By: Linda Schiffer
Nobody wants to get involved with IRS tax penalties. One of the strongest departments in the U.S. Government, the IRS seems to be an entity unto itself, making its own rules and regulations over the years, with what many have said is the harshest auditing and enforcement in any government agency.
That might have been true once, but thanks to the Taxpayer Advocacy Service and to a more humane approach, the IRS has toned down the harsh and ratcheted up the understanding and assistance. However, penalties still do prevail and they can be heavy.
The Types of Penalties and Fees
1. Late Penalties: a) If you filed on time but paid late, the fee is .05% for each month or partial month that money is due. Show good cause why it has not been paid and no penalty will be levied. b) If you did not file on time and owe taxes, you will have to pay 5% for each month until taxes are paid. There are other stipulations in this and it is best to go to the IRS web site to read them all.
2. If you owe taxes but cannot pay them, the IRS might do an Offer in Compromise if you are facing economic hardship. (Form 656)
3. Tax Liens: The IRS can place a Federal Tax Lien on any taxpayer’s property for the amount of the taxpayer’s liability. A Federal Tax Lien supercedes any and all other liens that might be in place on that property. All creditors are advised of the Federal Tax Lien.
Releasing the Lien: A Release of the Notice of Federal Tax Lien is given by the IRS 30 days after the amount of tax payable has been paid. A bond guaranteeing that payment will be made at a later date is also acceptable and will have the lien released. Be aware that the taxpayer pays all accrued costs involved in this lien, not only the penalty, but the filing, etc
Other releases include Discharging, Subordination, Certificate of Non-attachment and Withdrawal of Notice of Federal Tax Lien. See the IRS site for additional information.
4. Wage Garnishment & Tax Levy: When a taxpayer owes the IRS back taxes, the IRS often uses wage garnishment to collect the taxes. Wage Garnishment is also called a Wage Levy. The Garnishment calculation is complicated and changes per situation. See the IRS site for additional information.
Any Notice of Levy on Wages, Salary and Other Income automatically includes a Statement of Exemptions and Filing Status.
If a joint filing is involved, the IRS will usually garnish the wages that are larger. Joint liability rules and regulations should be read on the IRS site under 5.11.5.4.3 (05-05-1998) Joint Liabilities.
5. Tax Bankruptcy: Both Chapter 7 and Chapter 13 deal with bankruptcy that can discharge a delinquent tax amount. One is capable of discharge completely while the other puts the due taxes on a payment plan. Bankruptcy is a complex issue to deal with and requires the use of an attorney, especially where the IRS is involved.
Payday Cash Advance Loans is a helpful source for your tax needs!
