement?
Pennies on the dollar is a great marketing phrase but as you know what sounds too good to be true often is. The phrase “Pennies on the dollar” refers to an offer in compromise program and that is a program that can greatly reduce or eliminate your tax liability. Can we reduce your tax liability to pennies on the dollar? Yes, most likely we can but the ability to do that is ultimately determined by many factors that are unique to your specific tax situation. Not everyone qualifies for a pennies on the dollar settlement but Arena and Associates are experts at identifying how we can qualify you for this type of settlement.
What is the OIC program?
The Offer in Compromise program is also known as the OIC. The criterion for this program focuses on several possible basis for review:
Doubt as to liability;
Doubt as to collectability or;
Which program you qualify for is technical and depends on many factors but the important thing to keep in mind is that if you have a tax liability that you don’t believe you owe, can’t afford to pay or if you were to pay in full that you would suffer a loss of health and home then a resolution by this program may be possible.
If you think any of these situations apply to you then you should call us so that we can best determine what resolution will best work with your set of circumstances. The call is free and the information will prove invaluable.
What is an Arbitrary Assessment?
Some taxpayers may get a bill from the IRS and not understand how the government arrived at the bill. In the situation where a taxpayer has not filed a tax return the IRS can file a return for you. This government return is called a “Substitute for Return” and if you order an IRS transcript of your account this is what will show as filed. The IRS prepares these returns with information that they have on your account. In the case of substitute income tax returns this can be very bad as the IRS generally only recognizes your income and will not account for all of your proper deductions.
If the IRS has filed a substitute return for you then you should move quickly to correct this return because the IRS will begin collection even if in reality you should not owe any money.
When can I change my tax returns?
In general you must file any corrections to your tax returns within three years of filing. If you have missed this window and have a tax bill then even if you can’t file the amended return the information from this new return may help you get a penalty abatement.
If you are interested in getting your tax bill lowered then please call us so that we can diagnose your case and put you on the correct path to getting a penalty abatement.
What is an IRS POA? BUYER BEWARE
A taxing authority will only discuss a tax bill with the Taxpayer or someone licensed to discuss the matter. The taxpayer must sign a Form 2848 to allow the third party to contact the taxing authority and negotiate on your behalf.
In the case of the IRS a representative MUST be a recognized licensed professional compliant under IRS Circular 230. Before you hire any firm to represent you make sure you investigate their credentials. Many “Tax Representation” firms make many promises about the “Professional” that will be handling your case but that person often turns out to be an unlicensed clerical employee that can’t even legally speak to the Revenue Agent that has your case. If you hire a firm to represent you then you should demand to know the name of the professional that will represent you and what their credentials are. If a company can’t tell you the name and credentials of your representative then you should find a company that will.
There are many possible avenues for solving your tax problem. Some of these solutions are:
Abatement of Penalty;
Restructuring of Business;
Start-Ups and Wind-Downs.
These solutions are just a partial list. Often the right solution for you will be a combination of the above or some other strategy not listed. Call us and we can help direct you to the right one.
Call today for a free consultation with a tax help professional 303-847-4038.