Nicholas Hartney, E.A.©

Currently Not Collectible *2018 Updates* If all of your past tax returns are filed, you have stopped pyramiding taxes and have furnished the IRS with all the applicable financial data, you may be eligible to have your tax debt placed in a currently not collectible status. This is a temporary delay in enforced collection action (from tax levies, bank levies, wage garnishments, etc.) until your financial condition improves. The IRS coded currently not collectible as “Status 53”. This code tells everyone in the IRS that it is not worth their time to pursue collection action due to lack of equity and income. Typically the IRS will look at your financial situation every year to review your ability to pay the back tax debt. If after their review they determine you are making substantially more income will once again pursue enforced collection action such as bank levies and wage garnishments. If the IRS determines that your financial condition has not improved they may still fil

What to do When Your Business Falls Behind on its Federal Tax Deposits To View Patriot Tax Resolution, LLC's take on Back IRS Payroll Taxes and the IRS Trust Fund Recovery Penalty please click on the highlighted links. The IRS considers back payroll tax debt as the most serious of all tax debts. The IRS views operating a business while owing back payroll taxes as illegally borrowing money from the government. The IRS can seize assets and force you out of business if you owe back payroll taxes . The scary thing about payroll taxes is that the IRS can assess a portion of the tax, called the Trust Fund Recovery Penalty, on individuals it believes had authority to collect and pay the tax. This can be an owner manager and even a bookkeeper. The number one reason I have business clients is because of unpaid payroll taxes . Each scenario basically works similar to this: Business is slow. You pay the rent and your employees’ wages, but don’t make your federal tax deposits. Y

Whenever an IRS tax debt owed the federal government will make a claim against the debtor by filing what is called a tax lien. This tax lien is perfected by recording a Notice of Federal Tax Lien at the county recorder’s office or with your secretary of State’s office. The tax lien automatically attaches to all you own or have a right in. Penalty and interest on the tax is also covered on the lien, so the lien simply acts like a placeholder (e.g. if the amount of the lien is filed for 2005 1040 taxes in the amount of $23,000 and next month the amount increases due to penalties and interest, the lien, although filed for $23,000, will not be removed until the additional fees are paid that are added later). A tax lien allows the IRS to levy your property to satisfy your tax debt. The same is true with state taxing authorities. Just as a recorded mortgage tells anyone who searches the public records or pulls your credit report that you owe on your home, a Notice of Federal Tax Lien show

Abatement of Penalty By far the accrual of penalties and interest are the most frustrating topic of those who owe back taxes. The IRS charges interest, late payment and late filing penalties for each month you don’t file or pay the taxes due. Initially the late payment and late filing charge is ½% each per month with the late payment plan reduced to ¼% if you enter into a formal payment plan. The interest rate fluctuates quarterly. The late payment penalty maxes out at 25% as does the late filing penalty. Interest never maxes out. The IRS can eliminate or reduce a penalty for a reasonable cause if you request it. The term the IRS uses for removing or reducing penalties is “abatement”. About one-third of IRS-imposed penalties are later removed. Only interest that has accrued on the penalties can be reduced unless it was erroneously applied or if it was due to lengthy delays by the IRS. The only way to completely remove all penalties and interest is through an Offer in Compromise.