June 20, 2017

Tax Resolutions

 

Overview

The firm represents individual before the IRS that owe taxes from past years.  Dealing with the IRS can be difficult and confusing.  As a tax payer, you have certain rights in dealing with the IRS including receiving notices of the taxes you owe, the basis for the taxes due, a right to hearings before certain actions by the IRS are taken and right to appeal administrative actions taken by the IRS to collect taxes you owe.  These rights are important and exercising them can protect a tax payor from interest in their property and income.  However, these rights and the procedures the IRS must follow in collecting taxes are complicated and confusing.  We protect our client’s rights when dealing with the IRS and resolving their tax issues.

 

Installment Agreement

            One of the most common methods of resolving a tax problem with the IRS is to pay the taxes under an installment agreement.  While it may seem simple to set up a payment plan with the IRS, there are several steps that should be taken to insure the installment agreement is established so that the tax payor has a reasonable opportunity and ability to successfully complete it and resolve their tax liability once and for all.  The advice and council of an experienced attorney or tax professional will help the tax payor structure the agreement.

 

Offer in Compromise

          An offer in compromise (“OIC”) is a procedure that is available to a tax payor whereby the tax payor and the IRS enter an agreement to resolve the tax payor’s past due tax debt.  It is used when a tax payor owes more taxes than he/she can afford to pay.  In its simplest form, the tax payor offers to pay a portion of the taxes due the IRS in exchange for the IRS forgiving the balance of the taxes due.  If this sound almost too good to be true it is, except there are several steps involved in obtaining such an agreement and the IRS will not approve an OIC without first taking several steps to ensure that the tax payor cannot afford to pay the full amount of taxes due.  The process to follow in obtaining an OIC is involved and difficult to understand.  The help of an experienced attorney is helpful in dealing with the IRS, completing the necessary and structuring a successful offer that is both acceptable to the IRS and feasible for the tax payor to perform.

 

Non-Collectable Status

            Non-collectable Status or Currently Not Collectible Status is not a resolution of one’s tax liability with the IRS. Rather, it is a status within the IRS collection division whereby the tax payor’s status is classified as non-collectable.  If this status applies to the tax payor, the IRS will not take collection activities such as levies or garnishments against the tax payor.  Non-Collectable Status is reviewable by the IRS from time to time and is not a permanent resolution.  However, it can be very helpful in relieving the stress and anxiety of being subject to the pressure of an IRS collection activities. In some cases, a non-collectable status can last for years.  Obtaining non-collectable status requires providing the IRS with certain information on the correct IRS forms regarding the tax payor’s assets and income.  The advice of an attorney is often required in completing the required forms and negotiating a non-collectable status agreement.

 

 

Lien Release

            The IRS often files a tax lien against a taxpayer that owes past due taxes.  A tax lien can stay on record for up to 10 years.  The mere filing of a tax lien by the IRS creates a lien on all the property owned by the tax payor in the county in which the lien is filed.  Once a tax lien is filed and attaches to the tax payor’s property their ability to sell, finance or refinance the property is impaired.  If a tax payor needs to sell or transfer the property or refinance it, a lien release must be obtained from the IRS.  Obtaining a lien release can be accomplished under certain circumstances.  However, the procedure is tedious and involved and often is under time constraints.  An attorney is needed to communicate with and provide the necessary information to the IRS to obtain a lien release in a time manner.  

 

Bankruptcy

            Many clients are not aware that bankruptcy can be used to resolve tax issues at the same time they are obtaining a fresh start with their other creditors.  Under the bankruptcy code taxes are classified as either priority, secured or non-priority unsecured.  Priority taxes are not dischargeable by a bankruptcy discharge.  Secured taxes that are not priority taxes are payable up to the value of the collateral securing the taxes.  Unsecured, non-priority taxes are subject to discharge as any other dischargeable unsecured debt.  Taxes can be dealt with under either a Chapter 7 or a Chapter 13 case.  Resolving a tax debt under the bankruptcy code is complicated process that requires someone that is knowledgeable both tax code and the bankruptcy code.  Our firm has many years of experience in dealing with taxes through the bankruptcy process.

 

State of North Carolina Taxes

            The North Carolina Department of Revenue has the same tools and procedures to collect past due taxes as the IRS.  However, the specific rules and procedures differ substantially from the rules, forms and procedures of the IRS.  Dealing with the Department of Revenue can be frustrating and stressful.  An attorney that has dealt with the IRS is also familiar with the Department of Revenue rules and procedures and can help a tax payor navigate this process as with the IRS.