What could happen if I have un-filed tax returns?
If you have un-filed tax returns you could end up in serious trouble with the IRS. The IRS has ten years to collect taxes that you owe and if you filed a return ten years ago and owed taxes that you didn’t pay, the IRS will use your last known address as your contact. If you leave the country, the government has no way to contact you, but if you return within the ten-year period and start earning money, then they can come after you for the taxes and all the penalties and interest that has accrued on the original amount. If you have just not bothered to file tax returns, you had better have all the documents you need to file your returns. It doesn’t matter if your new income is much lower or if you have had a lot of medical bills. It could mean that you have no money left over to pay your mortgage or your regular bills.
When you don’t bother to file tax returns, the IRS will send you reminders. After a while these reminders will turn unfriendly and you may be faced with a Notice of Intent to Levy your assets and wages.
Is it a problem if the un-filed returns go back quite far?
If your un-filed returns go back more than 6 years, then the situation gets more complicated. It will take much longer to locate records back that far because they are in storage and it takes longer to find them. The agent may have to go through the files and retrieve them individually.
What is a wage garnishment?
Wage garnishments or imposing a levy is another method the IRS often uses to collect any back taxes that you owe. The terms garnishment and levy mean the same thing when it comes to IRS seizures. Although your wages and bank accounts are usually the targets, it can also apply to the seizure of your home, equipment, furniture, vehicles or other possessions of value
Is the bank allowed to turn my account over to the IRS without my permission?
When the IRS places a levy on your bank account, the bank has a legal obligation to turn over all monies in your accounts. It doesn’t matter where the money came from or whether or not it is even your money. The fact that you have it in your bank account is all that is needed. Most people have direct deposit for their pensions, Social Security, child support, etc., but the IRS does not check the records to find out the source of the funds. Once the money is deposited in your account, it loses its identity.
Can the IRS keep imposing garnishments or levies on my bank account?
If a wage garnishment or levy has been imposed on you, it will remain in place until you have paid the tax bill in full. Sometimes, when the amount reaches a manageable status, the IRS may release the levy. However, once the IRS has garnished the money in your bank account, it is not permitted to do so a second time. This means that you will only lose your savings once and after that any funds that come into the account are yours once again.
What is the OIC program?
The Offer in Compromise program is also known as the OIC. The criteria for this program focuses on the individuals “ability to pay”. If the individual’s ability to pay the tax debt over a five year period is less than what he/she owes, then some of the tax debt will be forgiven. This puts the amount owing down to a reasonable level that the individual can start paying.
Would I qualify for this program?
In order to qualify for this program all your expenses in a month are taken into consideration, which include the money that you spend on:
If the total of these expenses is equal to or greater than the monthly income after taxes, then you would most likely qualify for the program.
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