Unfortunately, many of us fail to file our individual or business tax returns, leading to overwhelming penalties and interest that can keep us awake for many endless nights. The IRS can go back six years to audit and assess additional taxes, penalties, and interest for unfiled taxes. However, there is no statute of limitations if you fail to file a tax return or if the IRS suspects you have committed fraud.
Many businesses either forget to file a 941 payroll tax return or lack the funds to make the deposit. If you have paid your payroll tax deposits, and had a problem with a form, the IRS will normally let you clear it up simply by filing the form with them as quickly as possible. You may be given a small penalty, but that’s not always the case.
The real 941 payroll tax problems result from failing to make the required payroll tax deposits on time and in the correct amounts. If you own a business with employees, even if that employee is just you and/or your spouse, you have specific deposit requirements. These are the most common:
In addition to withholding the money from your employees’ wages, and depositing that money on their behalf, you also have the requirement to pay a matching amount for some of those taxes. Some of these tax liabilities are reported to the IRS quarterly via IRS Form 941, and others are reported annually using Form 940.
When you are in debt to the IRS, one of the most extreme ways the tax agency can ensure you pay is by levying your property. A tax levy is when the IRS legally seizes your assets to settle your debt.
If you haven’t paid your tax bill after receiving a notice and demand for payment from the IRS, the Internal Revenue Service will enact a levy. You will know a levy has been enacted on your assets because the IRS will also issue a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing at least 30 days before the levy goes into effect.
Different kinds of levies can be authorized, depending on your situation. A bank levy is when your bank places a hold on your funds at the IRS’ request, deducting them 21 days later to pay your debt. The IRS may continue taking funds from your account until the debt is paid off.
Another type of levy is property seizure, in which the IRS claims your property, sells it, and applies the proceeds to your debt. Cars and homes are two of the most common pieces of property the IRS seizes.
But the IRS is not limited to taking money from your bank accounts or selling your property — it also has the power to seize your life insurance, retirement funds, or passport to force you to pay.
Having your assets levied is a difficult position, but it’s not an impossible situation to escape. The best way to get rid of a levy is to pay your IRS balance in full, after which the levy will be removed in 30 days. But this is not available for many people. Another great option is contacting a dedicated tax professional who can help you weigh your options, including setting up a payment plan, filing an appeal, or proving financial hardship. A levy doesn’t have to ruin your finances, an experienced tax professional can help you eliminate levies.
Wage garnishment is a legal process forcing an employer to withhold an employee’s earnings to pay off a debt. This can happen after a creditor sues a debtor for nonpayment and wins in court or, in some cases, without a court order. Debts that can result in wage garnishment include child support, student loans, and unpaid taxes.
If the IRS levies (seizes) your wages, part of your wages will be sent to the IRS each pay period until you make other arrangements to pay your overdue taxes. The garnishment will continue until the overdue taxes you owe are paid or the levy is released.
When You Receive the Frightful IRS Audit Letter
The IRS conducts thousands of yearly business and individual tax audits to ensure the filing of financial information is accurate according to tax laws. The IRS reviews and examines documentation, reports, accounts, and financial information to confirm the correct tax report.
The IRS is required to contact you via mail to inform you of a tax audit. The Notice of Audit and Examination Scheduled explains that your return has been chosen for a tax audit. The audit letter will describe the type of examination, as well as necessary documentation and deadlines.
There are three types of audits:
The type of audit will determine its complexity and duration.
Our professional tax experts at GTR Services can help you fill out the correct forms, organize documentation, and defend your tax return and deductions.
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