Have unpaid tax debts or unfiled back taxes and looking for a fresh start? If so, I can help! Over the past 12+ years I’ve helped many clients from Raleigh, North Carolina and the Greater Triangle area to resolve their tax debt issues with the Internal Revenue Service (IRS) and the North Carolina Department of Revenue (NCDOR). Below is a brief overview of tax resolution services that I offer to help people settle tax debts.
Fresh Start Tax Program to Settle Tax Debts
The “IRS Fresh Start Program” or “IRS Fresh Start Initiative” are two terms that have been wildly advertised through TV commercials and the radio over the last few years. This intent of the Fresh Start tax program was to provide taxpayers with more flexibility and more favorable terms to resolve their tax debts through setting up an installment agreement (payment plan) to pay the debt off over time or even the ability to settle their tax debts for less than owed through filing an Offer-in-Compromise (settling for pennies on the dollar). However, each of these options requires that a taxpayer meet certain requirements which all begin with making sure that all required income tax returns have been filed.
Back Taxes
Have unfiled tax returns? I get it, life happens and sometimes the tax returns just don’t get filed. However, it is only a matter of when and not if the IRS or the NCDOR will catch up with you. It is not uncommon for the IRS or the NCDOR to wait several years before contacting you about unfiled or missing back tax returns. It’s best to tackle the situation head-on before the IRS or NCDOR contacts you first. Unfortunately, if the tax agencies reach out first you may be forced to deal with the situation immediately to avoid forced collection actions such as wage garnishments (having a levy on a paycheck) or bank garnishments (having a levy on a checking or savings account). In cases where people refuse to file a return the IRS and/or NCDOR will prepare a tax return for them known as a Substitute-for-Return (SFR). In most cases, the SFR return will reflect a much higher tax amount than what would actually be due if the return was voluntarily filed. Penalties and interest will also be added to the tax amount and in some case may even double the original tax bill. Therefore, filling back tax returns are highly recommended as soon as possible! Generally, the IRS and NCDOR will only require you to file the last six (6) years of tax returns to be considered back in compliance. Ordering a complete set of IRS transcripts online can be a great place to start if you are unsure of the last year you filed a federal return or if you forgot your sources of income (i.e., employers, 1099 contractor, etc.) for a given year.
Stop Wage Garnishments & Bank Levies
The IRS or North Carolina Department of Revenue will issue a wage garnishment (or wage levy) to your employer if you owe taxes and you haven’t paid after several requests for payment have been made via tax notices mailed to your last address on record. Wage garnishments are intended to hurt and to get your attention. Wage garnishments can also severely impact your ability to meet your living expenses. Unfortunately, your employer is required to withhold the funds from your paycheck each payday until you work out an agreement with the IRS or the NCDOR. In a similar fashion, the IRS or NCDOR will issue a bank account garnishment (bank levy) if their request for payment have been ignored. Typically, in order for the wage garnishment or bank levy to be released you must file all back taxes and agree to start repaying the debt through setting up an installment agreement or payment plan.
Installment Agreements
Both the IRS and the NCDOR will work with taxpayers to setup an installment agreement to start repaying back taxes over an extended period of time. However, all back tax returns must be filed first! Taxpayers typically do not have to worry about forced collection actions such as wage garnishment and bank levies if they are setup on an installment agreement. The amount of the repayment will be based on several factors such as the amount owed, the age of the tax debt, and the financial ability to pay. In some cases, taxpayers may not have the ability to make payments at all and qualify to have their accounts put on hold, also known as Uncollectible Status or Currently Not Collectible Status.
Offer in Compromise
In cases where it is doubtful that a taxpayer will ever be able to pay the entire tax amount back in full an Offer in Compromise may be filed to settle the debt for a lesser amount (pennies on the dollar). However, in order for an offer to be accepted at least six (6) years of income tax returns must be filed leaving all back tax or unfiled tax return issues resolved. In addition, a taxpayer must be current with making quarterly estimated tax payments, if applicable. The process to substantiate the doubt of a taxpayer to ever be able to full pay the debt within the time allowed (typically 10 years once the tax is assessed) can be complex as it involve numerous formulas and in-depth analysis. Word of caution: incorrectly filing an Offer in Compromise can actually do a lot more harm than good.
Penalty Abatement
Are tax penalties making it seem impossible to pay your tax debt in full? If so, there are certain circumstances where tax penalties can be waived or removed thereby granting you some tax debt relief. An example of when a tax penalty may be removed or eliminated is when a taxpayer hasn’t had a history of tax penalties in the past. The IRS and the NCDOR have different rules regarding tax penalty removal. The IRS will allow penalties to be removed before the tax debt is paid in full; whereas, the North Carolina Department of Revenue requires the tax debt be paid in full before granting a penalty waiver. In any case, pursuing a penalty waiver can help you to pay your tax debt off sooner.
Please feel free to contact me if you or someone you know in the Raleigh, NC area needs help with settling their tax debts using the options available under the IRS Fresh Start Tax Program. I regularly assist clients in my Raleigh, NC office with filing back taxes, removing wage garnishments and bank levies, setting up installment agreements, and filing Offers in Compromise. I can be contacted by phone at (919) 792-8511 or you can email me directly using this link.
I’m here to help!
Lauren Massie
Lauren Massie, CPA, PLLC
8480 Honeycutt Road, Suite 200
Raleigh, NC 27615
(919) 792-8511
Lauren Massie, CPA, PLLC is based in Raleigh, North Carolina and serves clients throughout the Greater Triangle Area including cities such as Wake Forest, Durham, Cary, Chapel Hill, Morrisville, Holly Springs, Fuquay-Varina, Clayton, Louisburg, Knightdale, Zebulon, Rolesville, Wendell, Hillsborough, Youngsville, Franklinton, Garner, Zebulon, Henderson, Franklinton, Holly Springs, Creedmoor, and Angier.