Tax FAQs

Frequently Asked Questions…And Their Answers

  • Does the IRS have to give me notice before taking my wages?
  • Can the IRS take all of my paycheck?
  • What is the Automated Collection Service of the IRS?
  • I can’t pay my back taxes.  What can you do?
  • I haven’t filed my tax returns.  What should I do?
  • I just received an audit notice.  What should I do?
  • I haven’t paid my employment and payroll taxes.  Can the IRS hold me personally liable?
  • Can I be held liable for my spouse’s taxes?
  • Can a taxpayer really prevail against the IRS?
  • Why should I hire a tax attorney instead of another tax professional?
  • What’s the difference between a tax attorney and a tax resolution company?
  • If a promise to solve my taxes for just “pennies on the dollar” sounds too good to be true, is it?
  • Is there more than one way to solve my tax problems?  Will I have options?
  • Do I have to deal with the IRS once I engage a tax attorney?
  • What do I have to do to get help?
  • Can I afford your services?

Does the IRS have to give me notice before taking my wages?
The IRS is the envy of any commercial collection agency.  Without going to court, winning the case, entering a judgment, and getting the sheriff’s department to serve notice, the IRS only has to file a Form 668-W, Notice of Levy on Wages and Other Income, with your employer.  It can then seize your income.  Before the Notice of Levy is filed, the IRS must give you written notice. You will receive a Letter 1058, Final Notice.  After receiving the Final Notice you have 30 days to appeal the proposed levy.  If you don’t exercise appeal rights, the IRS levy stays in place and your employer must send the non-exempt portion of your paycheck to the government (see below).  The IRS does not have to send you the Final Notice before each enforced collection action, such as seizing your bank account or wages.  If months or years go by after the Final Notice is sent, taxpayers often undergo the shock of losing their paycheck without having immediate notification.

Can the IRS take all of my paycheck?
The IRS takes the nonexempt portion of your paycheck.  That leaves you with the “exempt” portion, which is not much.  For example, a taxpayer who is single with a $4,000 personal exemption and $5,000 standard deduction would take home $173.08 per week.  A family of four who filed a Married Filing Joint tax return would have to live on $500 per week.

What is the Automated Collection Service of the IRS?
Known by its initials, ACS is the faceless computerized system manned by an army of collection technicians who contact taxpayers, search for taxpayer assets, and handle taxpayer correspondence.  With the push of a button, ACS personnel can seize your bank account or wages.  ACS technicians have a reputation for being aggressive.  Generally ACS personnel are poorly trained and lack authority to solve problems on many cases.  ACS may place you on hold for extended periods by an automated answering system.  On each occasion you will be assigned a different person with whom to speak.  Many IRS horror stories begin in ACS.

I can’t pay my back taxes.  What can you do?
We devise a strategy that works for you which may include a negotiated settlement (Offer in Compromise), extended payment plan (Installment Agreement), getting you declared “uncollectible”, or, in extreme cases, filing bankruptcy.  Each taxpayer’s situation is unique.  We use our expertise and experience and the law to solve your tax problems and improve your life.

I haven’t filed my tax returns.  What should I do?
Call a tax attorney.  Failing to file tax returns is one of the most dangerous situations a taxpayer can face.  Because failure to file can lead to a criminal prosecution, you need to work through a tax attorney to keep all your information confidential through the Attorney-Client Privilege.  If before hiring a tax attorney you engage an accountant who prepares and files your returns, the IRS can compel the accountant to testify against you in a criminal trial.  Under the law, the information you tell your attorney stays confidential.

It’s important to file your tax returns, and not just to avoid being sent to jail.  Without filing tax returns, you cannot benefit from a reduced settlement (Offer in Compromise) or pay over time (Installment Agreement) or discharge your taxes in bankruptcy.  Without filing tax returns, the IRS can pursue you as long as you live, even collecting from your estate, because the Statute of Limitations time clock won’t begin to run.

I just received an audit notice.  What should I do?
Call a tax attorney right away.  When you face an income, employment, or sales tax audit, highly-trained government officials examine your returns and records in detail to ensure you have paid the “right” amount of tax.  Because the tax laws are very complicated and subject to different interpretations, often times auditors incorrectly assess large amounts of additional tax.  Once the IRS inflates the amount of taxes owed, the number you owe skyrockets because of added penalties and interest.

Your best defense is a tax attorney for three reasons:  1)  A tax attorney ensures that all your information stays confidential because of the Attorney-Client Privilege, which is not the case if another professional represents you.  2) Armed with all your legal rights, a tax attorney gives you total protection from the beginning of the process until its satisfactory conclusion.  3) When you face an audit, a tax attorney offers you the skills of negotiation and advocacy to protect you from overzealous auditors.

I haven’t paid my employment and payroll taxes.  Can the IRS hold me personally liable?
Yes.  Once a business owes payroll taxes for multiple periods, the IRS is much more likely to shut it down and seize the assets.  Focused on payment, the IRS identifies the responsible parties who failed to turn over the taxes, usually the owners and managers, and holds them personally liable.  Personal liability for income tax withholdings is known as a “Trust Fund Penalty.”

The IRS will assess a Trust Fund Recovery Penalty against a person who was required to collect and turn over payroll taxes and who willfully failed to do so.  That person becomes personally liable for 100% of what was not collected and turned over to the government.  Revenue Officers are directed to conduct extensive interviews to determine who the responsible person was, but often times they take a shotgun approach and assess bookkeepers, accountants, owners, and managers. Trust Fund Penalties often are large.  They cannot be discharged in bankruptcy.  Because the liability is personal in nature, your home and other property become a target for the IRS.  Your credit can be ruined.  A person burdened with Trust Fund Penalties has to deal with enormous personal stress.

Legitimate defenses exist to protect you from Trust Fund Penalties.  An experienced tax attorney can help prevent the imposition of Trust Fund Penalties or resolve them if properly assessed.  STS Tax Law defends individuals using the power of the law to ensure you are not unfairly accused.

Can I be held liable for my spouse’s taxes?
Yes.  Many spouses who go through a divorce often have to deal with an outrageous burden never anticipated – a tax bill for their ex-husband or ex-wife.  Because most married couples file joint returns, each spouse is liable for all of the taxes.  If the IRS comes back three years later and determines ones of the spouses didn’t report all of his income on a return the couple filed jointly, the IRS will pursue both spouses for payment.  The couple may be separated or divorced, but the IRS can seize the bank account and paycheck of the innocent spouse.

Can a taxpayer really prevail against the IRS?
Unprotected by a tax attorney, a taxpayer leaves himself or herself exposed to the full arsenal of the IRS.  With its power to seize your bank account and paycheck and ruin your credit, the IRS has an enormous advantage over the average citizen unaware of his or her rights and all available legal options.  With a tax attorney on his or her side, a taxpayer can prevail against the IRS.  The IRS prefers to deal with the taxpayer alone, because a tax attorney has the greatest success in restraining the heavy hand of the IRS and eliminating or reducing back tax debt.

Why should I hire a tax attorney instead of another tax professional?
We view other tax professionals – accountants and enrolled agents – as our allies in the fight against the IRS.  Tax attorneys, however, are the only tax professionals who legally protect all your information as confidential through the Attorney-Client Privilege.  In a criminal prosecution, your accountant or enrolled agent can be forced to testify against you; a tax attorney cannot.

Tax attorneys are the only tax professionals trained to defend you using all your legal options.  In addition to representing you at every level of the IRS, only tax attorneys can advocate for you in the federal courts that handle tax controversies.  Tax attorneys have the training and experience to negotiate and aggressively represent you before an IRS Revenue Officer or Agent, an Appeals Officer, or a federal or state judge.

What’s the difference between a tax attorney and a tax resolution company?
Tax resolution companies are businesses where you often deal with a “consultant” or “representative” who does not have the legal training or experience you need.  Your initial contacts often are with a trained telephone salesperson who will subject you to high-pressure sales tactics.  Tax resolution businesses often over-promise and under-deliver.  Because people with tax problems are already stressed, these sales tactics work.  

As a glaring example of abuse, in August 2010, the California Attorney General filed a $34 million lawsuit against Roni Deutch, accusing her firm of misleading consumers by falsely promising to reduce tax debts to the IRS.  The Attorney General alleged that the firm takes large, up-front payments with little or no help in reducing tax bills.  (To read the Complaint, click here.)  

Deutch allegedly spends $3 million a year on advertising, using false testimonies from clients who claim her firm saved them thousands of dollars in tax debts.  Three clients who appear in one advertisement still owe the IRS the full amount of their taxes plus interest and penalties, alleged the Attorney General.  As part of their sales tactics, the Attorney General said that telephone representatives claim a 99 percent success rate in dealing with the IRS.  In reality, the firm reduces only 10 percent of its clients’ tax bills.

In another troubling example from June 2008, 18 states sued J.K. Harris, a national tax resolution firm, for deceptive advertising.   J.K. Harris aired a national TV ad campaign promising consumers it can settle consumers’ debt with the IRS for “pennies on the dollar.”   The states and the tax resolution firm agreed upon a settlement in which the firm agreed to stop misleading consumers about its services and to pay $1.5 million in restitution.”This company took advantage of people who paid for tax assistance and, in some instances, profited by taking their money and not giving them any help at all,” said Massachusetts Attorney General Martha Coakley. “This agreement will ensure that this firm is honest with its clients and provides refunds if they are unable to assist them.”  (Click here to read more.)

Tax attorneys, in contrast, are highly trained professionals who have attended at least three years of law school after college, and often have earned an advanced degree in taxation through more years of study.  Attorneys in general, and tax attorneys in particular, must adhere to the highest ethical standards, ever careful to represent the truth and avoid taking advantage of their clients. Tax attorneys must follow the professional ethical guidelines of the state that licenses them, as well as, the IRS.

Tax attorneys may or may not charge more than tax resolution companies, but no matter their fee, tax attorneys give personal attention to their clients.  At the heart of the tax attorney’s craft lies a detailed understanding of complicated tax law and regulations and each client’s unique situation.  Tax attorneys do not operate like factories with an assembly line of workers.  Tax attorneys value the time with their clients to learn about the client’s personal situation.  With that knowledge in hand, tax attorneys devise a strategy that works for the individual, solving his or her tax problems and protecting his or her assets.

If a promise to solve my taxes for just “pennies on the dollar” sounds too good to be true, is it?
Yes.  Please read the immediately preceding section which describes abuses in the marketplace where tax resolution firms have over-promised and under-delivered.  One national tax resolution business advertised it could settle liabilities for “pennies on the dollar” and was sued by 18 states.

Obtaining a negotiated settlement, what is called an Offer in Compromise, has become more difficult than ever.  Government statistics show that the IRS rejects more than 75 percent of all Offers in Compromise.  Three out of every four taxpayers are turned away.  To succeed, an Offer in Compromise must comply with complicated IRS regulations, procedures, and guidelines.

Attempting an Offer in Compromise without a tax attorney could be extremely dangerous.  Under IRS guidelines for an Offer in Compromise, you must reveal all your finances, including your income and assets.  If your Offer in Compromise is rejected, the IRS has the information it needs to seize your bank accounts and paycheck.

The IRS evaluates your financial information to determine your ability to pay.  Even though the process is complicated and takes into account numerous calculations, described simply, you must offer what the IRS would get if the IRS seized your assets and received monthly payments over four or five years.  A qualified tax attorney who knows the law, pays attention to detail, and has successfully negotiated settlements for others can make the crucial difference between a reasonable settlement and rejection from the IRS or State.

Is there more than one way to solve my tax problems?  Will I have options?
As tax attorneys, we do not take a cookie-cutter approach to your problem.  We listen carefully to what you have to say, analyze the details of your situation, and consider all available legal options to resolve your tax problems.  We discuss with you the pros and cons of each strategy.  We can solve tax problems in more than one way.  We want to make sure, though, that the solution we decide upon works best for you and your family.

Do I have to deal with the IRS once I engage a tax attorney?

Once you hire a tax attorney you no longer have to deal one-on-one with the IRS.  You can go back to your life knowing that an experienced, knowledgeable advocate is dealing with your problem.  In addition to relieving the stress and pressure of dealing with the IRS, hiring a tax attorney gives you another huge advantage.  Because tax attorneys understand how information can be used against you, they protect you from needlessly revealing details not required by the law and which the IRS may use against you later on.

What do I have to do to get help?
Call Bankruptcy & Tax Law Center at 1-800-TAX(829)-6183 or complete our Contact Form.  When you call, you’ll have the opportunity to speak with a tax attorney, not a “consultant” or “representative.” And when you call, we will never employ high-pressure sales tactics to collect a fee.  Our goal is to improve your life and give you a fresh start by solving your tax problems and protecting your assets.  Our tax attorneys listen to understand your tax problem and discuss how we work with our clients.  We work hard to please all of our clients.  Give us a call today and take the first step toward a better future.

Can I afford your services?
As tax attorneys, we are dedicated to solving your tax problems and protecting your assets – at a price you can afford.  Our fees are fair and affordable so that you can get the assistance you need.  We recognize that the financial situation of our clients is compromised.  To be part of the solution and not the problem, we offer fairly-priced legal fees payable over the time we represent you.

Because the facts and circumstances of every client differ, legal fees differ as well.  We offer a free and confidential tax debt analysis so we have enough information about your case to determine our fee structure.  Unlike many lawyers, we do not charge large initial retainer fees. Nor do we set a large fixed fee where you pay more than the amount of legal work necessary. We typically offer our services at an affordable rate with modest retainers.  That way you pay as you go, for what you need, and get our legal expertise at a fair price.

Our fees are based upon value.  We solve your tax problems and give you the personal, legal attention that will make a difference in your life.