The Tale of Two Seasons: IRS Levy Season and the Holiday Season


With the holiday season literally coming upon us in a few days, there are many stresses accompanying the happy times ahead. If you owe tax debt, one of those stresses should be the IRS. IRS levies rarely put anyone into a jolly mood. However, with the holidays also comes a fever of IRS collection actions.
Coming up to the holidays and shortly after them, the IRS kicks collections into gear and are often more aggressive than normal. This is due to an informal hold that the IRS has done annually referred to as the Holiday Stay of Collections. Technically, for about three weeks around the holidays, the IRS automated collections systems will generally not levy personal accounts or wages. This is not formally announced, but as we actively work with clients to resolve issues, we normally are privy to this information through phone conversations with the IRS. While the IRS claims that they take this time to reboot their computer system for upgrades for the New Year, we know that they are actually doing a kindness in taking three weeks off from collecting against tax debtors.
This sounds great right? Yes and no. The hold is great, but surrounding it is known as the Levy season. This is because the IRS is of course aware of the hold and it is their job to collect funds. However, what we see happen more often is that all the collection actions that should have taken place during those three weeks comes like a freight train once the Holiday Stay is completed. Some people think that they won the lottery because they were warned of serious collection action through notices and then nothing happened so they assume that the IRS forgot about them. That is definitely not the case. Tax debtors beware: we are approaching IRS levy season.
Read your letters:
In order for the IRS to take collection action, they must give you proper notice. This has to be served correctly (normally through the mail). These letters also provide a guide as to when the IRS will actually levy.
The first three mean warnings only, and they are titled as follows: 1) Amount Due Letter 2) Notice and demand, and 3) Notice of intent to levy. It’s the letter that follows this that is one to take note of, the IRS Letter 1058 “Final Notice of Intent to Levy”. On this letter, there is a notice date, and the debtor has 30 days to do something before collection action is taken. If this letter is received any time in the month of November, you could assume no action will be taken in December, however, be sure that after the Stay collection action will occur.
With IRS levy season and courtesy holiday stay of collections right around the corner, now is a good time to look for help. If you have received a letter from the IRS, or if they are threatening collections, today is the day to think about what you are to do with this. When we say today, we mean today, not after you are collected upon. Collections can be stopped and prevented, and the holidays are not the time to get garnished or levied. Give us a call 619-352-4188 to see what your options are during the holidays.


Turns out you can afford to pay the IRS, now what?

Financial IRS tax forms
After exhausting all efforts to resolve your tax debt, you have come to the conclusion that the only thing that is available to you is to pay the darn thing off. If that is you, and this conclusion was helped met by talking with a licensed professional, there are some smart options for you to take moving forward. One of those options is to enter into a payment plan where it doesn’t matter how much money you may have left over after bills are paid and one in which liens are removed and new liens won’t be filed. This is called a Streamlined Payment Plan.
First, do you owe less than $50,000?
In order to enter a streamlined payment plan, you have to owe less than $50,000 to the IRS. Thankfully this amount was raised from the recently previous amount of $25,000. This amount is the assessed tax liability amount, not the actual amount that you owe including interest and penalties. Therefore, you could possibly really owe about $52,000 and still qualify. If you owe more than $50,000 in assessed tax liability, then this payment plan is not an option for you until you get to that threshold. The IRS will normally ask if it is possible for you to pay the debt down to get to that level, either in lump sum or in payments. If you owe more than $50,000 you have to negotiate a payment plan and go through finances with the IRS.
Your Payments
Your payment amounts are calculated on a 72 month payment plan. This is true unless the tax debt will expire before then. If that is the case, then the calculations are met by how many months are left on the statute period for the IRS to collect. If it comes to the point that they are higher because of this fact, you should talk with a licensed professional about your options in doing a partial payment plan or even a high offer in compromise. So for most, if you owe let’s say $10,000, your monthly payments would be about $140 a month, regardless of your amount of income, expenses, or equity in assets.
The beauty of this type of payment plan really lays with the lien protection. If no liens have yet been filed against you, by entering this type of plan, no liens will be filed as long as you remain in the plan. If a lien has already been filed, then you can petition to have the lien removed through a lien removal process. This falls into qualifying criteria as we discussed in a previous blog article.
Do I need to hire someone to do this?
Most simply, no. If you know you don’t qualify for relief of any kind, and have scheduled to hire someone down the road for penalty abatement, and don’t have any live liens filed against you, you don’t need to hire any company to setup a payment plan for you. It takes about an hour, most of which is because you’ll be on hold waiting for the IRS on the phone. Ask for a streamlined payment plan, and you’ll be set. If you want to talk with someone about penalty abatement, lien removal, or to make sure you don’t qualify for other relief types, then call 619-352-4188.

How to Get Rid of the Federal Tax Lien for Good

There are a lot of people that owe tax debt to the IRS. Recently a spokesperson from the IRS stated that an estimated 8.2 million Americans owed back taxes. That’s a lot of people. Most of these people owe a minimal amount and don’t qualify for a settlement of any kind with the IRS. However, what a lot of these 8.2 million have in common can be found on their credit report. Normally accompanying tax debt is a tax lien, and this shows its ugly head on a credit report, glaring at lenders, landlords, and credit companies. So what can be done?

First, how to qualify to have your lien removed at the IRS

In order to qualify to have a tax lien removed, your balance must be paid in full, through a settlement or in full payment, or you must be in a streamlined payment plan. There are of course ways around a lien temporarily, but the focus of this article is to get it removed completely from your credit report. If you paid the balance in full, then of course the lien is eligible as there is nothing to back the lien on. If you have reached a settlement with the IRS and that settlement has been finalized and paid in full, then there is no debt remaining and therefore once again you can have the lien removed. If you owe less than $50,000 to the IRS, you can qualify for a streamlined fresh start payment plan and are protected from new liens filed and are also eligible to have your past lien removed after proof of successful payments. Therefore, in order to get the lien removed, the debt must be paid in full or you must be on the right type of payment plan.

Make the right request

While the law says that the release will automatically happen, this is not often the case. What is necessary sometimes is a request in writing to the IRS. You will want to make a request to have the release of tax lien form. Once you obtain this form, this only “releases” the lien, but it will still show on your report. Thus, the next step is normally the most important. You have to request to the IRS to “withdrawal” the tax lien. Prepare a cover letter, the right form, attach all necessary documentation, and even include some IRS publications to help guide them.

You received the Withdrawal letter, now what?

Now you have taken all necessary steps to get the balance situated, the lien removed, and the lien withdrawn. However, it is still showing up on your credit report as “removed”. It can take up to seven years to get this removed through the normal process, so you should take steps to expedite the process. Contact the three credit bureaus, dispute the lien, and provided a copy of IRS communications to make the argument that to have it deleted from your report, NOT show “removed.” Credit agencies will verify the information with the counties the lien is filed with and then should remove from credit report within 60 days.

Sounds easy enough….not really…

There are a lot of moving parts and a lot of agencies that you’ll be dealing with. There are a lot of forms to organize and complete, and some legal drafting on your request/demand letters. Even when a professional takes control, it can be removed on 2 credit agencies and not all 3 and therefore more work is needed. Luckily, we here at Tax Debt Services have had the experience in making these arguments for our clients and are familiar with the language, forms, and processes of removing a tax lien. Call 619-352-4188 to see if we can help get your credit report free from tax liens.

Thanks for Entering a Payment Plan, but We’re Still Going to Charge You Penalties and Interest

One of the worst things about owing the IRS money is that it continues to grow. Not only do you have the actual tax debt that you owe, but the IRS charges interest and it also can charge two different types of penalties. After many years, 25% of your total tax debt can be penalties. You may have entered into a payment plan and filed all missing returns, but the penalties and interest continue to grow. Let’s go through some common questions about this bad situation:

What stops interest and penalties from accruing?

The only thing that stops interest and penalties from accruing on your tax debt is to not have tax debt. That means it must be paid in full, either through a one-time payment, making multiple payments over years, or by having an offer in compromise settlement accepted and then paid in full. Beyond this, those interest and penalties will continue to enlarge your debt to the IRS.

Can you have the interest accrued waived?

Unfortunately, the answer is no. The IRS will not remove interest unless there is an extreme unique situation. However, if you have an offer in compromise accepted, it can indirectly remove the interest as that is part of the settlement. Beyond that, you will be paying back all interest accrued on the debt.

Can you have the penalties accrued waived?

Yes! Penalties accrued for failure to pay in full and penalties for failure to file can be removed. This can be done through what the IRS calls Penalty Abatement. Your penalties are there for two purposes, failure to file and/or failure to pay in full. In order to get these penalties removed, you have to show reasonable cause to the IRS of why you failed to file on time or why you failed to pay it in full.

My favorite answer to these questions is when people tell me “well…we just didn’t have the money.” Unfortunately, that is not reasonable to the IRS. The IRS is not friendly or kind, their job is to collect tax revenue for the country and if they cannot do that, they will penalize you for it. However, if there was a natural disaster, if there was a death in the family, if there was a period of sickness, then the IRS would say…”well…that’s reasonable, we’ll waive your penalties, but you’re still paying interest!”

If you are paying on your tax debt, and its been years of paying but the debt is staying solid, and you have a reason of why you owed, it may be worth your while to attempt a penalty abatement request. Give us a call at 619-352-4188 to see what our professionals think your options are.
Tax Debt Services

It’s Not My Debt, it’s my Ex’s

A common question that many of our prospects ask us is what to do in the situation where the IRS is threatening collections against you for tax debt that accrued while married? Many of these people state that they had no idea that there was a tax debt issue, their previous spouse always prepared their returns and did the finances of the house, and now they feel anxious and fearful of IRS collections even though they were in the dark the whole time.

The answer to these similar questions comes in the form of an Innocent Spouse relief. The IRS has created a category of debtors who owe tax debt as a joint couple, but where one spouse is not liable based upon the facts of the situation and an equitable argument. There are many subcategories and different criteria to be met under the banner of the Innocent Spouse, but if you do qualify for this type of relief, the tax debt is removed from your name and social. That means that instead of you owing the debt, the whole balance is transferred to the liable spouse.

How do you know if you qualify?

As is stated above, there are many subcategories and criteria to be met in each to see if you do qualify for relief, but some good indicators are as follows:
– You are now divorced, widowed, or legally separated
– You did not handle much of the finances of the home
– You were minimally involved in the preparation of tax returns
– You were unaware of any extra sources of income your ex was making
– You were unaware of any tax debt issues
– You did not receive notice from the IRS of tax issues until recently

If some, or all of these criteria are met, you may qualify for relief under the banner of Innocent Spouse.

I think I may qualify, now what?

If you believe any of the following may sound like you, the best step is to speak to a professional for them to hear your story, make a determination of what your options are, and then seek the relief. Many tax resolution companies do not look for this during initial conversations, so be sure to seek a company that is looking to listen to you and your story, not just interested in earning a profit. Contact us at 619-352-4188 and let our professionals get to work for you.

Owe Tax Debt but Have a Nest Egg? Currently Not Collectible is your Key to Peace

While an offer in compromise is the goldmine for those who owe tax debt, obtaining one with equity in assets is hard to come by.  However, if you have a nest of equity, but are cash broke, there are other options at the IRS that may better suit your needs.

Why don’t I qualify for a settlement?

The Offer in Compromise is the settlement program that allows people to settle their tax debt for less than what they actually owe.  To qualify for a settlement, there is a formula used that looks at disposable income and equity in assets.  While you may not be able to afford a monthly payment to the IRS, because you have equity in assets, the value of those assets may be too high to make a settlement practical.  Therefore, the taxpayer is stuck in a position between an inability to settle and an inability to enter a payment plan.  Rather than suffer through garnishments, levies, and property seizures, the taxpayer has another option: Currently Not Collectible status. 

What is a Currently Not Collectible Program?

The financial hardship status with the IRS known as Currently Not Collectible was established for the taxpayer that at this time could not enter into a payment plan.  Under the 8th Amendment’s cruel and unusual punishment and excessive fees and fines clause, the government has come up with a status for taxpayers to enter in which the taxpayer’s constitutional rights are protected.  In this status, no collection actions will occur and no payments to the IRS are necessary.  Therefore, the taxpayer can protect their nest egg, and not have to enter a financial hardship of which they cannot afford.  So whether it be a 401k account, equity in a home, tied up stocks and bonds, or vehicle values, the IRS will leave your property alone.  The one caveat is that the IRS will place a lien against your overall property in order to secure its interest in obtaining any assets that you may later plan to liquidate.

How to Qualify

1.  Taxpayer is compliant with tax returns for last six years. 

2. Taxpayer is compliant with tax withholding and/or quarterly estimated tax deposit requirements.

3. Taxpayer fully discloses all financials

What happens to the debt?

The IRS will not collect nor require payments on the debt, so what happens to it? Federal tax debt expires 10 years from the date of assessment.  By entering this program, the clock still ticks and potentially may expire while under this program.  For example, a taxpayer that is on social security and no has ability to make monthly payments to the IRS, but has accessible equity in their home owes the IRS $20,000.  This debt comes from a tax return filed in 2010.  The tax debt is set to expire in 2020, so by entering this currently not collectible program, the taxpayer does not have to make payments, is not collected upon, and as long as there are no dramatic changes to their finances, the taxpayer remains in this status until the tax debt expires in 2020.  

Do I qualify?

Some companies will charge you to see if you qualify, other companies will tell you that you qualify without actually gathering enough information to do the two part test.  Contact us at Tax Debt Services at 619-887-4881 and we can determine if you qualify for free. 


Today’s IRS Offer in Compromise is the Most Generous Program to Date

The recent rule changes brought out under the IRS’ fresh start program has allowed thousands of Americans to now be eligible for tax relief where before they wouldn’t even qualify for a settlement.  So, how does the program work?

What is an Offer in Compromise?

The Offer in Compromise is a program that allows people to settle their tax debt for less than what they actually owe.  There are two main type of offer settlements 1) Doubt to Collectability and 2) Doubt to Liability.  While Doubt to Liability seems like an obvious choice for many, the hard truth is that most people that owe tax debt, truly do owe the tax debt, but just struggle with paying that debt off.  Therefore, the fresh start program implemented by the IRS is focused on the Doubt to Collectible offer in compromise.

What Amount Can I Settle For?

Doubt to Collectability can mean a lot of things.  There are hundreds of court cases, legislation, and directives that build the definitions to that term.  However, it can be simplified into a two part test.

Test 1) Given the disposable income per month, if the taxpayer paid that amount per month every month until the tax debt expired, would the debt be paid in full?

Test 2) If the amount would not be paid in full, then an equation is used:



Tax Debt settlements are very different from other types of settlements where the debtor cannot just offer the creditor money as a percentage of the debt and expect success.  If the two tests fail or show a settlement amount higher than the actual debt, then the Offer program is not right for you.

How to Qualify

1.  Taxpayer is compliant with tax returns for last six years.

2. Taxpayer is compliant with tax withholding and/or quarterly estimated tax deposit requirements.

3. Taxpayer is protected from collection actions.

Why would the IRS do this?

The IRS would rather ensure that you are a good taxpayer from this point forward than destroy your life because of some past mistakes. They are willing to forgive your old debt in exchange for future compliance and a promise to not owe taxes again for at least the next five years.

Do I qualify?

Some companies will charge you to see if you qualify, other companies will tell you that you qualify without actually gathering enough information to do the two part test.  Contact us at Tax Debt Services at 619-887-4881 and we can determine if you qualify for free.

If I do qualify, why would I need to hire a professional?Image

Criminal court cases, lawsuits, corporate mergers, vehicle repair, bankruptcies are all examples of situations where anyone can do things by themselves.  People can represent themselves in court, repair their own engines, and file the lengthy paperwork of bankruptcies by themselves.  How does this normally work out for the person who isn’t a professional? Normally not so swell.

Hire a company that has professionals who do this for a living.  This is tax debt and should be thought of as a serious and urgent concern.  Why would you not want to get it done right?