Protecting Assets from IRS Collection Enforcement
Tax obligations can be overwhelming for some. Whether you chose the wrong deductions for your paycheck or you failed to properly account for your self-employment taxes or investment taxes, you may be blindsided by that big tax bill come April. Few of us have hundreds or thousands of dollars stashed away to pay for such unexpected debts, so you may find yourself grasping for what to do if you are faced with such a bill.
Know that you must act. If you do nothing, you will face the seizure of your assets, including your home, vehicle, personal belongings, and even your retirement accounts. You must take action to protect your most important assets. Here’s what you can do:
Contact the IRS
The first thing you should do if you receive a notice that you owe AZ taxes and are unable to pay them is to call the IRS. If you do nothing, the IRS will immediately begin collection activity against you, which can involve seizing your assets. However, if you call the IRS and let them know that you are unable to pay, you should be able to set up a repayment plan with a more affordable monthly payment.
The notice you receive about your tax debt should also include information about how to contact the IRS, including a phone number and appropriate times. Depending on the circumstances of your debt, there may even be a contact person listed who is handling your case.
Petition for an Administrative Resolution
Sometimes, you may not be able to work things out with the IRS because you have a poor relationship with the representative handling your case (often a result of communication or personality issues) or because you disagree with the conclusions reached by the IRS. You can stop collection efforts and the seizure of your assets by petitioning for an administrative resolution, which involves a hearing before an administrative panel.
You can petition for an administrative resolution if you feel that the IRS has overreached in its collection efforts, as well, such as in making threatening statements or in pursuing assets that are inappropriate to the debt owed. You can also petition for the resolution if you disagree about the amount owed. You can represent yourself at the hearing, but it is best if you hire a tax attorney who better understands the complexities of the law and who can make a stronger case on your behalf.
Argue Your Innocence
Married people don’t always help each other. Sometimes, one spouse commits a violation that can land the other in hot water. For example, one may hide assets that are later discovered by the IRS and are taxed. One may intentionally lie about income or other information on the tax return, resulting in fraud.
You may be able to protect your assets from seizure by arguing that your spouse was the one responsible for the debt and that you had no knowledge of your spouse’s actions. However, applying for Innocent Spouse Relief is a complex process, and it is best to work with a qualified and experienced attorney to apply for it and improve your chances of success.
Hire an Attorney
An experienced tax attorney can find help you find many ways to challenge, minimize, or better manage your tax debt. For example, your attorney may be able to audit your return and find ways to reduce your tax obligation, such as by getting you more deductions or credits. An attorney may be able to help you get Innocent Spouse Relief or help you seek other avenues for protection. Or an attorney may be able to negotiate a settlement to lower the amount you end up paying.
An experienced tax attorney understands the complexities of tax law and can see options for your case that you cannot. Many tax matters can turn on subjective interpretations of the circumstances, so an attorney may also be able to turn the case in your favor depending on how the evidence is presented.
File for Bankruptcy
Once you have explored all your options with your AZ tax attorney, you may find that you still owe a substantial amount that you are unable to pay. You may also be struggling with other financial obligations. In some cases, filing for bankruptcy may be the smart option.
You may be able to discharge your tax debt by filing for Chapter 7 bankruptcy if you meet certain criteria. If you file before the IRS moves forward on collection efforts, you can also avoid having a lien placed on your property. Once a lien is placed, it is very difficult to remove. Not even filing for bankruptcy can have it removed.
Call Bankruptcy AZ if you are considering bankruptcy, and call Silver Law PLC if you need legal tax help. The attorneys at Silver Law all have experience working for the IRS, so they understand how these cases are handled from both sides of the aisle. They can help you understand your options for protecting your assets and minimizing (or possibly even eliminating) your tax debt.
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