Also, remember that if you owe and cannot afford to pay the tax, you should go ahead and file your income tax return to save on the failure to file penalty that can be up to 25% of the tax you owe.  Simply by filing the tax return you save this penalty and increase the amount of money that you keep in your pocket.

The IRS wants you to think that you only have one option: pay the tax, interest and penalties they say you owe in full.  In actuality, you have several options and it is to your benefit to know your rights and options so you don’t pay more than you have to and so you don’t get stuck with tons and tons of penalties.

Here are the seminar details:

• When? Tuesday, March 24, 2009 at 7 pm
• Where? The Buck Mickel Center, Greenville Technical College
• How to RSVP: Online or by Telephone (1-800-216-1116)

You will also learn 5 Tax Secrets that will Save you Money:

1. Why it is important to file all of your tax returns, even if you cannot afford to pay the tax
2. How to keep from paying IRS penalties
3. Why you should always pay your company’s payroll taxes on time
4. How to avoid IRS audits and if audited, how to end it quickly
5. How to pay less taxes utilizing an offer in compromise

If you would like to attend one of the free seminars, you can visit the online RSVP page here.  You can also call toll free to give us your reservation information at 1-800-216-1116.

The law firm that I am a member of, The Greene Law Firm, P.A., is putting on a free seminar to discuss ways you can avoid IRS problems and let you know about your rights in case you find yourself in the midst of IRS problems.

Here are the seminar details:

• When? 2 Sessions: Thursday, March 19, 2009 or Tuesday, March 24, 2009 at 7 pm
• Where? The Buck Mickel Center, Greenville Technical College
• How to RSVP: Online or by Telephone (1-800-216-1116)

You will also learn 5 Tax Secrets that will Save you Money:

1. Why it is important to file all of your tax returns, even if you cannot afford to pay the tax
2. How to keep from paying IRS penalties
3. Why you should always pay your company’s payroll taxes on time
4. How to avoid IRS audits and if audited, how to end it quickly
5. How to pay less taxes utilizing an offer in compromise

If you would like to attend one of the free seminars, you can visit the online RSVP page here.  You can also call toll free to give us your reservation information at 1-800-216-1116.

Here are the seminar details:

• When? 2 Sessions: Thursday, March 19, 2009 or Tuesday, March 24, 2009 at 7 pm
• Where? The Buck Mickel Center, Greenville Technical College
• How to RSVP: Online or by Telephone (1-800-216-1116)

You will also learn 5 Tax Secrets that will Save you Money:

1. Why it is important to file all of your tax returns, even if you cannot afford to pay the tax
2. How to keep from paying IRS penalties
3. Why you should always pay your company’s payroll taxes on time
4. How to avoid IRS audits and if audited, how to end it quickly
5. How to pay less taxes utilizing an offer in compromise

If you would like to attend one of the free seminars, you can visit the online RSVP page here.  You can also call toll free to give us your reservation information at 1-800-216-1116.

When we spoke about the case, I thought we were clear that all returns had been filed, but the client just owed the IRS money for a few years.  Upon calling the IRS to negotiate the release of the levy, I was informed that there were, in fact, outstanding tax returns that must be filed. 

Before the IRS will negotiate with you whether it is to negotiate the release of a wage garnishment or to ask them to accept an offer in compromise, you must have at least the last six years tax returns filed.  If you do not, the IRS will not begin to negotiate with you.

I always urge my clients to go ahead and file their tax returns on time every year whether they can afford to pay the tax or not.  Why?  For two main reasons.  First, by filing you immediately avoid the failure to file penalty that the IRS assesses.  This can add up quickly.  The failure to file penalty is 5% of the tax owed per month up to a maximum of 25%.  Yuck!

Second, by filing, you begin the statute of limitations clock running for how long the IRS to collect the tax that you owe.  If you never file the clock never starts and you are stuck with the IRS for the rest of your life or until you finally pay off the tax, penalties and interest. 

Usually, the IRS will release a levy that is in place when you submit an offer in compromise.  However, they are not required to and if a levy is already in place it may take several weeks before a release can be obtained.  The first thing that has to be done is that we have to wait for the IRS to receive your offer in compromise and we have to receive a letter back from them that states the offer in compromise has been received.  This will be our proof to the IRS that an offer has been submitted when we call and request the levy to be released.  It usually takes at least 30 days from when we submit the offer in comproimse to receive this letter.

Our first attempt will be to call the collections department of the IRS and ask them to release the levy.  This used to be pretty easy; however, in the past several months we have noticed the IRS getting much stricter and not releasing these levies even after the offer in compromise has been received.  Technically, they do not have to and they are sticking with this.  I have appealed it to their managers and supervisors and have not had any luck.  Where we have had some luck is in contacting the Taxpayer Advocate Service in this situation.  A levy is supposed to be released when it causes an economic hardship on a taxpayer and that is generally our best argument along with the fact that the offer in compromise has been submitted.

So, if you are receiving collection notices from the IRS and contemplating an offer in compromise, I would recommend that you go ahead and get moving with the offer because once the IRS begins collecting through a levy on your wages it is much more difficult (and definitely not a guaranteed thing) to get released.

Here’s a little background on the case I had a question about.  Basically, the IRS is levying my client’s income.  The type of arrangement my client has with her client makes this levy basically a 100% levy so she has absolutely no income to pay basic living expenses.  The revenue officer was not working with us on getting the levy released (or at least reduced) so I filed a Taxpayer Assistance Order (Form 911) with the Taxpayer Advocate’s office to seek some relief from them.  The Taxpayer Advocate’s letterhead has this quote in its logo, “Your Voice at the IRS.”  However, when I received her response the letter appeared to have been written by the revenue officer and signed by the taxpayer advocate.  In a nutshell the letter said, “too bad, so sad.” Because my client was not “in compliance” (meaning she was current with all of her taxes) the taxpayer advocate could not help her.  My question is this, who calls the taxpayer advocate for help?  Certainly not the people who have no tax issues and are current!  It is the person who is struggling to get on their feet and the IRS is harassing them who needs the help of the Taxpayer Advocate.

What I heard on the conference call yesterday was that many practitioners around the country are also dealing with this type of IRS.  It is hard to get any help even when you are doing everything you can to get back on track with the IRS.  There have been some rumors about the IRS recently and that things may “loosen up” for a little while because of the state of the economy.  However, nothing has come down in any official capacity to give practitioners any guidance.

ANSWER: Yes, it is possible to work with the IRS to have the lien either released or subordinated beneath the lender’s mortgage so you can refinance your home.  In fact, due to the state of the economy there are some new rules where the IRS is expediting the process of releasing or subordinating liens for taxpayers so they can refinance their homes to take advantage of the low mortgage interest rates.  They are especially excited to be able to subordinate a lien when you will be able to take some money out of the equity in your home to pay your tax debt, but that is not always necessary.