When the Internal Revenue Service and State of California Franchise Tax Board claim you owe back taxes, you can expect aggressive collection activity including, but not limited to, the filing of tax liens and the seizure of your wages, other income, bank accounts, and property. Whether you owe back taxes, have years of unfiled tax returns, or have received notices from the taxing authorities regarding an intent to levy your bank account or garnish your wages, A qualified collections attorney at Diosdi & Liu, LLP can help. We will carefully analyze your tax problem, recommend a comprehensive solution to your federal and state tax issues, and zealously represent you before the Internal Revenue Service and State of California Franchise Tax Board.
Internal Revenue Service Tax Debt Resolution
If you owe outstanding federal income tax liability, the attorneys at Diosdi & Liu, LLP can assist you to get out from under the stressful burden of IRS debt. At Diosdi & Liu, LLP, we understand that owing back federal taxes comes in many different forms, and each type of tax has a different solution. We look at each case individually and put together plan that works best for the individual client.
The first step for anyone with an Internal Revenue Service liability is to understand that there are options available to you and that you do not have to accept whatever the Internal Revenue Service demands. At Diosdi & Liu, LLP we routinely handle all types of collection disputes with the Internal Revenue Service and aggressively attempt to achieve a solution for each of our client’s tax problems. Below is some of the most commonly and effective tax resolution strategies utilized by our attorneys.
IRS Bankruptcy
In some cases, filing bankruptcy can help reduce or eliminate tax debt. Certain requirements must be met to discharge an Internal Revenue Service tax liability in bankruptcy. The requirements include that all taxes must be due for at least three years and the tax return must have been filed for at least two years prior to the filing of the bankruptcy. In addition, the tax liability must have been assessed at least 240 days prior to the filing of a bankruptcy. If these conditions are satisfied, it may be possible to utilize a Chapter 7 or Chapter 13 to reduce or eliminate tax debt.
Offers in Compromises
An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service that settles a tax liability for less than the full amount owed. There is no legal right to have a tax liability reduced by the Internal Revenue Service. However, if properly submitted, the Internal Revenue Service must give an Offer in Compromise fair consideration. Submitting an offer in compromise to the Internal Revenue Service is a detailed and formal process. Nobody can just call the Internal Revenue Service and say “Let’s make a deal.” However, in the right circumstances, an Offer in Compromise can be a very effective way to mitigate or remove an Internal Revenue Service liability.
Penalty Abatement
This type of relief is available to those afford to satisfy the total amount of federal taxes assessed against them, but not the penalties and some of the interest assessed. Through a penalty abatement request, it may be possible to reduce a significant portion of a tax assessment if reasonable cause can be shown why tax returns were filed late and/or taxes were not timely satisfied.
Innocent Spouse Relief
The Internal Revenue Service allows taxpayers to request Innocent Spouse Relief. If approved, the Internal Revenue Service will free you from being liable for the tax debt incurred by a former or even a current spouse. In order to qualify for Innocent Spouse Relief, you must satisfy specific guidelines such as proof that you did not benefit from the money being contested. Claiming Innocent Spouse Relief is fact based. It is therefore important to make sure you are prepared before submitting a claim for Innocent Spouse Relief.
Currently Not Collectible Status
Convincing the Internal Revenue Service to place a back tax liability into not collectible status means that they will not to collect tax liabilities from you for a period of time. This means that the Internal Revenue Service will agree not to collect an outstanding tax liability through levies, seizures, or wage garnishments. However, the Internal Revenue Service usually only agrees to place an account in Not Collectible Status temporarily. Typically, the Internal Revenue Service will place an account in Not Collectible Status for 12 to 24 months. During this time, you will not be required to make payments to the Internal Revenue Service. However, the Internal Revenue Service will continue to assess penalties and interest on an outstanding tax liability. In certain cases, convincing the Internal Revenue Service to place an account into Not Collectible Status can be part of an overall strategy to resolve an outstanding tax liability. If negotiated properly, postponing collection in Not Collectible Status until the statute of limitations has expired can turn a temporary solution into a permanent solution.
Statute of Limitations Defense
One of the most effective ways to resolve an Internal Revenue Service tax liability is to utilize the Statute of Limitations as a defense. The Internal Revenue Code places strict time restrictions on the Internal Revenue Service’s ability to assess and collect a tax liability. In many cases, the Internal Revenue Service has only three years from the date of the filing of a tax return to assess a tax liability and the Internal Revenue Service has ten years to collect a tax assessment. There are a number of events that can toll or extend the statute of limitations on assessments and collections. However, with the proper planning and guidance, the statute of limitations can be a very effective tool to reduce or eliminate IRS tax liabilities.
Collection Due Process Hearings
Under the Internal Revenue Code, you have a right to a hearing request before an impartial officer when the Internal Revenue Service has either filed a federal tax lien against you or put you on notice of an Internal Revenue Service intent to levy your wages or assets. Through a Collection Due Process Hearing, it may be possible to negotiate favorable payment terms, negotiate an offer in compromise, contest a tax liability based the statute of limitations, negotiate a penalty abatement or place an account into not collectible status. In certain situations, it may be possible to contest an Internal Revenue Service assessment. However, you only have 30 days to request a Collection Due Process Hearing from that date that the Internal Revenue Service issues to you a notice concerning a proposed levy, a notice of levy, or a notice of federal tax lien. A Collection Due Process Hearing is an extremely powerful remedy because once a Collection Due Process Hearing is filed, by law, the Internal Revenue Service cannot issue wage levies or garnishments and the Collection Due Process Hearing is subject to judicial review. However, the window to request such a hearing is incredible short.
Installment Payment Agreement
If you owe an Internal Revenue Service liability that you cannot satisfy in full, it may be possible to negotiate an Installment Payment Agreement with the Internal Revenue Service. An Installment Payment Agreement is an agreement with the Internal Revenue Service to pay taxes you owe within an extended timeframe. In certain circumstances, it may be possible to negotiate an Installment Payment Agreement with the Internal Revenue Service in which you pay less than the amount that you owe.