The United States has one of the most complex tax codes in the world, and on top of federal taxes, you also have to deal with state and local taxes. This challenging environment can lead to a myriad of tax problems, but luckily, every tax problem has a solution.
At Seattle Legal Services, PLLC, our focus is on helping our clients solve state and federal tax problems. At our firm, we leverage our extensive knowledge and experience to help our clients find custom solutions to their unique tax issues. Our tax attorneys can help with the following tax problems and more. To get assistance now, contact us today or check out the links below for more resources.
Unpaid Taxes
Unpaid state or IRS taxes are one of the most common tax problems faced by individuals and businesses. You may end up with unpaid taxes due to 1) filing returns and not paying, 2) having the IRS or state revenue agency make changes to a return that leads to a tax liability, or 3) undergoing an audit that increases your tax bill.
There are many different solutions for unpaid back taxes including monthly payment plans, tax forgiveness, offers in compromise, and innocent spouse relief. Depending on the specifics, you may also be able to dispute the assessment or appeal the audit results. If you don’t pay your taxes, you may face liens, levies, and the loss of your passport.
Unfiled Taxes
If you earn above the standard deduction or meet one of the other filing requirements, you must file an individual income tax return. Businesses must file a range of different returns including business income returns, employer returns, sales tax returns, and more. Failing to file your taxes can lead to interest, penalties, and unwanted tax assessments.
Tax Liens
When you have unpaid taxes, the IRS may file a tax lien against you. Typically, the agency only files tax liens when you owe at least $10,000, but it may happen with lower amounts of tax debts.
Federal tax liens attach to all of your real and personal property. They give the government a stake in your property. Thus, if you sell the property, the IRS can take the proceeds up to the amount of your tax debt, plus interest, penalties, lien filing costs, and collection fees.
The WA DOR also files tax liens, but in this state, they are referred to as tax warrants. For most intents and purposes, a state tax warrant works just like a federal tax lien. It attaches to your assets to secure the state’s interest.
Tax Levies
Think of a levy as the next step after a tax lien. A levy is when the government takes your assets. Levies can include wage garnishments and seizing the funds in your bank account, but they can also include physically seizing your assets and selling them at auction.
Both the IRS and Washington State must notify you before seizing your assets. However, in cases, where the collection is in jeopardy, tax agencies may be able to take your assets without warning.
IRS Notices
The IRS sends many different notices to taxpayers when they have unpaid taxes or unfiled returns. The agency starts with “friendly” reminders to pay your tax bill or file your returns. However, if you ignore the initial notices, the subsequent notices will get much less friendly, and eventually, you may receive a Final Notice of Intent to Levy which explains that the IRS plans to take your assets if you don’t respond in time.
In addition to collection notices, there are also IRS and state letters about audits, tax assessments, mistakes on your tax return, and other issues. If you receive a notice, review it carefully, and if you have questions, reach out to a tax professional.
Tax Penalties
The IRS and the WA DOR assess penalties when you file late or pay late. There are also penalties if you’re selected for an audit and the tax agency discovers that you underreported your income. Additionally, there are penalties for bounced checks, tax crimes, and a range of other issues.
Penalties can add up quickly. Failure to file penalties are 5% of your balance per month, and they can get up to a quarter of the tax bill. Penalties with business tax returns can be even worse—for instance, the Trust Fund Recovery Penalty for unpaid trust fund taxes can be 100% of the unpaid tax.
Both the state and the federal government offer penalty abatement. You must apply, and generally, to get approved, you must show that you have a legitimate reason for the issue or that this is your first time incurring penalties.
Tax Audits
You can face audits on individual and business tax returns at both the state and federal levels. If the IRS or state decides to audit your return, they will send you an audit notice that explains what’s being reviewed. Then, you will respond to the auditor through the mail (correspondence audit), over the phone (phone audit), in person (desk audit), or at your home or place of business (field audit).
At its core, an audit is simple: you just need to back up the information on your return. However, the situation can be very complex especially if you don’t have the right paperwork or if you took a position with the tax law that the IRS disagrees with. Additionally, if you disagree with the results of an audit, you have appeal rights, but you should work with an attorney if you want to appeal successfully.
Cryptocurrency Tax Issues
Cryptocurrency offers a lot of advantages, but it’s also a relatively new type of asset surrounded by somewhat confusing tax laws. If you’re confused about crypto, facing an audit for not reporting crypto gains, or dealing with other crypto issues, you need a tax attorney who understands this unique tax concern.
Business Tax Problems
Businesses can face similar tax problems as individuals. Namely, they may end up dealing with unpaid taxes, unfiled returns, penalties, liens, levies, and audits. However, the solutions often vary. For example, the IRS gives businesses shorter time frames to repay tax debts than it does for individuals. If you’re dealing with business tax problems such as an ERC audit, you need to consult with an attorney who has dedicated experience with business clients.
State Tax Problems
Every state has its own revenue agency, its own tax code, and its own consequences for unpaid taxes and unfiled returns. This can be especially confusing for business owners who generally pay more state taxes than individuals. If you’re dealing with state tax problems, look for an attorney who has experience in your state.
Get Help From Seattle Legal Services
Are you dealing with the above tax problems? Want personalized, high-quality help? Then, it’s time to contact Seattle Legal Services, PLLC. Our tax attorneys will talk with you about your problems and help you find the best solution possible. Don’t wait — contact us today and put these problems behind you.