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Tax Problems

Is There a Statute of Limitations on IRS Audits?

Is There a Statute of Limitations on IRS Audits?

By on Feb 15, 2018 in IRS, IRS Audit, Tax Problems | 0 comments

The changes of getting audited by the Internal Revenue Service (IRS) are actually quite low.  The bottom line is that if you make less than $200,000 a year, you only have about a 1% chance of receiving an audit notice from the government. That means that you have a 99% chance of NOT being audited.  In general, the IRS completes audits as soon as possible after returns are filed. However, there are times when this does not happen and an audit is not pursued by the IRS for an extended period of time. The statute of limitations can really be an important factor when it comes to dealing with the IRS after time has passed. How Far Back Can The IRS Audit You? Generally speaking, the primary statute of limitations for the IRS to notify you of an audit is three years. You should be aware, however, that there are many exceptions to this rule, and the IRS may have MORE than three years, depending on your unique circumstances.  In fact, many exceptions give the IRS up to six years to send notice of their intention to perform an audit. Here are a few of the most common reasons that the IRS can take more than 3 years: Filing an extension actually increases the amount of time that that IRS has to initiate an audit.  So, if you request an extension this year until October, the IRS will have until October 2021 to initiate an audit. The three-year statute of limitation is doubled to six years if the IRS discovers that a taxpayer has omitted an amount from gross income that exceeds 25% of the stated gross income. There is no statute of limitations when an audit pertains to the assessment of tax if a return is false or fraudulent, reflects a willful attempt to evade taxation or when no tax return at all is filed.  The IRS can audit you at any time if they suspect a fraudulent return or if you did not file at all. Keep in mind that not all audits automatically mean that there is a problem with your tax return. The IRS conducts random audits and may only require you to submit very...

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Requesting a Tax Lien Withdrawal From the IRS

Requesting a Tax Lien Withdrawal From the IRS

By on Jan 14, 2018 in State Tax Lien, Tax lien, Tax Problems | 0 comments

A tax lien is one of the most damaging things you can possibly have on your credit report. In addition to the government having first rights to your property, and the ability to seize and sell it to pay off your tax debts, your credit score can really take a hit, making it difficult (if not impossible) to borrow money for a car loan, mortgage or even to apply for a line of credit.  Once you have been served with a tax lien from the IRS, this information will show up as a public record on your credit report with serious long-term implications.   Impact of a Tax Lien   You can request a tax lien withdrawal from the IRS, and this step might help you protect your credit score. The first thing that you should know is that paying your tax debt is the best way to get this process started.  If you’re unsure how you will be able to do this, consider requesting an installment agreement from the IRS, so that you can pay your debt off over time, rather than in one lump sum. If you have suffered a financial hardship, you may want to also consider applying for an Offer in Compromise, which allows you to pay your debt off for less than you actually owe. Once you have paid your tax debt off, the IRS will automatically release a tax lien within 30 days of your final payment. The Fresh Start Initiative   The IRS’s Fresh Start Initiative has made it easier to request a tax lien withdrawal in order to help taxpayers get back on their feet. Currently to request a withdrawal, which removes the public notice of a Federal Tax Lien, you must have paid the tax debt and be in compliance for the past three years in filing (all individual returns, business returns, and information returns) and be current on your estimated tax payments and federal tax deposits, as applicable.  In addition, you can now request a withdrawal if you have entered into or converted your regular installment agreement to a Direct Debit installment agreement. In this situation, you must owe $25,000 or less, and you must pay the full amount...

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Texas Tax Penalties and Interest Rates and How to Avoid Them

Texas Tax Penalties and Interest Rates and How to Avoid Them

By on Nov 13, 2017 in Tax Debt, Tax Problems, Tax relief | 0 comments

When you owe back taxes to the state, or to the IRS, you not only have to pay off the actual tax debt, but you also must pay a hefty amount in penalties and interest that have accrued as a result of your debt. Depending on what you owe, this can add significantly to your total amount due. Penalties and interest continue to accrue each day that your tax debt goes unpaid, so the longer you wait to settle your debt, the more you will ultimately owe. Calculating Interest And Penalties for Texas Tax Debt In Texas, you can expect to pay a 5% penalty on top of your taxes due, if you are paying between 1-30 days late.  That penalty jumps to 10% if it’s been more than 30 days. If you are paying the tax after the date that is referenced on the Notice of Tax/Fee Due, you should be prepared to pay an additional 10% on top of the 10% referenced above, for a total of 20% in penalties.  Interest starts to accrue 61 days after the due date and this rate is variable, determined in January of each year.  In addition to these penalties and interest, you are also assessed a penalty of $50.00 for each late report.   Avoid Paying Unnecessary Interest And Penalties   As you can see, you can very easily pay as much in interest and penalties as you do in actual back taxes. Avoiding tax penalties and interest is your best bet for protecting your financial future.  Here are 3 ways you can take care of your tax debt now so that you do not have to pay interest and penalties:   Installment Agreement:  An installment agreement allows you to pay your tax debt over time, rather than in one lump sum. While you are still responsible for the interest and penalties, you come up with a plan to pay, rather than letting the debt get out of control. Offer in Compromise: If you cannot afford the taxes that you owe, you might qualify for an offer in compromise, which is a program offered by the state (and the IRS) to allow you to pay off the debt for less...

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3 Ways to Settle a Large Tax Debt

3 Ways to Settle a Large Tax Debt

By on Sep 23, 2017 in Debt Relief, Tax Problems, Taxes | 0 comments

In 2016, the Internal Revenue Service (IRS) estimated that more than $450 billion went unpaid in taxes.  That is a staggering number that translates to millions of Americans holding onto an unpaid tax debt.  There are many reasons why an individual (or a business) might not pay their taxes on time—some of the most common reasons include being too busy, having an unexpected and/or disruptive life event (death in family, sudden illness, move, etc.) or simply not having the money.  Regardless of the reason for the tax debt, it’s important to focus on the best way to settle your debt before the IRS moves forward with additional penalties, wage garnishments and/or putting a lien on your property. Here are 3 common options for working with the IRS to resolve your unpaid tax debt once and for all: Offer in Compromise:  In some cases, when you cannot pay your tax debt, the IRS can settle your debt for less than the amount you owe.  There is an extensive application process to request an Offer in Compromise and you should be prepared to provide details about your financial situation. There is a $150 application fee to file for an offer in compromise. Installment Agreement:  An installment agreement allows you to pay your tax debt off in installments, rather than in one lump sum. This can be more manageable for individuals and businesses that do not have the full amount at the time that taxes are filed.  You are still responsible for paying the total amount (and any interest and penalties) but the IRS may let you make monthly payments to resolve the debt. Temporary Delay: If the IRS determines that you are unable to pay your tax debt, they might be willing to delay your bill.  During this delay, the IRS will monitor your ability to pay and may even file a notice for a tax lien to protect their interests. What If You Cannot Pay Your Tax Debt? Each of these tools can help you settle a large tax debt. However, deciding which to pursue based on your unique set of circumstances and completing all of the necessary paperwork can be overwhelming.  The team at Success Tax Relief can help...

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How to Settle a Tax Debt with a Chapter 13 Bankruptcy

How to Settle a Tax Debt with a Chapter 13 Bankruptcy

By on Sep 15, 2017 in Consultation, IRS, Tax Problems, Tax Tips | 0 comments

Bankruptcy shouldn’t ever be considered the “get out of debt” free option. Major consequences follow behind a bankruptcy filing. You could be restricting yourself from financial opportunities through this type of solution. Let’s first review exactly what it means to file for bankruptcy.  Bankruptcy. What Does it Actually Mean for You? Filing for bankruptcy is officially reporting to the government that you acknowledge that you have outstanding debts to pay to various companies and agencies and you do not have the financial means to pay the debt. A bankruptcy filing will clear you of these debts, but at a price. Your credit score will take a major hit that will make it almost impossible for you to pull a line of credit with any bank or to even purchase a vehicle. You’ll Pay More in Interest with a Bankruptcy Filing Any line of credit that you do manage to get with a bankruptcy filing on your credit report will come with a hefty interest rate. Financial institutions that charge high-interest rates are merely trying to get as much money from you up front because your credit report shows that you have a history of not pay what you owe.     Bankruptcy filings can stay on your credit report for at least seven years.   Bankruptcy is a Solution, But Not Always the Best One What most taxpayers don’t realize is that your tax debt may not go away with a bankruptcy filing. Certain stipulations have to come into play in order for your tax debt to be wiped away with a bankruptcy filing. There are different types of bankruptcy filings, but the most common one is Chapter 13 for individual taxpayers and sole proprietors. Corporations typically file under Chapter 7 or Chapter 11. For the purpose this article, we’ll focus on Chapter 13. When it comes to filing a Chapter 13 bankruptcy, the Internal Revenue Service (IRS) states that you must qualify for the following:   4 Things The IRS Wants You to Know About Chapter 13 Bankruptcy Filing   You must file all required tax returns for tax periods ending within four years of your bankruptcy filing. During your bankruptcy you must continue to file, or get...

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Back Taxes Penalties and Interest Rates in 2017

Back Taxes Penalties and Interest Rates in 2017

By on Jun 25, 2017 in Tax Problems | 0 comments

  When it comes to interest rates, they can fluctuate by the quarter. While the Internal Revenue Service (IRS) typically issues a press quarterly press stating any information regarding the interest rates, it’s still the taxpayer’s responsibility to keep themselves updated—especially if you owe any back taxes, because overpayments will be penalized as well. As of April 1, 2017, the IRS reported that the interest rates for the second quarter is as follows: 4% for overpayments 3% overpayment fee for corporations 5% overpayment fee that exceeds $10,000 for corporations 4% for underpayments 6 % for underpayment for large corporations As the second quarter is winding down to an end, the professionals at Success Tax Relief want you to be aware of the current interest penalties before the new quarter begins. Keeping Up With the Quarterly Interest Rate Fees The IRS does not have their interest rate fees posted for the third quarter at this time. The moment they do, you can look to Success Tax Relief to swiftly provide you with the information you’re looking for. Percentage Points Another thing to keep in mind when it comes to penalties and back taxes is that while the interest rate may change every quarter, the fees of the over and underpayment rate is also added on with three percentage points. This excludes corporations. With corporations, the under and overpayment rate is a little different. The overpayment rate is 2 percentage points while the underpayment rate is 5 percentage points—in addition to the federal short-term rate. Finding the Help You Need to Keep Up With It All Keeping up with quarterly interest rates can easily be forgotten whether you’re operating a business or just managing your personal taxes. Success Tax Relief has over three decades of experience helping people resolve their tax debt and even eliminating it altogether. We have a competent and talented team of tax lawyers, accountants, CPA, and tax preparers on hand to handle your case and keep your payments up-to-date, preventing any under or overpayments that will lead to an inflated balance. Success Tax Relief. Your Help Our team also provides consultation services that will help keep you out of debt. Our new service, Success Credit Relief is...

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