IRS Fresh Start Program Helps Taxpayers Who Owe the IRS

Source: https://www.irs.gov/newsroom

Updated: 31-Aug-2017

The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start. Here are three important features of the Fresh Start program:

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What is a Tax Lien?

Have you received a Notice of Federal Tax Lien (NFTL) from the IRS?  We Can Help!

A Federal Tax Lien or State Tax Lien gives the IRS, California Franchise Tax Board, or your State Department of Taxation a legal claim to your property as security or payment for your tax debt. A Notice of Federal Tax Lien may be filed only after:

  • IRS assesses the liability;
  • IRS sends you a Notice and Demand for Payment – a bill that tells you how much you owe in taxes; and
  • You neglect or refuse to fully pay the debt within 10 days after we notify you about it.
 

Once these requirements are met, a lien is created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that the IRS or State have a claim against all of your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.

The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable, if you are a business).

 

Caution!

 

Once a lien is filed, your credit rating will be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease for an apartment.  Many employers also review your credit report as a requirement for employment.  Therefore it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary.

Call today at (800) 505-4134 for a FREE Tax Resolution Analysis.

Releasing a Tax Lien Direct Tax Relief can negotiate a settlement of your back taxes through an Offer in Compromise.  When the accepted Offer amount is paid in full, DTR will have your lien released within 30 days.  The IRS will then issue a Release of Notice of Federal Tax Lien.  Another solution to releasing an IRS tax lien is when the collection statute expires.  Usually 10 years after a tax is assessed, a lien releases automatically, if the government does not file it again and if the taxpayer has not filed certain documents with the IRS to extend the statute.  The tax experts at DTR will retrieve all of your IRS transcripts in order to analyze and interpret them and decide which tax solution works best for you.

Withdrawing a Tax Lien By law, a filed notice of tax lien can be withdrawn if:
  • The notice was filed too soon or not according to IRS procedures,
  • You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise),
  • Withdrawal will speed collecting the tax, or
  • Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government.
 

Appealing the Filing of a Lien

The law requires the IRS to notify you in writing not more than 5 business days after the filing of a lien. They may give you this notice in person, leave it at your home or your usual place of business, or send it by certified or registered mail to your last known address. You may ask an IRS manager to review your case, and you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a hearing with the office listed on your notice. You must file your request by the date shown on your notice. Some of the issues you may discuss include:

  • You paid all you owed before the lien was filed,
  • You were assessed the tax and the lien was filed when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
  • The IRS made a procedural error in an assessment,
  • The time to collect the tax (called the statute of limitations) expired before the IRS filed the lien,
  • You did not have an opportunity to dispute the assessed liability,
  • You wish to discuss the collection options, or
  • You wish to make spousal defenses.
  Call today at (800) 505-4134 for a FREE Tax Resolution Analysis.

What is a Currently Not Collectible?

Currently Not Collectible (CNC) means that a taxpayer has no ability to pay his or her tax debt. When the taxpayer demonstrates they are in a severe financial hardship and have no ability to make monthly payments or liquidate assets in order to pay their back taxes, the IRS can declare the account “currently not collectible.”  In order for the IRS to consider placing your account in CNC status, the IRS agent will have to review detailed financial forms and substantiating documentation submitted by the taxpayer.

 

Once the IRS declares a taxpayer currently not collectible, the IRS must stop all collection activities, including levies and garnishments.  The IRS must send an annual statement to the taxpayer stating the amount of tax still owed. This annual statement is not a bill.  While in CNC status, the 10-year statute of limitations on tax debt collection is still running. If the IRS cannot collect the tax within the 10-year statutory period, then the tax debts will expire.

 

Our tax experts at Direct Tax Relief will evaluate your specific situation to see if CNC status is the best relief option for you.  CNC status is considered on an individual basis. In the right circumstances, CNC can indeed provide a good tax solution that permanently solves your tax problem.  In other situations it might be a temporary fix to give the taxpayer some breathing room until other tax solutions are available.  You need expert tax representation by a qualified professional to get the results that you are looking for.

Call today at (800) 505-4134 for a FREE Tax Resolution Analysis.

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What is a Trust Fund Recovery Penalty?

Does the IRS claim you are a person responsible for unpaid payroll taxes? Is the IRS seeking to secure payment from you personally?  We can help!

Call today at (800) 505-4134.

To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (TFRP).  These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed.

Who Can Be Responsible for the TFRP? The TFRP may be assessed against any person who:
  • is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and
  • willfully fails to collect or pay them.
  A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:
  • an officer or an employee of a corporation,
  • a member or employee of a partnership,
  • a corporate director or shareholder,
  • a member of a board of trustees of a nonprofit organization,
  • another person with authority and control over funds to direct their disbursement, or another corporation.
 

Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.

The IRS will request that any potential responsible parties complete an interview in order to determine the full scope of their duties and responsibilities. A Revenue Officer prepares form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty.  Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.

Assessing the Trust Fund Recovery Penalty If the IRS determines that you are a responsible person, they will provide you with a letter stating that they plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal their proposal. If protest against the assessment is not made and appealed to the IRS, they will assess the TFRP.

Once the assessment is made, aggressive collection actions will follow.  The IRS will take enforced collection action against your personal assets. They will file a federal tax lien or take levy or seizure action.  This includes garnishing your wages or levying your bank account.

Call today at (800) 505-4134 for a FREE Tax Resolution Analysis.