Unfiled Tax Returns
Do you have unfiled, delinquent tax returns? Penalties and interest could be accruing in addition to the back taxes that may be owed. Or you might have a refund waiting to be claimed. The IRS can create and file tax returns on your behalf if you ignore filing requirements. They use information from third parties such as employers and banks, as well as projections, to produce returns and establish your tax liability. Because they likely don’t have complete information, the return they file usually results in less favorable tax treatment than a return you could have filed.
Have you received an IRS notice in the mail or been contacted by an IRS Revenue Officer? Do not ignore it! It’s important that you respond because an IRS notice is generally the beginning of the collection process. Each notice you receive has a deadline to respond before you begin to forfeit your appeals rights.
State Tax Notices
Have you received a North Carolina (or other) state revenue department notice in the mail or been contacted by a State Revenue Officer? Do not ignore it! It’s important that you respond because just like the IRS, a State notice is generally the beginning of the collection process for the state department of revenue. Each notice you receive has a deadline to respond before you begin to forfeit your appeals rights.
The IRS conducts over ten thousand tax audits each year. An audit involves a review of the individual and/or business tax return(s) and supporting documents to confirm that information has been reported correctly and that the tax due is correct. There are different kinds of audits. Some are in person (office and field audits) while others are done via mail (correspondence audits). If subject to a correspondence audit, the taxpayer will receive a letter in the mail asking for more information about certain items on the tax return such as income, expenses and itemized deductions.
When the IRS or State revenue agencies are unable to collect tax liabilities, they will begin to seize your assets. One method commonly used is to garnish (take) your wages (paycheck). They can, and will, legally garnish up to 50% of your paycheck.
IRS and State revenue agencies can levy your bank, retirement and other asset accounts. They have the legal authority to seize all of your available funds from any of your asset accounts to satisfy outstanding tax liabilities, penalties and interest.
When the IRS or State revenue agencies place a Tax Lien on your property, they are making a "legal claim" to that property. A tax lien encumbers your ownership and title to the property which can negatively impact your ability to sell or refinance the property. IRS and State Tax Liens are reported to the three credit bureaus, negatively affecting your credit rating.
When other collection efforts fail to satisfy the outstanding tax liability, IRS and State revenue agencies have the legal authority to seize and sell your property. Assets such as cars, houses and other personal property may be seized and ultimately sold at auction.
Payroll Tax Problems
The IRS and State revenue agencies consider money withheld by business owners from their employees’ paychecks as "trust funds". Failure to report or remit this tax money can result in trust fund recovery penalties. Unpaid trust funds, penalties and interest can quickly spiral into an amount that can put you out of business. Payroll tax problems are particularly troubling because they are the one business tax liability for which the owner can be personally assessed. Business owners are still personal liability even with corporate or LLC structure in place to shield them from liability.
Other Business Tax Problems
There are numerous IRS, State and Local business taxes, that if not handled properly, can become serious problems. State sales taxes are one of the most common problem areas for business owners that we see. Collection actions against your business can threaten not only your cash flow but also the very survival of your business.