IRS Deficient & Delinquent Taxes
If you owe delinquent taxes to the IRS and they are demanding payment, it can be a scary experience. They will send you several letters that get progressively more threatening, and you may not know how to respond, or what payment options are available to you if you are delinquent with taxes.
And worse yet, the IRS is not legally required to explain your payment options, you are presumed to know that. However, they will continue to send threatening letters to seize your personal bank accounts, home, car, or other property without a court order.
Furthermore, delinquent taxes are nothing to play around with, the longer you wait to take action, the more penalty and interest will continue to accrue and as the amount grows, so does your chances of having a Revenue Officer assigned to your case.
If you continue to ignore the IRS threats of enforcement regarding your delinquent taxes, out of the blue, “boom” it will happen. A lien will get filed, this will harm your credit and prevent you from selling or refinancing your home. Or worse, a levy will get placed on your wages and bank accounts. The IRS can even levy your social security benefits and pension, and this can be especially harmful and frightening if you are retired and living on a fixed income.
The Internal Revenue Service (IRS) is responsible for collecting taxes from individuals and businesses in the United States. However, there are instances where taxpayers may not have paid their taxes correctly, resulting in tax deficiencies.
Tax deficiencies occur when the IRS determines that a taxpayer has not paid the full amount of taxes they owe. This can happen due to errors made on tax returns, failure to report all income, or claiming deductions or credits that the taxpayer is not eligible for. In some cases, taxpayers may intentionally try to evade paying taxes, which can result in even higher deficiencies and potential legal consequences.
Personal Tax Deficiencies
Personal tax deficiencies refer to situations where individuals have failed to correctly report their income or pay the full amount of taxes owed to the IRS. This can happen for a variety of reasons, such as not understanding tax laws, making mistakes on tax returns, or intentionally trying to avoid paying taxes.
Some common personal tax deficiencies include:
- Underreporting income: Taxpayers may fail to report all of their income, either intentionally or unintentionally. This can lead to a lower tax bill than what is actually owed.
- Overstating deductions: Taxpayers may claim deductions or credits that they are not eligible for in an attempt to lower their tax bill. This can result in a higher deficiency if the IRS discovers the false claims.
- Failure to file taxes: If a taxpayer fails to file their tax return on time, they may face penalties and interest charges, as well as potential tax deficiencies.
Business Tax Deficiencies
Businesses, both large and small, are also subject to tax deficiencies. These can occur when businesses fail to accurately report their income or pay the full amount of taxes owed. Some common business tax deficiencies include:
- Misclassification of employees: Businesses may incorrectly classify workers as independent contractors instead of employees, in an attempt to avoid paying certain taxes. This can result in tax deficiencies if the IRS determines that the workers were misclassified.
- Failure to pay employment taxes: Employers are responsible for withholding and paying employment taxes, such as Social Security and Medicare taxes, on behalf of their employees. If a business fails to do so, it may face penalties and interest charges, as well as potential tax deficiencies.
- Underreporting income: Businesses may fail to report all of their income, either intentionally or unintentionally. This can lead to a lower tax bill than what is actually owed.
Consequences of Tax Deficiencies
If the IRS determines that a taxpayer has a tax deficiency, they will send a notice to the taxpayer outlining the amount due and any penalties or interest charges that may apply. Tax deficiencies can also result in tax liens, wage garnishments, and other collection actions by the IRS.
In addition to financial consequences, taxpayers may also face legal repercussions if they are found to have intentionally evaded paying taxes. This can include fines and even potential imprisonment.
How to Resolve Tax Deficiencies
If you receive a notice from the IRS stating that you have a tax deficiency, it is important to take action as soon as possible. The longer you wait, the more interest and penalties will accrue.
Some options for resolving tax deficiencies include:
- Paying the full amount owed: If you are able to pay the full amount of taxes owed, this is often the best option as it can prevent further penalties and interest.
- Setting up a payment plan: The IRS offers payment plans for taxpayers who are unable to pay their taxes in full. These plans allow you to make monthly payments over time.
- Negotiating an offer in compromise: In some cases, the IRS may be willing to accept less than the full amount owed through an offer in compromise. This option is typically only available for taxpayers who are unable to pay their taxes in full and have no other means of resolving the deficiency.
- Seeking professional tax assistance: If you are unsure how to handle a tax deficiency, it is always recommended to seek the help of a qualified tax professional. We can review your situation and provide guidance on the best course of action.
Tax deficiencies can have serious consequences for individuals and businesses if left unsettled. It is important to understand your tax obligations and ensure that you report all income and pay the full amount of taxes owed.
If you do receive a notice from the IRS stating that you have a tax deficiency, it is crucial to take action promptly and consider seeking professional assistance to help resolve the issue.
Remember, ignoring tax deficiencies will only lead to further complications and potential legal consequences. So, it is always better to address these issues as soon as possible to avoid any adverse effects on your financial and personal life. By staying informed about tax laws and seeking professional help when needed, you can avoid tax deficiencies and maintain compliance with the IRS.
Don’t let a tax deficiency become a bigger problem – take action today to resolve any outstanding tax issues. Happy and responsible taxpaying!
Franskoviak Tax Solutions is an experienced CPA firm that is dedicated to helping taxpayers navigate through the tricky and confusing terrain of owing delinquent taxes to the IRS. We offer a free consultation and will explain your options, and provide personalized solutions for your personal situation and provide support along the way.
IRS Unpaid Back Taxes and
Delinquent Taxes (FAQ)
If I set up a payment plan for my IRS back taxes, can I pay online?
Yes, you can pay online or setup a Direct Debit agreement to pay your IRS Debt.
What are my options for resolving delinquent tax issues?
If you owe less than $50,000 you can apply for an installment agreement. Using the filing Form 9465, Installment Agreement Request. If you owe more than $50,000, we can help with other options, including Partial Payment Agreements, Offer in Compromise (OIC), and Filing Bankruptcy.
How can i resolve delinquent taxes?
Some of the ways that we help our clients resolve their delinquent taxes include, negotiating installment agreements, negotiating partial payment installments, establishing an offer in compromise agreement, Representation for “currently not collectible” cases, filing bankruptcy, release wage garnishment, innocent spouse relief and also enabling statute of limitations.
What does Delinquent taxes refer to?
Delinquent tax refers to a tax that is unpaid after the payment due date. Usually a penalty is attached to a delinquent tax. The power, jurisdiction and authority to collect all delinquent taxes are vested in the IRS.
What can the IRS do to collect back taxes?
The IRS can do many things, they are the largest collection agency on earth. They can levy your bank accounts, garnish your wages, file tax liens against your home and property, they can seize your home or business, they can summons you to appear in front of them, they can sue you in a civil court and get a judgement against you. And finally if the situation is severe enough they will charge you criminally and put you in jail.
Can I set up a payment plan with the IRS if I owe back taxes?
Yes, the IRS will usually accept a payment agreement to repay the back taxes. In cases of multiple prior defaulted agreements in the past or if you owe over $100k and have the money to pay the tax debt in full then the IRS may not accept a payment agreement. In this situation, it is best to seek help from a qualified tax professional.
Do I need legal representation to set up a payment plan for back taxes with the IRS or State of Michigan?
If you owe over $25k, have a Revenue Officer assigned, or have unfiled back tax returns, it is always best to hire a qualified tax professional to represent you. Make no mistake the IRS is not your friend and they will not be forthcoming with information about all options available to you. A qualified tax professional will assess your situation and present you with all of your options.
Is there a limit on the amount I owe, if I want to set up a payment plan for the IRS Taxes that I owe?
No, there is no limit, but be aware that the IRS will file a tax lien against you if you owe over $25k.
If I set up a payment plan with the IRS do I continue to accrue interest?
Yes, interest continues to accrue on the unpaid balance.
Is an IRS payment plan the best way for me to resolve my back taxes owed?
In some cases yes, but not in all cases, there are different options available such as; Currently Not Collectible, Offer in Compromise, bankruptcy, penalty abatement and a few others. It’s best to consult with a professional to decide which is the best tax resolution solution for you.
Some of Our Success Stories
Offer in Compromise & Delinquent Taxes
Duane was retired and supplementing his income working sporadically throughout the year to make ends meet. The monthly payments to the IRS were starting to get too hard to keep up with his current intermittent income, and he hoped that there was another option to solve his seven years’ worth of tax problems. We filed an Offer in Compromise and were able to get his tax debt of $60,677 to only $6,150.
“I would highly recommend Franskoviak to anyone who has tax issues! They were very professional and communicated well. They explained the process well, and there was no guess work needed.”
Offer in Compromise & Delinquent Taxes
Joseph had 7 years of unfiled back taxes, and owed money to the IRS since 2000. Having recently retired, Joseph was living off of a small fixed income with little room for extra expenditures. After filing an Offer in Compromise the $56,688 that was due to the IRS was successfully settled down to just $500. This is an amazing less than 1% settlement rate!
“Mike knew my case very well, and I feel very relieved. After 15 years of problems I feel very comfortable. I was very pleased with everything. Franskoviak and Company did a wonderful job and I appreciate it.”
Offer in Compromise& Delinquent Taxes
Michael, a floor installer from Pontiac, MI came to Franskoviak Tax Solutions with unfiled tax returns for the years 2008 through 2013. The first step was getting him into compliance and getting those tax returns filed. Next we negotiated for a levy release from his wages. The IRS told Michael that he owed $174,725 from those same tax years. The Franskoviak team of tax specialists went to work and submitted an Offer in Compromise with the IRS for the amount of $500. The IRS approved his Offer and Michael’s debt was reduced by $174,225; a savings of 99%!
After asking Michael about his experience with the Franskoviak team he replied “Franskoviak & Company was awesome! They gave me a brighter future with this tax debt finally off my back.”
Currently Non-Collectible Status & Levy Release & Delinquent Taxes
Jeffrey L., a self-employed floor installer from Hazel Park, MI had been served with an IRS wage garnishment that left him with only $200 per week to live on. This happened because Jeffrey owed over $134,000 in back taxes for ten years of unfiled tax returns.
Franskoviak Tax Solutions got up to date on the unfiled returns and had the wage garnishment lifted in less than 7 days, and the clients account was placed into Currently Noncollectable Status.
Offer in Compromise & Delinquent Taxes
Law firm unable to pay their payroll taxes due to decline in economy and loss of several customers. Our firm filed several years back payroll and income tax returns. We negotiated a settlement with the IRS that resulted in a $182,000 tax savings.
Mark and Lori owed $673,556 in back income taxes as a result of not paying quarterly estimates as well as failing to file over 6 years of back tax returns. We negotiated an Offer In Compromise and settled for $1,682, a savings of over $675,200, which is almost a 100% settlement!
Offer in Compromise & Delinquent Taxes
Ken came to us owing the IRS approximately $72,000 as a result of not paying quarterly tax estimates for a 3 year period. The Franskoviak team of tax specialists went to work. The starting process was to get a collection hold so no wage or bank levies would be issued. Next we got Ken into compliance by filing back tax returns. Lastly we submitted an Offer In Compromise for $549.
Initially the IRS claimed in their response that Ken could pay more, over $25,000. But we negotiated hard, and our experience with the laws paid off. Finally, the IRS relented and agreed to the $549 Offer In Compromise. Ken saved $71,993; over 99% of the original amount owed!
When we asked Ken about the Franskoviak team he replied “Franskoviak & Company took a terrifying situation and with their expertise and knowledge, brought me peace of mind and got the best resolution I could ever hope for. You guys turned a hopeless situation into a brand new beginning.”