Tax Issues in Miami
Dealing with tax problems can be an extremely heavy burden along with the responsibilities of everyday life. Taxes are a complicated and confusing concern in any bankruptcy case. However, allowing your problem with the IRS drag on is only going to complicate things that could potentially be more easily resolved right at the outset.
Tax Liens and Levies
After a certain time the IRS has sent you notices stating that you have a tax debt, it will file a federal tax lien against real property and/or personal property you own. Federal tax liens are filed with the county clerk where you resolving your debt with Uncle Sam first. IRS liens can be a real nightmare because they will come up on your credit report, making it very difficult, if not impossible, to obtain any type of financing for any purpose.
Offers in Compromise
An Offer in Compromise is an agreement between you and the IRS that settles your tax debt for less than the full amount you owe. The IRS will accept a settlement when it is in the best interest of the IRS to settle the tax debt. Hire a competent tax attorney.
IRS collection procedures provide for the following types of Installment Agreements:
- Taxpayers who can pay the tax liability in full now;
- Taxpayers who owe less than $25,000 and need a plan payment;
- Taxpayers who owe $25,001 up to $50,000 and need a plan payment; and
- Taxpayers who owe more than $50,000;
The IRS will generally dictate how much you need to pay and when.
Payroll Tax Issues
As a business owner and employer, you are required to withhold Federal, Medicare and Social Security taxes and any other applicable state and local taxes from your employees' paychecks, unless the employee is exempt from the tax. You are also supposed to pay all withholding amounts to the respective administrating agency in the required time frame. The withholding process is very simple: you withhold the tax from your employees, then pay and report it.
The IRS looks harshly upon employers who owe payroll taxes! The Agency sees the failure to properly pay the IRS for taxes withheld from employees' wages as stealing from the employees. If you have failed to withhold or pay payroll taxes, you can incur huge IRS penalties as well as face potential civil or criminal sanctions. The survival of your business may be at risk. Your assets could be seized and the IRS may hold you personally responsible.
If the IRS has already taken action against you for unpaid payroll taxes, you need representation immediately. If you wait too long, not only will your penalties multiply, the IRS will take more aggressive steps to collect including holding you personally liable for the debt, leaving you open for civil or criminal prosecution.
A quickly negotiated acceptable agreement will ensure that you do not lose your business and will result in your personal assets, wages, and bank accounts remaining intact.
Employment Taxes and the Trust Fund Recovery Penalty
The IRS is empowered by Congress to charge any "responsible person" who refuses or willfully fails to collect and pay mandated federal taxes a 100% personal liability penalty. A responsible person is a person or group of people who has (or have) the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This is a complex area and you need a competent attorney.
IRS penalties and interest can cause a small delinquent tax debt to compound into an unmanageable amount within a very short period of time. Penalties alone can make up 25% of the amount you owe. Having a competent professional negotiate with the IRS to either reduce or eliminate penalties may tremendously impact the amount of your tax debt.
Not filing required tax returns can be construed by the IRS as tax evasion which is considered a criminal act. This is a very serious matter, punishable by a fine of $10,000 and one year in jail for each year not filed. However, the IRS would much rather get taxpayers back into the system than prosecute the average person who makes a mistake. For whatever reason you have not filed your tax returns, the first step to resolving your tax problem – before the IRS will consider any payment plan or tax settlement offer – is to become compliant by filing ALL your delinquent tax returns.
Innocent Spouse Matters
Married couples filing joint returns are held equally responsible for their tax return and the payment of appropriate taxes. In some cases, however, spouses can be relieved of all IRS tax, interest, and penalties on a joint return if they are able to meet specific criteria. In essence, three types of relief are available for people who find themselves in this situation and can qualify: innocent spouse relief, separation of liability relief, and equitable relief. Each has different requirements.
With relief by separation of liability, the tax, interest, and penalties owned on your joint return is separated between you and your spouse, with the amount you have to pay generally proportionate to the amount the IRS has determined you are responsible for. Relief by separation of liability only applies to understatements of your tax. Refunds are not allowed.
There are numerous techniques available to help protect you from liability incurred due to a current or former spouse.
IRS Appeals – You Have the Right to Appeal an IRS Decision
If your tax debt situation with the IRS (either through dealing with them yourself or with other representation) has resulted in an outcome you believe is less than fair and equitable, you have the right to appeal the IRS's decision. The IRS has a special department devoted to this called the IRS Appeals Division. Expert representation before the IRS Appeals Division is critical in order for you to have the best opportunity for a satisfactory resolution in your favor.
Appeals of IRS Collection – Hire a Competent Professional
When you receive notice or threat of IRS collection actions, you have the right to appeal to the IRS Office of Appeals. These collection actions include:
- Federal tax lien
- Seizure and sale of property
- Intent to levy wages, retirement accounts, bank accounts, accounts receivable, etc.
- Rejection, termination, or proposed termination of an installment agreement
- Rejected Offer in Compromise
- Proposed Trust Fund Recovery Penalty
- Denied Trust Fund Recovery Penalty Claim
- Denied request to abate penalties (such as, late payment, late filing, or deposit penalties)
You also have the right to professional representation to guide you through this complex process and ensure that you get the best possible outcome.
Foreign Bank Accounts and Filings
Each U.S. person who has a financial interest in, or signature or other authority over, one or more foreign financial accounts that has an aggregate value greater than $10,000 at any time during a calendar year is required to report the existence of the foreign account to the IRS.
For years, the IRS has been pursuing the disclosure of information regarding undeclared interests of U.S. taxpayers (or those who ought to be U.S. taxpayers) in foreign financial accounts but it wasn't until the IRS and Department of Justice investigations involving UBS, HSBC and other banks. Federal agencies continue to focus substantial enforcement resources aimed at U.S. taxpayers who may have failed to declare and report income on foreign bank accounts.