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Understanding Tax Liens, Penalties and Interest For Back Tax Debt Owed to the IRS and/or State Taxing Authorities | Where the Rubber Meets the Road

"Why was a tax lien filed?" or "Can you abate the penalties?" are the two most common concerns I hear from potential clients.  While others (sales people) have no problem telling you that they will remove the tax lien and get rid of the penalties I will attempt to explain to you where the rubber meets the road.

If you owe the IRS more than $25,000 there is going to be a tax lien filed, period.  You can appeal the initial notice of federal tax lien but that doesn't prevent it from being filed.  It can be withdrawn if you are successful in appeals.   If you owe more than the threshold amount of $25K good luck with that.    

The IRS takes the position if you did the crime you must do the time.  That time is in the form of both the filing of a tax lien as well as penalties and interest.  While abating penalties is much more likely than releasing a tax lien if you owe more than $25,000, it certainly is not a given.   You must demonstrate reasonable cause existed in order to convince our good friends at the IRS to abate any penalties.  I talk about this in previous posts.

Everyone thinks they are special and entitled to a hook-up but the truth is excuses are like assholes, everyone has one.   You have to have something that happened to you outside of your control.  If there were medical reasons which strapped you financially and therefore were unable to make your estimated tax deposits that is one example.  If you decided it was more important for you to go build a house instead of pay the IRS then no, don't expect the IRS to agree to abate your penalties.

If you want honest help then call me, if you want to be greedy go to a large company like Tax Masters.  I like to help people like myself, honest and to the point. 






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Keys to a Successful Offer in Compromise | Nicholas Hartney, EA | Genesis Tax Consultants, LLC ©

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Contact me: Nicholas Hartney Licensed to Represent Taxpayers Before the IRS 
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Preparing IRS Form 1045 Tentative Carryback Application or Carryback Claim Net Operation Loss (NOL)

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If after you filed an amendment to your tax return (Form 1040X) and the IRS sends you a notice requesting that you now file Form 1045 you should consider calling someone for help!  I filed one of these forms back in June for a client of mine and just received notice that it was approved, lowering the taxpayer's liability down from $8492 to $2900.


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If you wanted to try to tackle the 1045 yourself here are the instructions:

Department of the Treasury
Internal Revenue Service 2010
Instructions for Form 1045
Application for Tentative Refund
Section references are to the Internal Definitions connection with gambling, the racing
Revenue Code unless otherwise noted. of animals, or the on-site viewing of
Eligible loss. For an individual, an such racing, and the portion of any
eli…