Don't Pay Money You Don't Owe- The Truth About IRS Notices

This time of year hundreds of  "CP 2000" Notices are automatically being sent out by IRS machines. The IRS is seen as infallible, but truth is:

Your IRS Notice
could be wrong.

When information returns (W2s and 1099s) sent to the IRS by banks, employers, and stockbrokers don't match up with the 1040 you filed, a CP 2000 may be sent to your mailbox. 

Expert CPAs, Tax Attorneys,  and even IRS documents admit that these IRS Notices are sometimes sent out in error.

Is Your IRS Notice Wrong?

A Treasury Inspector General shows a 5% error rate on the IRS's part.

Experienced CPAs and Attorneys like Claudia A. Hill have different estimates, claiming that a third are wrong and another third are only half-right*.

Don't Owe the IRS? Here's What to do:

If you believe you were sent an IRS Notice injustly, do the following:

1. Gather financial documents which prove why you do not owe the debt the CP 2000 Notice claims you owe.

2. Contact the IRS immediately with the response section of your CP 2000 to explain why the notice is unjustified.

3. If you don't feel confident contacting the IRS on your own, hire a professional who can gather necessary documentation and speak to the IRS on your behalf.
 
Never ignore an IRS Notice: Many people who receive an IRS Notice wrongfully will just ignore it. NEVER do this! If you ignore the notice, the IRS assumes that you agree with the changes and you probably will face the following consequences:

- Debt Grows out of control from penalties and interest
- The IRS may levy your bank account or wages to pay for the debt owed
- The IRS will assign a Tax Lien, putting your assets and property in danger
- The IRS may seize assets if necessary to collect on the amount owed


More Articles on IRS Notices:

Steps to Take When You Don't Owe the IRS

What do IRS Notices Mean- And How Do I Respond?

Watch Out: The IRS Notices are Coming

Don't be Cowed by IRS Computers

*How to Stop the Machine

Roni Deutch Speaks Out on her $34 Million Lawsuit

 Roni Lynn Deutch the famous Tax Lady has issued an official statement on her $34 million lawsuit on her blog:

 "I believe the California Attorney General’s civil complaint against my law firm and me to simply be election year politics."

She goes on, saying that her ubiquitous law firm has represented taxpayers for almost 20 years. She goes into the thousands of people and tens of millions of dollars saved from the IRS's clutches. She claims to have followed California's rules and regulations.

"I will aggressively and vigorously defend the claims against us, and I am absolutely confident we will prevail."

I'm shocked at how confidently she's defending herself considering the evidence against her. Let's take a look:

-  Hundreds of combined complaints between the top consumer complaint websites
-  Over 290 complaints on Better Business Bureau Report(s)
-  F Rating with the Better Business Bureau (View Report)
-  Shady Advertising highlights tax settlements, doesn't deliver results 
- Commercial "Testimonails" proved to be fakes and half-truths
- Charges outlandish fees; doesn't provide service

Rule of Thumb: When you decide to work with a professional avoid any company that claims you can settle your tax debt for incredibly low sums ("Pennies on the Dollar" is the usual lie). The IRS warns taxpayers about trusting misleading promotions: “We urge taxpayers not to be duped by high-priced promises.”

Crocodile Dundee Owes Multi-Million Tax Debt, Crickey!

Crocodile Dundee actor Paul Hogan finally has to face up to the millions he owes in taxes. Last year Hogan had this to say about the Australian Taxation Office after they enlisted the help of US tax authorities to look at his bank accounts:


"Come and get me, you miserable bastards!" 
  
Looks like they spoke too soon, he's officially caught and now he's got to pay what he owes. Here's the Scoop:

The famous Australian actor lives in Los Angeles California with his wife, Linda Kozloweski and their 12-year-old-son, Chance. He recently returned to Sydney, Australia for the funeral of his 101-year-old mother. 

He tried to leave his motherland but the Australian Tax Man (who's apparently just as bad-ass as our U.S Tax Man) didn't let him board the flight. A prohibition order from local tax authorities will keep him in Australia until he pays up.

Tax Tax Bill: Former "Crocodile Dundee" owes $37 Million in Australian dollars to the Australian tax office, which is about $33 Million in U.S Money. 

The Crocodile Dundee himself has spoken up yet, but his lawyer Andrew Robinson speaks and Paul Hogan's and Linda Kozloweski's behalf when he says, 

"The process of detaining Paul in Australia, away from his wife and child in Los Angeles, has devastated Paul, he will continue to defend his position through all available legal and other channels."

 Australia's most successful export isn't getting away without paying what he owes, it's time for Paul Hogan to fess up and pay up.

Don't File & You Could Owe a $175,000,000 Tax Debt Like Marcos Esparza Bofill

 A broke twenty-something hipster was hit with a $175,000,000 tax bill. When asked about his shocking tax debt he responds: 

"What's the IRS?"

Marcos Esparza Bofill emigrated to the United States from Spain to try his luck as a day-trader. He lost money while he was here and before he left he was barely surviving. If this is all true, how the hell could he owe the IRS $175 Million in tax debt?  

Here's the Deal:

-  Marcos Esparza Bofill did not file his taxes for the year he was living in New York

- The IRS followed every transaction he made, coming up with an annual income of $500 Million

- According to IRS documents posted on The Smoking Gun, Esparza owes $172,101,056.48 on his unfiled 2006 tax return.

Though friends are speaking out saying Esparza's modest apartment and lifestyle mean the debt is a big mistake, it's a little strange that a "broke hipster" has $500 million to trade in stock, isn't it?

"He lives a very modest life," an anonymous friend said of Esparza Bofill. "So just to think that all of a sudden he owes $172 million is pretty ridiculous."

File Your Taxes: When you don't file, the IRS will file an substitute return in a way that best benefits them. Why not, wouldn't you? This is especially dangerous if you're a day-trader, because the IRS will assume you've made 100% profit. The IRS filed Marcos Esparza Bofill's taxes as if he bought stock at no cost. 

Solutions for the $175,000,000 Debt: If Esparza Bofill is truly as broke as his friends claim, he should be able to wipe out his problem simply by filing his taxes for that year. If  his losses truly outweigh his profits there will be zero tax liability and no penalties or interest.

What You Can Learn From Roni Deutch's $34 Million Fraud Lawsuit

I've encountered hundreds of victims of untrustworthy tax relief "experts", but justice is finally being served. Just yesterday, Roni Deutch has been sued by the California attorney general for $34 million!

So what are the charges against the infamous Tax Lady herself?

- escalating tax debts instead of reducing them
- not delivering on her promises
- not offering refunds & providing poor service
- shady or plain false advertising claims and tactics
- hundreds of complaints
- ads stating a tax reduction rate is 99%; it's really 10%

Oh, the list goes on and on.  This isn't the first time Roni Deutch has faced legal troubles. Back in 2006 she paid $300,000 to settle a lawsuit filed for her misleading commercials.
According to the AP Article, Attorney General Jerry Brown states that Deutch "Overstates her TV claims of winning tax battles...She advertises a success rate of up to 99 percent, yet successfully reduces the amount of money her clients owe in taxes in just 10 percent of cases."

Additionally, this case seeks a currently unspecified amount of civil penalties on top of $33.9 million in restitution for the hundreds of clients that filed fraud complaints against Roni Deutch's law firm.

According to the California Officer of the Attorney General "Tax Lady Roni Deutch" escalates tax debts instead of reducing them as she claims. The press release goes on to reveal:

"One woman from Pico Rivera who owed the IRS $13,000…paid Detuch a $1,900 retainer, but by the time the Deutch firm ended its representation she owed the IRS hundreds of dollars more in interest and penalties. ..Deutch refused to refund the woman's retainer."

The main focus of the lawsuit is on her false claims and advertising tactics. In one of her ads three clients claimed Roni Deutch's firm help them save $86,000 collectively, but all three of the people filmed still owed the IRS back taxes, penalties, and interest.

I highly recommend seeking professional help when you owe the IRS but choose the right kind, one that won't rip you off. 

Read more about Roni Deutch's $34,000,000 Lawsuit:

Brown Seeks $34 Million from TV's Tax Lady Roni Deutch: Official News Release

TV Tax Lady Roni Deutch Facing Legal Troubles on Time

Tax Lady Roni Deutch Sued for "Heartless Scam" by Moneywatch

Roni Deutch Sued by California AG on Taxgirl

'Tax Lady' Accused of Unladylike Behavior on the Tax Update Blog

Answering Your Tax Questions- How Do I Retrieve Tax Returns?

I've received and answered hundreds of tax questions over the years. If you've got one, simply e-mail me. Here's a question I receive often:

How do you get tax returns from previous years?

You should keep tax records for seven years in case of an audit or another emergency. Don't do this? You're not alone. Whether you owe the IRS or not, now's as good time a time as any to start gathering those documents. Here's what you do:

- Contact your accountant or tax preparer. I hope you hired a good one that has copies of your tax returns to send to you. If they don't have your returns, fire them; then try the option below.

- Obtain copies from the IRS by using IRS Form 4506, Request for Copy of Tax Return. The downside is the outlandish fee, $57 per tax year requested. That'll teach you to keep previous year's tax forms on hand, won't it?

-Other tax documents you should keep filed away include:

canceled checks
bank statements
deposit slips
contracts
charitable contributions
medical bills
pay stubs
pension plan records
credit card statements

While your at it, why don't your organize all of your vital documents and keep them in a fireproof safe? The IRS may remove penalties from your tax debt if you're affected by a natural disaster that destroys your tax forms, but you're out of luck if you're audited and your tax documents are either lost or destroyed.

One Thing You and Naomi Campbell Have in Common: The Tax Man

You and infamous diva and supermodel Naomi Campbell have one thing in common. A higher power to answer to. The IRS.

You're not bludgeoning housekeepers with diamond encrusted phones, assaulting airport security, or punching your limo driver in the face, but both you and Naomi Campbell won't escape the IRS if you owe tax debt.

Naomi Campbell recently had a $63,487 Tax Lien filed against her. Residing in the top tier of elite super models, you know Naomi Campbell's got the cash to pay the IRS. Her track record shows how she hates to follow the rules, but the IRS will give her a wake up call!

Celebrities continue to get caught by the IRS:

- Armed IRS agents seized assets from Young Buck

- Billionaire Red McCombs is still fighting the IRS

- Alicia Keys just married into a multi-million tax debt

- Comedian Chris Tucker forgot to give the IRS his cut

- Khloe Kardashian owes the IRS thousands

- Hip Hop Artist & Haitian Presidential Candidate Wyclef Jean owes the IRS $2.1 million

Maybe shady accountants and bookkeepers are to blame, maybe the wealthy and famous have a sense of entitlement. Whatever the case, it's clear that the IRS is combing through tax records and coming after those that owe full throttle. If you owe the IRS and haven't been caught yet, you will be! It's only a matter of time.

Results are In: You STILL Hate the IRS!

So you hate the IRS? Well, you're not the only one. Near the end of last week an Internal Revenue Service Office was evacuated after a suspicious envelope arrived.

According to Philadelphia police reports, the envelope contained a vial with a plastic bag over it. It looked threatening, but tests revealed that there was no harmful substances inside. The IRS workers filed back into the building before they had a chance to enjoy a full day off from work.

February of 2010 Andrew Joseph Stack II surprised American by flying his Piper Dakota airplane into an Internal Revenue Service office complex in Austin, Texas. (Read more here) Two months back another man threatened the IRS with a "bomb bag" (get the scoop).

IRS sentiment is at an all time low, they're not winning popularity polls anytime soon. Tomorrow I'll report with more news that will give you more reasons to loathe the Tax Man.

Keep the IRS Away From Your Assets: A Lesson from Young Buck

Earlier this month rapper Young Buck's home was raided by the IRS. Armed IRS agents seized everything; furniture, recording equipment, jewelry, platinum, wall plaques, and even his kid's PlayStation. Young Buck has more details on the vicious IRS seizure. Learn from Young Buck's mistakes and keep the IRS away from your assets!

In a recent interview with Vibe Young Buck describes the IRS raid:

I was sleep, man. It was like 6:30 am. They were probably thinking I was still living how I was back in the day, because they came with their guns out and everything. My past has already been out there, so maybe they thought I was up to no-good. If you coming just to serve some tax papers and take assets, then you wouldn’t have M-16s, 12 gauges, and glocks all out. They making it seem like it’s a drug raid.

 When asked if he still owes the IRS $300K Young Buck replied:

I don’t owe no $300,000, they was telling me I only owe them $164,000. And they saying they were trying to create some communication with me for three years. But my accountant was 50 Cent’s accountant, my lawyer was hired through his lawyer, my manager was 50 cent’s best friend. So once I was actually pushed away from that crew—I had to reconstruct my circle of people that was handling my business, and I ended up catching the backlash of that with this whole tax situation. I’m not trying to blame anyone though, I accept full responsibility, but one plus one equals two.

Young Buck claims he didn't know the IRS way trying to communicate with him for years. Apparently after a split from his old record label he was not in touch with his accountant, lawyer, or manager. The perfect storm. It all proves that in order to prevent tax debt you need to be your own accountant. Sure, you can hire accountants, bookkeepers, agents, lawyers, and mangers, but at the end of the day who's tax debt will it be? Yours! Take responsibility.

Double check numbers, and most importantly, make sure your taxes are paid as a priority. After all, you don't want the IRS armed agents to kick in your store and start stealing your assets!

BP's Wants YOU to Pay for Their Outrageous $10 Billion Tax Credit!

BP used a shifty accounting trick to cut their tax bill by $10 billion, a legal but questionable move for the oil barrens. As outraged citizens speak up, congress may get involved.

The release of BP's earning statement revealed a $10 billion reduction in tax liability for their oil-spill clean-up expenses. People want to know- how and why is this legal? Here's the rub:

- Questionable or not, the huge reduction in tax liability for BP is a standard business expense deduction

-Businesses can claim refunds for previously paid taxes when a net operating loss (NOL) to offset future tax liabilities (In other words, they can claim the damages as a tax-exempt loss)

-  These business expense deductions and NOLs supposedly enhance economic efficient by reducing business-cycle-induced fluctuations

The lofty $10 billion sum appears on the earning statement as a "tax credit", but it's not a tax credit in the traditional sense. The $10 billion amount reflects a reduction in tax liability on the $32 billion BP is estimated to pay in cleanup costs over several years.

If it's any consolation, BP can't claim the penalties they'll pay as tax deductions. But this tax move raises important questions. Do we need to change the tax code? Find a better way to determine what qualifies as a true business loss? Speak up, what do you think? Because I'm with all of you when I say I don't want to foot the bill for BP's offenses.

Haitian Presidential Candidate Wyclef Jean Owes the IRS $2.1 Million

Wyclef Jean (given name Nel Wyclef Jean), who's been planning to run for Haiti's presidency, owes the IRS more than $2.1 million according to federal tax liens. Saying the whole situation is "questionable" is an understatement.

The Tax Debt: Haitian hip hop musician and producer Wyclef Jean had multiple liens filed against him. The IRS filed a $724,332 tax lien back in May, then another $599,167 last July. Yet another $792,269 tax lien was filed against Jean Wyclef in July of 2007. These liens covers taxes that were due on his individual 1040 returns for 2006 through 2008.

The Lavish Life: Wyclef Jean bought a $1.85 million home where he lives with his family. The tax liens were filed against him at this lavish home. It looks like the music gig pays good- so why didn't Wyclef pay his taxes? It's mind boggling! Especially in light of some questionable financial decisions involving his charity and the fact that he's had to settle two smaller tax liens filed by New Jersey and New York State.

Questionable "Charity": After the tragic Haitian earthquake, there were reports detailing questionable handling of the finances of his charitable foundation (The Wyclef Jean Foundation). Going beyond filing late tax returns, he dipped into foundation funds and paid himself and his business partner (his cousin Jerry Duplessis) more than $410,000 for production services, rent, and Jean Wyclef's appearance at a charity benefit concert.

Despite the fact that the Wyclef Jean Foundation had a deficit and cash flow issues, Jean and his partner/cousin paid themselves $65,000 for rent payments on their Manhattan recording studio. The $65,000 prepaid 25 months of rent for the studio, it was done for the foundation's use of a table in the studio's kitchen. Hmmm.... The foundation has received millions in donations, but how the funds were spent and allocated still remains a mystery.

New President of Haiti? Wyclef Jean is officially running for presidency in Haiti. Analysts say his star power and resources make him a strong candidate with a high chance of winning. My question is this, if he and his team can't manage to pay their taxes on time or run a charitable organization with integrity- how can he be trusted to rebuild a devastated country?

If he became President of Haiti he would be in charge of proper allocation of foreign aid payments. Is he responsible enough to handle the pressures and temptations of being the President of Haiti? Leave your thoughts in the comments.

The IRS Dips Into Your Tips: The IRS Hits Hard on Tip Income

The IRS is cracking down on tip income Nationwide. It's not enough that service industry employees work long hours for little pay; the Tax Man wants his cut. Here's the rub on new IRS compliance initiatives to increase IRS Form 8027 filings in the restaurant industry.

Taking Your Tips: The IRS wants to increase the amount of Restaurants that file IRS Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips". The form is required to be filed with the IRS every February in the foods or beverage industry where tipping is the norm. According to the National Restaurant Association (NRA), the IRS's chief priority is to make sure tip income accounted for.

No Escape: IRS Form 8027 gives the IRS data on all the tips reported for any applicable establishment. With this form exposing any restaurant's tip underreporting secrets, the IRS won't hesitate to closely investigate any establishment where they feel tips are underreported. The result? You're caught!

Who Must File?

The IRS wants any "large" food or beverage establishment that operates at more than one site to file IRS Form 8027 for each one. The IRS defines "large" as any establishment that meets the following:

1. Food and/or beverage is served
2. Tipping is customary
3. More than 10 employees who worked more than 80 hours were employed and present on a typical business day during the prior year

To see if number three applies to you, take the total hours worked by the entire staff for any average period (month, quarter, or year) then divide by the number of days in the period. If the number is larger than 80, you need to file IRS Form 8027.

The IRS Watchdogs

The IRS is cracking down on compliance across the board. No matter what industry or niche you occupy, now's not the time to attempt to cheat the Taxman. He will come down on you, and he'll do it with a vengeance. Take it from the IRS Hitman.

Big Billionaire McCombs Still Fighting the IRS

Last week I wrote about the IRS suing Billionaire Billy Joe "Red" McCombs for $45 Million. The battle between the Rich and Entitled and the Almighty United States Government continues as B.J. "Red" McCombs argues his IRS charges.

The debate is over the sale of stock, which "Red "McCombs claims he shouldn't have to pay taxes on. The IRS begs to differ- they say the two debated transactions amount to the sale of stock in 2002 even when McCombs claims no sale happened.

Full Disclosure: McCombs actually sued the IRS in U.S. Tax Court. He claims the IRS is wrong and that he didn't need to report $213.4 million he earned in capital gains in 2002 from the (alleged) sale of 11.3 million shares of Clear Channel Communications Inc. McCombs even debated another $3.3 million in capital gains related to further stock transactions.

The word from McCombs Enterprises? President Gary Woods had the following to say in an e-mail, "[we] have always paid its taxes, of all kinds, in full, and in a timely manner."

Of course, the IRS cannot legally discuss McComb's tax case, but I think it's clear that this will end with billionaire McCombs paying his dues to the Tax Man. After all, I think he can afford it.

Alica Key's Tax Debt Disaster, New Husband Owes the IRS over $2 Million

And Now, More Celebrity Tax Debt! Songstress Alicia Key's matrimonial bliss may have ended when she realized her new husband owes the IRS over $2Million! Alicia Key's husband Swizz Beats (Kasseem Dean) has a total of $4 million in taxes if three different states.

Owing Your Spouse's Debt- How it Happens

Alicia Keys didn't rack up the outlandish debt, but she may end up being responsible for it! I constantly recieve e-mails from taxpayers who are stuck with their spouse or ex-spouse's debt. They want to move on, but they're stuck with their ex's tax bill! Here's the rub: 

Community Property States: If you get married in a community property state all the debts your spouse had prior to marrying you are now your responsibility. If you get married in the following state, you marry your honey's tax debt, too: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin.

Filing Jointly: You may save money by filing taxes jointly with yours spouse, but do so with caution. You might trust your husband or wife and simply sign without checking the information. This is how many end up owning debt with this spouse. If you file jointly, you pay the tax debt jointly! And saying, "I didn't know what my spouse filed!" doesn't work if you signed it! When you sign it, you take responsibility. Period.

On Innocent Spouse Relief

I'm going to be straight with you about Innocent Spouse Relief- very few people will qualify for it. Innocent Spouse Relief is for emergency situations. You have to go above and beyond the call of duty to prove you don't owe debt your spouse racked up. I said it before but I'll say it again, if you signed the joint tax return, you will owe the tax debt. If there's a dispute with your spouse, you might have to take it to court or divorce court. Who should pay what will not be the IRS's concern- they just want it paid.

Equitable Relief: Remove Your Spouse's Tax Debt

Equitable Relief is a little like "Innocent Spouse Relief" - you are relieved of the debt your spouse owes. But this plan is only offered in extreme situations. These scenarios usually involve domestic abuse, sudden disabilities, serious illnesses and prolonged hospital stays. These are life changing events that shattered your finances. If you feel Equitable Relief applies to you, ask the IRS or a tax debt professional if you qualify.

Rapper's Home Invaded By the IRS for his $300K Tax Debt

Recently, rapper David Darnell Brown, stage name "Young Buck", joined the long list of celebrities that owe tax debt. The morning of August 3, 2010 Young Buck's lavish home in Tennessee was raided by IRS agents. Their goal? To seize enough assets to settle his $300,000 tax debt!

Although Young Buck's legal team worked to file motions in court last month that would protect his property protected and out of the IRS's paws, the IRS agents moved in to seize belongings. The IRS agents seized recording equipment, computers, a PlayStation, furniture, jewelry, and even his platinum wall plaques.

"The worst part of this isn't the material stuff — that will all be replaced," Buck said in a statement. "It's what it does to the people around me. They took my kids' PlayStation, my assistants' computers, and my baby's mothers' jewelry. They took my home studio so I can't even record."

The problem here is obvious. The taxes needed to be paid first and foremost. Only then can Young Buck worry about buying jewelry for his "baby's mother" and multiple computers for his assistants (how many assistants does one person need, anyway?) Taxes were paid until it came to this point, now he has to pay the ultimate price and face the IRS.

“I have a new team in place, but I am also paying full attention now," the statement continued.
“Nothing like this will ever happen again. This is a huge wake-up call for all entertainers to stay on top of your own trusted employees and team members, and replace anyone that was put in place by your record label if the situation you have goes sour. This IRS situation came about because I trusted accountants, lawyers and managers to handle my business for me while I focused on making music.”

Many celebrities stay silent, but David "Young Buck" Darnell Brown spoke up and made it clear that you have to be careful who  you hire and stay on top of your finances. It's not overt, but he's taking responsibility and asking others to take his example as a warning call. 

Young buck is a platinum record seller (1,000,001 to 1,999,999 records sold), signed to G-Unit and later Cashville records.

Review: The Top 5 Tax Problems & Their Solutions

I know first hand that you're at the IRS's mercy when you owe tax debt. The IRS will do anything and everything to make sure you pay. Even if it means dipping into your pay or taking funds right from your paycheck. I think it's review time. With IRS Collections looming, let's go back to basics and cover the Top 5 Most Common Troubles. 

IRS Penalties and Interest, It Keeps Growing & Growing
The IRS imposes harsh penalties for those who do not pay their taxes on time. The IRS’S late payment penalties (“Failure to Deposit”, “Failure to File” and “Failure to Pay”) can double the amount you owe the IRS in no time flat. Combine this with the Interest, which compound daily, and you're debt will be an out of control burden that you'll have no clue how to resolve.

Payroll Tax Problems- Small Business Beware
Small Business Owners are struggling in this economic slump. But to add insult to injury, the IRS has publicly announced them as targets. The IRS believes that Small Business are far more likely to avoid paying taxes, they say Small Business Owners are the largest components of the tax gap. So even if you make a tiny mistake,  you're in big IRS trouble.

Tax Lien: Credit Ruined
IRS will enforce tax liens to make its claim against your money and property for the debt you owe them. Federal Tax Liens are public records that show how much you owe in Federal Taxes. When these records go public, your credit report will never be the same again. It will nearly impossible to do anything involving credit. When I worked at the IRS, Tax Liens were the biggest complaint. People would call in begging us to stop the Tax Liens, which were preventing them from taking out a loan, selling their own home or property, or applying for new credit cards. But we didn't budge, Tax Liens cannot be removed until the debt is paid in full.

Bank Levy: All Funds Gone in a Flash
You're in big trouble if you get a “Notice of Intent to Levy” in your mailbox. This means a Bank Levy is coming. An IRS Bank Levy starts with a letter the IRS will send your bank notifying them of the seizure. Your bank will freeze your funds and then forward them to the IRS if you don’t act immediately after you receive the “Notice of Intent to Levy” from the IRS.

Wage Garnishment: Goodbye Paycheck
A Wage Garnishment allows the IRS to automatically takeout a set amount from each pay check. The amount is based on your filing status and number of allowable exemptions. More than likely, you will not have enough left over to pay for all of your bills. The worst part about a Wage Garnishment is that it can go on until your tax debt is repaid in full.

Get the Help You Need

First of all, it's vital to file and pay your taxes on time every year if you don't want to be afflicted with any of the tax problems listed. If you already owe the IRS, it's time to be proactive. Do not wait for the IRS to contact you because it will be a hell of a lot harder to resolve your debt problems by this point. Get your finances together, make a case for yourself, consult with a professional for a course of action, then contact the IRS (or have someone do it on your behalf) so you can resolve your tax debt once and for all.

IRS Collection Process: Know the Facts & Get Out From Under Tax Debt

If you owe the IRS thousands of dollars in back taxes, the first time you’re probably going to hear from this is in letters via certified mail. The first two letters you receive will outline how much you owe, and give you a time frame to pay off the debt or set up a payment plan.

If you’ve already gotten a few of these letters, and you chose to ignore them, you’re probably in for a world of trouble. Here's what to expect:

Tax Levy: Usually, when the IRS places a levy, they do it on your bank account. Your bank is notified to set aside all of the funds in your account for 21 days. During that time, you have to prove that the seizure will cause significant economic hardship. Proving is harder than it seems. You will need to show evidence such as eviction or utility notices.

Tax Lien: This is the IRS’ silent killer. When they use this form of collection, it’s usually not effective as immediately as a levy. But it can be much, much worse. When the IRS places a lien on your credit, they basically slap a large black spot on it. That means that you aren’t going to be able to do anything involving credit; getting a loan, refinancing a mortgage, etc. Plus, even if you get the lien removed, it can make it very hard to rebuild your credit from that state.

Wage Garnishment: This tactic goes straight to the source; your paycheck! The IRS looks at your filing status and the number of exemptions they believe you are allowed. Then, they decide how much money you are allowed to keep from your paycheck. Usually, the amount is not enough to pay all of your bills. You could be left with as little as $791! In some cases, they can even garnish the entire check!

Can They Really Do That? Absolutely. The IRS has legal rights to use any of the above collection tactics. And trust me, they’ll use them. The IRS didn’t become the strongest collection agency in the world by playing fair. They fight dirty, and will go to any extent to get their money back. The trick is, knowing how to avoid getting yourself in one of these situations.

What Can I do? The best way to avoid these attacks is to file on time, and contact the IRS about paying off your debt A.S.AP! When it comes to taxes, being proactive is crucial. But if you’re already in one of these collection states, time is of the essence. You need to speak with a reliable, knowledgeable tax professional as soon as possible. A seasoned tax professional will know just what it takes to fight back against the IRS and get your life back on track.

Khloe Kardashian's New $18,490.74 Tax Lien

Famous-for-being-famous "celebrity" Khloe Kardashian from the E! Television Show Keeping Up with the Kardashians now owes the Tax Man.

She was once arrested for driving under the influence and even served jail time for violating probation. She only served 3 hours of her 30 days sentence, but I'm sure the IRS won't be so easy on her.

Newly released documents reveal that Khloe Kardashian owes an incredible $18,490.74 in back taxes. The money is from 2007, the year the reality show Keeping Up with the Kardashians began.

A debt of $18,490.74 is absolutely incredible. It's still a mystery, how the hell do these rich celebrities who make multiple millions neglect to hire a reliable accountant? And what makes them think they'll get away with not paying the almighty tax man?