You worked hard to negotiate an IRS installment agreement. You remained compliant with the terms of the agreement for a couple of years, and then, all of the sudden, you were preparing to file your 2015 return and noticed you will owe a significant tax liability. To make matters worse, you do not have the money to pay your taxes.
This is a common problem for many who negotiate installment agreements with the IRS. The terms of all IRS installment agreements require future tax compliance. Future tax compliance means timely filing and timely paying all future taxes. The problem with future tax compliance is that you can be blindsided by unexpected events, such as an audit, misinformed about a transaction that causes a large tax bill, or by not adequately withholding during an extremely profitable tax year.
Should I hire a Tax Attorney if I Breach my Installment Agreement?
I know that I’m biased here, but the answer is yes . . . and you should hire a tax attorney before you breach your agreement.
How can I anticipate I’m about to Breach my Installment Agreement?
Any time there is an event or transaction in your life such as purchasing or selling real estate, starting a business, hitting the lottery, inheriting money, negotiating a settlement with a creditor, receiving an incorrect 1099, filing for divorce, moving abroad, an audit etc., you should hire a tax attorney before the transaction or event occurs or, worst case scenario, immediately thereafter. This is especially true if you have an agreement with the IRS such as an offer in compromise, voluntary disclosure agreement, or installment agreement. A tax attorney can assist in structuring the transaction in a tax advantageous way while also avoiding an action that could breach your negotiated settlement with the IRS.
What will the IRS do if I Breach my Installment Agreement?
If you breach your installment agreement, then the IRS will issue a Notice of Intent to Levy, Intent to Terminate Your Installment Agreement letter. The Notice of Intent to Levy letter forcefully requests the amount of back taxes you owe be paid in full immediately. The IRS letter will threaten to seize or levy your bank accounts, business assets, personal assets, social security benefits, yes social security benefits, and wages. Further, if you have negotiated an IRS installment agreement that avoids a tax lien, then the IRS may immediately file a Notice of Federal Tax Lien to secure its interest against other creditors. Tax liens can end a career, destroy credit, and wreak havoc on selling your property.
Stop the IRS from Garnishing my Wages, Levying my Bank Account, and Seizing my Assets
The tax solution is . . . ready: Addressing the breach of your IRS installment agreement immediately. That’s it. Once you notice or anticipate you will owe taxes, then you must “take action” immediately. Take action means notifying the IRS before the breach occurs or immediately thereafter.
If you contact the IRS before filing a return with a balance due, the IRS can add the new balance to the installment agreement as long as the total amount of back taxes does not exceed $50,000 and full pays the tax within the collection statute of limitations period. The IRS has 10 years to collect a tax unless it seeks a judgment which provides an additional 20 years under state law in New Jersey. Therefore, the key is to resolve the resolve tax debt before it occurs.
If your tax matter exceeds $50,000 or you cannot afford to repay the IRS, then you should contact a tax attorney immediately. If your debt exceeds $50,000 the IRS will require an intrusive financial disclosure. During the financial disclosure process, the IRS will seek to liquidate assets and obtain as high a monthly back tax payment as it deems appropriate. The financial disclosure process benefits the IRS, not you.
Contact a Local Tax Attorney
I am a local NJ tax attorney in with an offices located in Mt. Laurel, New Jersey and Woodbridge, New Jersey. When you call, you will be speaking to me, not a tax resolution firm’s sales guy. IRS issues are sensitive, painful, embarrassing, and difficult to overcome. I know because I battle the IRS day in and day out. There is a light at the end of the tunnel and the Law Offices of Todd S. Unger is here to provide a solution out. End this problem once and for all by calling us. Come in and speak to a tax attorney today (877) 544-4743.