Why is the IRS levying my bank account, I haven’t filed a tax return in several years?

How To Stop The IRS From Garnishing Your Bank Account By Mesa Tax Debt LawyerAt the end of each year, employers and others are required to send the IRS documentation telling it how much money was paid to you.  The document these entities send may be a W-2 Form, or a 1099 Form containing contractor, interest or dividend income, mortgage interest or retirement account information.

These documents are matched up with your Social Security number and saved in a database.  Every once in a while the IRS’ Computer does a search to see whether you have filed a tax return for a given year or to see whether the tax return you filed matches the income information it received for that year.

If the Computer recognizes that you did file a return but that the information in the return doesn’t match the information it was provided, it will shoot out a letter to you.  That letter will tell you that it’s intent is to change your return to match the reported info.

If the Computer doesn’t see a return, and your income was high enough that a return was required, it will send a letter asking you to file the return.  It sends this letter to the last known address it has on record for you.

If you don’t get the letter, which is very common, or you do get it and you ignore it, the IRS Computer will prepare a return called a Substitute for Return or “SFR”, using the information on record and treating as single or married filing separate with no deductions.  It will than send another  telling you that if you don’t file a return or challenge the one it has created within 90 days, the amount from it’s return will become “assessed” or set in stone.  Once that happens, the IRS collection process begins.

Video: Is The IRS Allowed To Garnish My Paychecks or Bank Account?

SFR’s really stink and for a number of reasons.

First, the SFR doesn’t credit you for any deductions you may have had in that year, or any business expenses if you needed to do a Schedule C.  There are also no deductions for dependents.  As a result, the SFR is calculated at the highest possible amount.

Second, If the SFR is assessed before you file your return, the principal portion of the debt is never going to be dischargeable in Bankruptcy should that become necessary.

Third, if the SFR is assessed before you complete your own return and file it, you MAY have to deal with the IRS based on the incorrect SFR debt amount while you are waiting to see if the IRS accepts your correct tax return.

If you haven’t filed for a while, get the returns done asap in order to avoid this entire mess.  If the SFR’s have been assessed by the IRS, it will attempt to collect.

Michael Anderson, Tax Lawyer In ArizonaWritten By:

Anderson Tax Law
2158 N. Gilbert Rd. Ste 101
Mesa, Arizona 85203

Phone: (480) 507-5985
Fax: (480) 507-5988
Email: [email protected]
Website: https://taxlawyeraz.com

My Company owes the IRS a substantial amount of Payroll Tax. Can the IRS take money from my personal account to pay it?

My Company owes the IRS a substantial amount of Payroll Tax. Assuming that the business is a multi-member LLC or Corporation, it owes the Payroll Tax.  You don’t…at least not yet.

As you know, the business withholds Social Security (FICA), Medicare and Income Tax from it’s Employees’ paychecks.  The business holds that money and adds some if it’s own to the pot.  It sends the entire amount in to the IRS, or at least it is supposed to.

The IRS considers the withheld Income, FICA and Medicare tax to be “Trust Fund” money.  This means that the Business is or was holding it in “Trust” for the employee and was responsible for it.  The Trust Fund amount is usually 70% of the total amount sent in.

Right now…you don’t personally owe the IRS any money, only the Business does.  In order for the IRS to treat you as a debtor and thereby gain access to your personal assets, it has to make a formal determination that you are a “Responsible Person”.  This determination process usually begins with an interview and a review of documents like bank signature cards, corporate officer status etc.  Once the determination is made, the IRS issues a “proposed” assessment of just the Trust Fund amount only and against you personally.  You than have 60 days to submit a written protest.

Until the protest period expires, you don’t owe anything.  Because you don’t owe it personally, i.e. there has been no assessment, the IRS can’t take any collection action.  It can’t even file a tax lien against you.

If it is the case that you meet the criteria to be named a “Responsible Party”, the IRS will probably get around to proposing an assessment against you before the Statute of Limitations runs out on it’s ability to do so.  That Statute period is 3 years from the date the 941 tax return is filed.  If the debt is going to be substantial, it is a good idea to discuss your options with experienced Counsel.

Michael Anderson, Tax Lawyer In ArizonaWritten By:

Anderson Tax Law
2158 N. Gilbert Rd. Ste 101
Mesa, Arizona 85203

Phone: (480) 507-5985
Fax: (480) 507-5988
Email: [email protected]
Website: https://taxlawyeraz.com