IRS Tax Debt - Put the Collections Machine on Hold and Get More Time to Pay

Procrastination: Don't procrastinate with the IRS. You may have received some notices in the mail. They're certified, and they're important. So don't put it off, open the letter and get to work finding a solution before you face dire consequences.

Automated Collections 101: If you ignore the notices the IRS mails you, your account is sent to the Automated Collections System (ACS). This is the area of the IRS that can Seize your assets, Levy your Bank accounts, and Garnish your wages.

Buying Time: If you ignored your IRS debt, it's probably already too late. But there are certain ways you can buy time.

Short-Term Hold: This usually doesn't work, but it's worth a shot. You can call the IRS and request a short-time hold. This could be anywhere from one week to 60 days. After you call the IRS, send them a written request for more time along with the photocopy of the notice you were sent.

Long-Term Hold: It's even harder to get a hold on your account that is longer than 60 days. You have to call the IRS and ask them to classify your account as a "Hardship Case." If your situation is truly dire, a reprieve from debt collections for a year. But your have to provide plenty of evidence to support this. You need documents proving you cannot pay your debt. And IRS Hitmen are not known for their sympathy.

Getting Help: Did the IRS refuse to give you a long-term or a even a short-term hold? Then you have to face the music and find a way to pay your debt. At this stage, it's going to be really tough. You already tried one or two excuses that didn't work and the IRS doesn't like stalling tactics. You may need professional help at this point.


Window of Opportunity: The key here is acting on your debt as soon as you know it exists. Can't pay? Let the IRS know and work with them to find a solution. You can even consult with a third party for help, but don't pretend it doesn't exist!


Now You Have The Smoking Gun...Use it!

What Do YOU Want to Read?

Business as Usual: My e-mail inbox is full here at the office. I'm not complaining, I love to helping my readers with their Tax Debt Issues. But while going through the inbox today I got to thinking- what do YOU want to read about? What particular pressing items do you need answers to? What confusing IRS Issues need clarification? Let me know!

Today's Tips: Tonight, I wanted to cover Identity Theft. This is a Hot Issue with the IRS, the scammers have been more agressive than ever this past year.

Here are a few things the IRS wants you to know about Identity Theft:

1. If you receive a letter or notice from the IRS which leads you to believe someone may have fraudulently used your Social Security Number, respond immediately to the name and address or phone number printed on the IRS notice.

2. If you receive a letter from the IRS that indicates more than one tax return was filed for you, this may be a sign that your SSN was used fraudulently.

3. Another sign that you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.

4. The IRS has a department which deals specifically with identity theft issues. The IRS Identity Protection Specialized Unit is available if you have been in contact with the IRS about an identity theft issue and have not achieved a resolution.

The Big One: The IRS NEVER initiates communication with taxpayers about their tax account through emails. If you receive an e-mail or find a Web site you think is pretending to be the IRS, forward the e-mail or Web site URL to the IRS at phishing@irs.gov.

Now You Have the Smoking Gun...Use it!

IRS Tax Debt - Do You Want the Collections to Stop? You Have the Right to "Collections" Due Process

Fast Solution: You can stop the IRS Collections process. As you're all well aware, the IRS has the power to ruin your life with their Tax Liens, Levies, and Seizures. If you can prove that the IRS is in the wrong, you are entitled to a hearing. This is known as the Collections Due Process.

I don't agree with the amount the IRS says I owe. Will Appealing stop the Levy?

That depends. You have to make sure you qualify for an appeal. Read Publication 1660 "Collection Appeal Rights" or consult with a professional to make sure you qualify before going through with the process. If you win, then the Levy action will stop.

I just got Notice CP504. It says "Urgent!! We intend to levy Certain Assets." Can I still Appeal and stop the levy?

No. Your case is closed. The IRS has already determined how much you owe at this point, so there's nothing to Appeal. But you do have options for getting your case reopened so you can appeal:

-Pay the amount due in full and file a Claim for Refund. Even if the IRS disallows your claim, you'll have the right to appeal

-Request an Audit, following the instructions in Publication 3598

-File an Officer in Compromise (Form 656), Doubt as to liability

And remember, the IRS cannot levy you with just this notice. They must first file a formal intent to levy. And that will be the next letter you get. So act fast and find a solution. If you can't appeal, find a way to pay the debt off.


I know I qualify for a Collections Due Process Hearing. Now what do I do?

First, you have to complete Form 12153 "Request for a Collection Due Process or Equivalent Hearing." You can't leave anything out. And make sure you list ALL your reasons for disagreeing with the IRS. Include any documents that proves your case. Then send the Form to the same address on your Lien or Levy Notice. If no one gets back to you within 30 days, consider getting professional help and resubmitting the application.

Quick Tip: Does this whole process seem too formal for you. There's another solution you can try. The IRS offers the "Collections Appeal Program" as an alternative to a hearing. It's a quicker and easier process. But watch out, if you disagree with the appeals decision you will not be able to go to court.

Now You Have The Smoking Gun...Use it!

Breeze through Tax Forms with the Tax Filing Checklist

Start Early: I know my blog is reading like a broken record lately, but I’m going to say it again anyway: Get started early this Tax Season! Otherwise, you’ll be scrambling to get all of your Tax Documents together when April rolls around. Don’t let this happen to you, relax and use this checklist and get your Tax Files organized now.


Tax Filing Checklist:

1. Personal Information: You need your Social Security details, as well as the Social Security details for your Spouse, Children, or any other dependants you may have.

If you’ve hired a full time babysitter or nanny, you need their Name, Address, Tax ID, and Social Security Number for your Tax Filing.

2. Employment and Income: You need to have the following forms on-hand:
W-2 Forms for the current year and/or if Form 1099-G if you’ve received Unemployment Compensation for the past year.

Remember to report ALL of your income. Including Alimony received Gambling and Lottery Winnings, or even Jury Duty Pay. Report this miscellaneous income on Form 1099-MISC.

3. Expenses: This is your chance to earn money, so don’t overlook this step.. Here’s some expenses that qualify:

Gifts to Charity, Investment Expenses, Job Hunting Expenses, Child Care Expenses, Alimony Paid, Adoption Expenses, and even Job-Related education expenses count.

Be careful, do not claim expenses if they are not qualified expenses, or you could get end up in debt to the IRS.

Still Scary? Is this all still too much for you? You don’t have to do this on your own. You can use Tax Filing Software, or better yet hire a professional to file your taxes for you. It will be worth the expense if you’re saving your self from excess stress and anxiety.


Complications: Things get more complicated if you are self-employed, need to take medical deductions, or if you have specialized Tax Issues. If you have any specific questions, feel free to drop me a line, or do your own research. Just make sure to double check that your information is from a reputable source.

Now You Have the Smoking Gun…use it!

IRS Tax Debt - Overcoming Your Tax Fears - Get the Facts and Get Out of Debt

Fear and Loathing: The IRS is a fearsome force. With minimal effort they can take your car keys, your savings, your house, and your paycheck. Many people are terrified to file their taxes or even seek professional help to get them out of their IRS Tax Debt. Here are some common IRS and Tax related fears, and how to overcome them.


Fearing to file Unfiled Tax Returns:

Many people have unfiled tax years. They want to file, but they are terrified. They think the IRS will automatically hunt them down and put them in jail.

Reality: Actually, the IRS is trying to encourage people to file their unfiled tax returns. It's a pain for them to file a substitute form for you. So get to work and file those unfiled tax returns.


Fearing Professional Help:

There's plenty of crooks and scammers out there. With lots of press covering phising fraud, it's understandable that many people fear all tax professionals. This fear isn't entirely unjustified. You need to watch out, because there are tax professionals who are only in it to make a buck.

Reality: If anyone is asking for your bank account or credit card number the first time they talk to you on the phone, they could be scammers. But if you are intimidated by the IRS, hiring a Tax Professional is actually a good idea that the IRS advocates. People can make stupid mistakes when they're scared and get further into trouble.

Fear to Face Up:

IRS notices have been coming in the mail. You were too scared to open them, so you ignored them. This is the usual attitude of people in debt to the IRS.

Reality: Ignoring your IRS debt is the biggest mistake you can make. But thousands of people do it every year. The IRS adds penalties and interest to your debt for every month you don't pay. The debt can quickly go from being in the hundreds to being in the thousands. So face the facts, open those letters and get busy resolving the problem.

World of Hurt: Don't let fear overcome you. The IRS is big and bad, but you're not defenseless. There are plenty of resources to help you combat the IRS and your IRS Debt.

Now You Have The Smoking Gun...Use it!

Inauguration Afterglow...and Getting Back to Work!

My Two Cents: Every blogger in the Blogosphere is reporting on last night's Historical Presidential Inauguration. To be honest, I've been too busy here at the office helping Taxpayers with their Tax Debt Issues to really pause and take it all in! I'm sure we can all agree that change needs to happen in these pressing economic times. Many people are drowning in debt, and the IRS isn't going to pause and wait for Taxpayers to recover, this year they're redoubling their efforts to collect delinquent Tax Debt.

Temptation: Our economic challenges are making people desperate. I've personally seen a rise in Taxpayers trying to cheat their way out of tax debt, and their subsequent demise when the IRS catches them! For example, the IRS estimates 84% of tip-earning workers underreport their income and do not list tips with their income. Innocent enough, right? Wrong. The IRS will not see it this way. Cheating is cheating, and you will get caught. In 2007, 50% of the people bought to court for tax crimes were convicted.

They're Back: The Men in Black are back. The IRS wants to make it known that they are back in the enforcement business. So you need to stay alert and make sure you don't commit any common tax offenses. If you don't, you risk doubling or even tripling your tax debt.

Common Offenses:
-Failure to File your Tax Return
-Failure to Pay Your Taxes
-Failure to Supply information
-Filing a False Claim or Refund
-Failure to Keep Records
-Assisting anyone in the Acts above


Avoid It! Here are a couple of ways to avoid being stalked by the IRS's Special Agents

1.File your Tax Returns
2.Didn't file? Get current on filing your tax returns
3.Pay your Taxes
4.Didn't pay? Get current on paying your taxes

Be Straight: Times are tough, the American Taxpayers feel uncertain. I hear this every day, and I can empathize with your desperate situations. However, it's my duty to warn you not to get tempted to lie on your Tax Return in any way. You want to avoid the wrath of the IRS Criminal Investigations division at all costs.

Now You Have the Smoking Gun...Use it!

IRS Tax Problems - Can't Find a Job? Learn How to Keep the IRS Off Your Back

Sound Familiar? Job Fairs, Interviews, and Internet Searches and yielding nothing? You have no job. You used to pay all your bills on time, but now you can't. What can you do when you owe the IRS but you don't have the money to pay it with? There's a surprising amount of options available for those who are unemployed.

Choose the Right Help! See if you qualify for the options below.

Offer in Compromise - You can Settle your Debt with the IRS. It's a very long and tedious process and the qualifications are difficult to meet. Consulting with a professional is the best way to win an Offer, but it's not necessary. Be prepared to fill out 44 pages of paperwork. In addition to that, you must include 20% of the offer when you send it in.


Installment Agreement - Can you pay monthly?. This is like paying your credit card debt, except that the IRS gets to decide how much you pay per month. You have to provide your complete financial information to the IRS. After they review it and realize you have no or little income coming in and no assets to seize, they choose the amount you can pay each month. But if you have no job, this may not be an option for you.


Hardship Plan: You have a chance of qualifying for a hardship plan if you are unemployed. Basically, you have to prove to the IRS that you cannot afford to pay the IRS because if you do, you will not have money left over for your basic needs. If the IRS determines that you're right, they will give you a brief reprieve from the collections process. But don't get comfortable yet. After the resting period is up, the IRS will continue the collections process.

Penalty Abatement: The IRS won't stop their process just because you're on hold. When you can't pay, the IRS immediately starts adding interest and penalties . This means that not only do you owe the original debt, but also the newer fees. But there is a solution. Try applying for "Penalty Abatement." You could potentially reduce your tax debt up to 30%!

Don't give up. There's lots of ways to take care of your IRS debt, even if you don't have a job. There worst choice you can make is just to ignore it. Even if you are unemployed, your IRS debt will not simply vanish.

Now You Have The Smoking Gun...Use it!

Filing your Tax Return, Which IRS Form do you Use?

Get Paid: You want your Tax Return. But if you don't file your taxes or file your taxes wrong, you're going to lose your money. Make sure you use the right tax form to file your IRS Tax Return.

Three forms? There are three IRS Tax forms to choose from when you file your taxes, 1040EZ, 1040A and 1040. Here’s how to know which one is right for you.

Use the 1040EZ if:

• Your taxable income is below $100,000
• Your filing status is Single or Married Filing Jointly
• You (and spouse) are under age 65
• You are not claiming any dependents
• Your interest income is $1,500 or less

Use the 1040A if:

• Your taxable income is below $100,000
• You have capital gain distributions
• You claim certain tax credits
• You claim deductions for IRA contributions, student loan interest, educator expenses or higher education tuition and fees

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. You must use the 1040 if:

• Your taxable income is $100,000 or more
• You claim itemized deductions
• You are reporting self-employment income
• You are reporting income from sale of property


Check Everything! When you prepare your return, read the instructions carefully and double check everything when you’re done. You don’t want to delay your money, or worse, get in trouble with the IRS due to a simple mistake with tax filing.

Now You Have the Smoking Gun...Use it!

Avoid 5 Common Tax Return Errors and Get your Money

Friday's Here! I'm ready for the weekend, how about you? It's time to wrap up work at the office, but I don't want to leave without imparting some wisdom to my readers. Many people have e-mailed me with concerns about their Tax Returns. They don't want to mess up and miss out on their money. So here it is, the 5 Common Tax Return Errors you need to avoid if you don't want to miss out on your deserved green.

1. Be Patient. Only file one 2007 Tax Return. It takes up to 12 weeks for the IRS to process paper returns and issue your stimulus payment. Some people get tired of waiting and try to file another Tax Return to speed up the process. Don't do it. It will do the opposite and cause your check to be delayed.

2. List Annual income, not your monthly income. If you don't list your annual income, you won't be eligible for the the minimum amount of $300. The income required by law is $3,000. This can be earned income, social security, or retirement pay.

3. Review your Tax Liability. Tax Liability is the net amount of Federal income taxes paid after deductions and credits. People who have small or no Tax Liability are getting smaller stimulus payments than they expected or none at all. The law provides for a maximum of $600 ($1,200 married filing jointly) or an amount equal to a taxpayer's tax liability, whichever is less.

4. Amended Returns: Generally, you can't file an amended return just to get a stimulus payment. The few exceptions: if you're a retiree, veteran, or have other "qualifying income."

5. Check the Address- I know I'm stating the obvious. But lots of people fail to use their current address or write their address incorrectly. You can't receive your payment on time if the address on your Tax Return is wrong. If you change addresses after filing, complete Form 8822 ("Change of Address") and a change of address card with the U.S Postal Service.

Income Too Low? Do you usually not file your taxes because your income is too low or nontaxable? You may still qualify for a return. Fill out form 1040a "Individual Income Tax Return".

Now You Have the Smoking Gun...Use it!

Cleaning out for the New Year: Which Tax Records Do you keep?

Cleaning Up: A fresh new year is upon us. This is a great time to go through all of your Tax Records and weed out everything that’s unneeded. To be honest, the IRS does not require you to keep your records in any particular order, but you should keep any document that could have an impact on your tax returns.

Confusion: Many people ask, "How long should I keep my tax records?" It's not fun to have loads of paperwork weighing you down, but keeping your paperwork is important. If the IRS decides to take any kind of action against you, how will you defend yourself without ample documentation?

The Keepers: This is the IRS’s official list of definite “Keeps.”

• Bills
• Credit card and other receipts
• Invoices
• Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return

Start off Right: If you keep your records straight through the year you’ll save time and effort when tax time rolls around. If you hire a professional to complete your return, having your records in order will help them quickly and accurately get the best results possible. Don’t wait until next year to set things right, get organized now!

Now You Have the Smoking Gun...Use it!

Tax Debt and New Years Resolutions

The New Year is under way...we're already half way there, folks! How are you doing with all of your resolutions? Out of all the common resolutions people make, taking care of your IRS Tax Debt should be priority number one! I'll tell you from experience, the IRS can have devastating effects on your life if you ignore them. This year, the IRS has resolved to crack down on taxpayers that owe.

Lets Review...There's a lot of ludicrous ideas out there about Tax Debt. So you need to know the cold hard facts. Don't let unreliable people tell you that settling tax debt is "Easy" or that there's "tons" of ways to pay off the IRS. Because it's not true. Working with the IRS is hard. Filling out IRS paperwork is daunting. And there are only 5 real options for handling your IRS Debt.

1. Wait for Statues to Expire: Bad idea! The statue of limitations on your debt will not expire for 10 years. And sometimes, the statues are extended (like if you file for an "Offer in Compromise.") And while your waiting for the time limit to expire the IRS can collect on your debt by force with Tax Liens, Levies, and seizures. Don't give them the opportunity to do this. It will not pay to ignore your debt.

2. Pay in Full: If there is any way you can actually pay in full, do it! Do not submit an "Offer in Compromise" if your have money in the bank to pay for your IRS Debt. Your IRS Hitman has access to your bank account. If they see you have the money to pay, they will tell you to pay in full.

3.Settle It: The IRS gives you the chance to submit an "Offer in Compromise." You're are basically settling your debt for a lower amount. Very few people are actually accepted for this program. And barely anyone has their offer accepted for "Pennies on the Dollar." But if you are in a truly desperate situation, you might want to see if an "Offer in Compromise" is an option for you.

4. Suspend Collections: If you are in a situation displaying true Financial Hardship, prove it. The IRS might stop the collections process for a limited amount of time so you can get your finances back in order. They will determine the amount of time based on your situation, and check up on you periodically to see if your situation has changed yet.

5. Pay Monthly: You can pay the IRS monthly. You have to enter into an "Installment Agreement" with the IRS to do this. The IRS will take a close look at all your finances and assets. If you're approved to pay monthly, they choose the amount you pay each month. Then you are locked into a binding contract, stating that you must pay a certain amount monthly. And defaulting can have harsh results.

Still Hope: Sorry if I'm making things seem hopeless. Yes, paying off your IRS Debt is hard. The IRS's system of ruthless Hitmen doesn't help the matter. But there are ways to get your debt taken care of. None of the options I have described are easy to do. But you have to do them if you don't want to remain in debt to the IRS forever.

Now You Have The Smoking Gun...Use it!

IRS Tax Filing: Your Questions Answered!

An IRS-Hitman Special: Tax time is around the corner. This is that special time of the year when my inbox get flooded with questions from worried taxpayers all across the Nation. It's time to give the people what they want, answers to their IRS Tax Filing questions!

What are the legal qualifications for filing jointly?
There's only one. The couple has to be legally married as of December 31 of that year.

Are any special return notations required when your are filing jointly, but your spouse is deceased?
Yes, there's a particular area of the paperwork you need to take note of. In the signature area write in "Filing as Surviving Spouse." The final return needs to have the word "Deceased," the decedent's name, and the date of death written across the top of the return.

What deductions can I safely take?
In the end, it's your decision. But ask yourself the following questions: Do you like taking risks that could land you into prison? Do you like taking risks that would make you pay hundreds or even thousands of dollars in fines? If you wouldn't rob a bank, don't rob the IRS. Those consequences I listed are the realities of getting too bold with your Tax Filing. It's best to get a professionals' opinion on this matter.

I haven't filed my taxes for a couple of years and the IRS says I owe them money. Do I have to file my missing years before the IRS will work with me on my debt?
Yes, you do have to file any Tax Returns from past years before the IRS will work with you. The plus side is that you only have to file missing returns for the last 7 years. And if you file your returns you may see your Tax Debt reduced.

Still Lost? Still have a tax question you need answered desperately? Don't worry, I'll be back next week to answer more of your questions. Until then, I hope everyone has a safe weekend!

IRS Wage Garnishment: Kiss Your Paycheck Goodbye

Where it Begins: If you’ve got an IRS tax debt, chances are good that the IRS is doing everything they can to get that money. Maybe you gotten a few letters, but none of them seemed to serious. But about two weeks ago you got a “Final Notice” that said they intended to garnish your wages. You didn’t think it was that big of a deal, at least until payday, when you discovered what exactly wage garnishment means to your check.

Where Is Your Money? How could this have happened? You used to make $2000 dollars a paycheck and now it’s $400 dollars. You can’t even pay the bills! Well, that’s because the IRS can legally garnish up to 80% of your paycheck in order to pay for your debt. It may seem unfair, but the IRS feels that nothing is more important than IRS debt. They feel if you can afford to ignore the debt, they’ll just take your money straight from the source.

Talking to the Boss: You’re obviously infuriated over this. How can they just take your money? You need it to pay bills. So you go to take it up with your boss, and he tells you that his hands are tied. Unfortunately, he’s right. Your boss has no say in the matter. The IRS just comes to him and says “We’re going to be taking this amount from this employee’s paycheck.” All the boss can do is comply. In fact, if he tries to interfere, he can be fined or brought up on charges.

Who Can Help? Depending on the specifics of the situation, you can get the garnishment removed. But that involves taking the necessary steps to solving the problem. The IRS took it this far, they’re certainly not going to walk away without their money. Speak with an experienced tax professional to find out what it takes to remove the garnishment, arrange to pay the debt, and get back to living.

Now you have the Smoking Gun…Use It!

Manage Your IRS Debt Even after You’ve Lost Your Job

It’s a jungle out there… Times are hard, and many people, possibly you; have lost their jobs. What’s worse is that you’ve taken out of your 401k to cover your bills until you can get back on your feet. Now that money is gone, your job situation hasn’t improved and you got a letter from the IRS stating that you have a tax debt.

When it rains…How did this tax debt happen, and what can you do about it? The cause is simple; the correct amount of taxes weren’t taken out when you withdrew the money from your 401k. When you withdraw money from a 401k or any other investment you should expect to have to pay the IRS around 30% of that money. But that money’s gone, it went to paying for basic bills. So how are you going to pay your IRS debt without any income or liquid assets?

Don’t be lured by false hope…There is a couple of promising solutions available based on your situation right now. But before you go and try to negotiate with the IRS to get your debt reduced or erased ask yourself one question: where will I be in a year?

The two solutions I’m talking about are the Offer in Compromise and Currently Non Collectible. Both of these are solutions for people who have been hit hard by financial trouble, and both of them can take the IRS up to a year to make a decision on.

Answers to questions…So why is the question: where you will be in a year important? Because both IRS programs have very strict financial guidelines that you must meet in order to be accepted. And if during the year you’re waiting for a decision you get a job and your financial situation improves, you would no longer be eligible.

So where does that leave you? Let’s go over your grim situation…you’re unemployed, or you’re working at a job that pays far less than you made before. You have to make decisions about what bills you can pay and which ones you can put off. On top of that you have an IRS tax debt.

Real, not perfect solutions…Your only real option is to setup a monthly payment plan with the IRS. Because of your situation you payments should be low. Even though you won’t even be paying enough to cover the interest, you are paying the IRS something. That way the IRS won’t take any collection actions against you.

Once your situation improves you will have to renegotiate your payment plan with the IRS, but the most important thing for you right now is to keep the IRS from kicking in your door and seizing all of your assets.

Now you have the smoking gun…Use it!