Frequently Asked Questions

Yes. They can. Other creditors like credit card companies, doctors’ offices, and banks cannot garnish federal benefit checks like Social Security and Disability checks. But, the IRS can garnish these benefits. We can help you stop these garnishments. You may need to enter into an installment agreement. Or, you may be assigned Currently not Collectable status meaning the garnishment will stop and you don’t have to pay the taxes. 

Garnishments are complex. Every case is different. It’s a good idea to contact me and we’ll go over your case. After a review of your case, we can provide recommendations that can stop your IRS garnishment immediately.

For individual taxes (1040 taxes), the taxes can be discharged in a Chapter 7 bankruptcy if all of the following conditions are met:

  • The tax return for the taxes must have been due over three years before you file for bankruptcy,
  • The tax return must have been filed over two years before you filed for bankruptcy,
  • Any assessment of the taxes for the tax year in question must have been at least 240 days before the bankruptcy is filed, and
  • The IRS has not filed a lien against you.

A Chapter 13 bankruptcy can discharge the taxes if the first three conditions above are met. This is even if a lien has been filed against you. If a lien has been filed against you, the lien can be stripped to the extent there isn’t enough equity in your property. Stripping a lien means it becomes an unsecured debt just like credit card debt. In that case, it’s usually paid at a small percentage through a Chapter 13 repayment plan of 36 to 60 months. 

Due to the complexities involved with Chapter 13 bankruptcies, you’ll need to call the office and set an appointment (in-office, telephonic, or virtual) to determine what a Chapter 13 bankruptcy could do for your taxes.

Yes. It’s a crime not to file your tax returns in many cases. Some wage earners (those who receive a W-2) don’t have to file a tax return when their income is below a certain level. The level changes from year to year. In 2022, it’s $12,950 for a single person under age 65. 

If you’re self-employed or an independent contractor and you’ve earned at least $400 in the tax year, you’re putting yourself at great risk by not filing your return. The IRS can arrest you for not filing a return. The IRS isn’t going to arrest you if you file the return, but don’t pay except in very rare and egregious circumstances.

It’s a good idea to use this tool provided by the IRS to know if you need to file. There are a lot of variables that must be determined for you to be safe not filing. Don’t just depend on the numbers above and decide not to file.

Yes. But they would rather seize cash. They get cash through wage garnishments and bank account levies. It’s important to realize, that, unlike other creditors, the IRS doesn’t have to go to court to seize your cash or property. Still, getting your cash is quicker since the IRS doesn’t have to “sell” cash to pay your taxes. A house or business will take time to sell. Also, you may have another lien against a house, business, land, or car. It gets complicated. The IRS will go after these things if necessary, but they would prefer your paycheck or bank account.

No. Most self-filed OICs are rejected. If the IRS doesn’t immediately send your OIC back for failure to provide all the required information, you’ll probably have to wait at least a year. Then, your OIC will probably be rejected. You need a professional who has filed many OICs before to greatly increase your chances. When your OIC is rejected, you’ll usually be in a deeper IRS mess than you would have been had you never filed the OIC.

The IRS has 10 years from the assessment date to collect your taxes. The assessment date is usually the date you file your return or the filing deadline – whichever is later. But, the assessment date may be the day the IRS filed a Substitute for Return (SFR) for you. SFRs are when the IRS calculates what they believe your tax liability should be. When the IRS files an SFR for you, they usually over-estimate your tax liability. The assessment date can also occur after an audit. 

These rules are the general rules. There are many exceptions. In some cases, it’s advisable to allow the IRS to extend the statute of limitations. In other cases, special rules will apply where the IRS can extend past 10 years. Then there are instances where the statute of limitations is automatically extended. You’ll need to set a time for a free consultation with our office to figure out where you stand with regard to the statute of limitations.

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