Achieving financial stability should be a lifelong goal. Developing financial plans and meeting long-term objectives is a lengthy process that requires patience, discipline, and endurance. What happens when your plans are disturbed because of past and present financial issues that threaten to destroy your future? Bankruptcy is one of those financial problems that take into consideration your past, your present, and your future.
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IRS Wage Garnishment Protocol
Wage garnishment is the most common type of garnishment, or attachment to earnings and/or assets. Wage garnishment is defined as the process of deducting money from an employee’s wages, or monetary compensation, as a result of a court order or related equitable procedure. A wage garnishment will continue until the entire debt is paid. There are common examples of different types of debts that result in wage garnishment. These types include child support, defaulted student loans, taxes, and unpaid court fines.
IRS Penalty Abatements and Reasonable Cause
IRS Penalty Abatements
As noted previously, the purpose of (assessing) a penalty is to encourage voluntary compliance. “Voluntary compliance exists when taxpayers conform to the law without compulsion or threat” (IRS.gov, “20.1.1.2.1 Encouraging Voluntary Compliance,” 8/14/2013). The taxpayer supports the tenets of the Internal Revenue Code in achieving voluntary compliance when he or she makes a good faith effort to meet all tax obligations (“Encouraging Voluntary Compliance”).
How IRS Interest is Calculated
You are required to file a return if you have earned income in the previous year. You are also required to pay all tax by the due date to avoid IRS interest and penalty charges. The official due date to file and pay taxes is April 15. This is the “deadline for most people to file their individual income tax return and pay any tax owed” (IRS.gov, “Topic 653 – IRS Notices and Bills, Penalties and Interest Charges,” 7/26/2013). All U.S. tax returns are checked for mathematical accuracy. In the event that you owe money to the IRS, you will be sent a bill. With this in mind, familiarize yourself with the different types of penalties and IRS interest charged to your tax balance as well as the procedures and methods used to calculate interest and penalties.
More on IRS Interest Abatements
According to section 20.27.1 Interest Abatement and Suspension Overview, reasonable cause can never serve as the basis for an IRS interest abatement (IRS.gov, 8/14/2013). With this in mind, the interest on a tax liability will accrue from the return due date until the taxpayer pays the tax obligation in full. Exceptions to the law may allow the authorization of an abatement, or suspension of interest. Exceptions may also consider certain periods relative to computing interest. When exceptions are overlooked, taxpayers may exercise the option for filing Form 843, Claim for Refund and Request for Abatement, or submitting written, signed correspondence requesting consideration.
First Time Penalty Abatement Program
The First Time Penalty Abatement Program relief is a one-time consideration that is applied to a first-time penalty charge. The penalty relief is based upon the taxpayer’s compliance history.
Why Retain a Sales Tax Attorney for your Collections Matter?
Why I Believe You Should Retain a Sales Tax Attorney for Your Board of Equalization Collections Matter?
Although I am generally a big proponent of self-help legal solutions, I am also cognizant of the situations that require the assistance of an experienced sales tax attorney. One of the areas where I feel sales tax attorney representation is essential, not just an option, in the in areas of sales tax collection matters. Given the difficulty that I have encountered in practice when taxpayers try to handle their own Board of Equalization collection matters and the rigidity of the Board of Equalization, I would recommend hiring a sales tax attorney for the following general reasons.
Sales Tax Audit: An Overview
An Overview of a Sales Tax Audit
A sales tax audit has key differences from a regular audit. First, the scope of the audit looks at a business’s gross receipts and various ways of measuring gross receipts. The businesses that are most frequently subject to sales tax audit include bars, restaurants, retail stores, manufacturers, wholesalers, services businesses that sell goods, and a variety of others.
Throughout their years of practice, sales tax auditors have developed ways of determining gross receipts that are innovative and industry specific. For example, if the business audited were a coin-operated laundromat, the Board of Equalization may measure water consumption levels for the business against the number of washing machines it has. Pour tests are common for restaurant and bars (the amount of alcohol used to make each drink) and inventory audits are common for other types of businesses.
What Types of Matters Should You Retain IRS Attorneys For?
Continued From Part One
3) Independent Contractor Issues
This category piggybacks off of technical tax matters, as matters that involve independent contractors can often be the most costly and the most difficult for taxpayers to resolve. For example, even IRS attorneys can be heavily tested in an independent contactor audit. When performing an independent contractor audit, the IRS and many state revenue agencies will use a multi-factor test with as many as twenty different variables. The variable (pardon the pun) nature of an independent contractor audit is something that overwhelms many practitioners, let alone an individual taxpayer. Most IRS attorneys are extremely familiar with this multi-factor test and can help you strategize in an audit. In addition, both independent contractor audits and IRS collection issues are often high dollar cases if they involve multiple attorneys and multiple years. It is best to not leave anything to chance and to retain an IRS attorney to represent you in your independent contractor matter.
What Types of Matters Should You Retain an IRS Attorney for?
The decision to hire an IRS attorney is one that should not be taken lightly. Attorneys can be extremely cost prohibitive and complicate matters unnecessarily when they can be resolved relatively easily. In general, I am a big proponent of self-help legal solutions, especially given the variety of informational material that can be found online (including much of what I have published on the subject of taxation). However, there are certain types of matters where I believe an IRS attorney is not only a benefit, but much of the time is an absolute necessity. Here is a quick checklist of the matters that I believe that an IRS attorney should be hired for.