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Boston Tax Law Blog

Can a business have a federal tax lien removed?

Running a Massachusetts business means that a person has to pay attention to every cog turning to ensure operations run smoothly. Of course, without the right help, some entrepreneurs may miss something vital, including paying certain taxes. If this happens to a serious extent, some business owners could end up facing a federal tax lien against their personal or business property.

Before a lien is placed on property, the IRS will attempt to contact the taxpayer in order to notify the person about the delinquent tax bill and demand payment. If the bill is still not paid, the IRS will then send out a notice for the federal tax lien and alert creditors to the lien on the property. A lien can go on the credit report for a business and can cause a considerable drop in that score.

Facts about IRS-issued tax liens

A lien, by definition, is a creditor's right to take a debtor's property until that individual's debt is paid off or discharged. A lien can be issued for any form of debt, including federal income taxes. Massachusetts residents who find themselves behind on their tax payments may find the government swooping in to seize their property if they do not take the steps to address the situation as soon as possible.

Once a tax lien is issued, there are three ways to deal with it. Option number one would be to pay what is owed in a lump sum -- which most people cannot afford to do. Option number two would be to negotiate an affordable payment plan or discharge of debt with the Internal Revenue Service. Option number three would be to consider filing for bankruptcy -- which can have a number of financial consequences.

Tax evasion allegations can seem overwhelming

Accusations of any type of criminal activity can have lasting effects on a person's life. If Massachusetts residents face charges for tax evasion, their situations can understandably seem overwhelming. Fortunately, parties in this type of predicament can defend against these allegations.

One man in another state will likely be hoping to find his best approach to his case after recently being taken into custody. According to reports, the man runs a bedding and furniture business and has allegedly underreported his total gross sales from 2017 through 2019. During that time, he purportedly reported over $432,000 in gross sales when the amount was over $907,000. As a result, the state Department of Revenue claims that he has evaded over $42,000 in sales tax.

Yes, the IRS can garnish your wages

Many Massachusetts residents are behind on their tax payments. It happens, and its nothing of which to be ashamed. If you find yourself in this position and you fail to take steps to rectify the situation promptly, you may find the Internal Revenue Service taking the matter into its own hands. One way it may collect taxes owed is by garnishing your wages. What makes the IRS unique is, unlike other creditors, it does not have to obtain a court order to issue a wage levy.

There is a limit to how much of your wages the IRS can touch every pay period. It cannot take the full check unless you have other sources of income. To determine how much may be collected from each paycheck, the IRS will look at your filing status, any child support obligations you have to meet and the number of dependents you have, among other things.

How the crucial skills of a tax attorney help your business

Entrepreneurs rely on a team of third-party professionals when they operate their businesses. And while creating or building a business, they go through an important checklist. Create a business plan? Check. Line up investors? Check. Secure office space? Check. Business structure? Check. A tax audit? Um … now what do I do?

Whether you created a start-up business or are a business owner with an established company, you will need the occasional advice of a tax attorney. A tax attorney helps you navigate through legal maelstroms within the business world. Some of them can be nerve-wracking.

Tax audits do not have to scare taxpayers

Many Massachusetts residents likely let out a sigh of relief when they finally filed their tax returns. For some, that relief may have been short-lived as they received a notice from the Internal Revenue Service about an audit. Before panicking, it is important that individuals understand that not all tax audits are the same and that some can be easy to resolve.

Audits can come about for various reasons. A taxpayer may have made a simple error when filling in information, or the IRS may have made an error when reviewing a taxpayer's information. Often, when a question regarding one issue on a tax return arises, the IRS will conduct a correspondence audit that essentially involves the agency contacting the taxpayer by mail and requesting additional documentation to address the issue. The taxpayer can then mail in additional evidence to support the information provided. This is the most common type of audit.

What you need to know about an Offer in Compromise

The stress that comes along with having tax debt one cannot pay can be overwhelming. Unfortunately, that stress is something numerous Massachusetts residents are feeling right now as many are struggling financially -- for various reasons. The last thing anyone wants is to increase how much they owe the government by accruing interest, fees and other penalties for failing to pay their taxes. Thankfully, relief options are available to those who end up with tax bills they cannot afford to pay at all or all at once. An Offer in Compromise is one such option. 

In short, an OIC is an agreement reached between a taxpayer and the Internal Revenue Service, allowing the taxpayer to pay less than what he or she actually owes. Not everyone will qualify for this type of relief. Only those who can prove that they lack the funds to meet their debt obligations will be able to strike this kind of deal with the IRS.

Scams the IRS says to watch for after filing tax returns

Even during the current circumstances plaguing the country, there are still people out there who would take advantage of others for financial gain. Each year, the IRS identifies certain tax scams to watch for, and some of them come into play after Massachusetts residents file their tax returns. Below are just a couple of the scams people may want to be aware of.

In one scam, individuals will call people claiming to work for the IRS. They will demand immediate payment, request financial information and make threats if the unsuspecting taxpayer fails to pay a fake tax bill. To be clear, the agency would never make first contact via phone, nor would it ever demand immediate payment or make threats.

Understand federal rules regarding offshore accounts

It is not a good or realistic idea to use an offshore bank account as a tax shelter. It is illegal, and the IRS always has had a penchant for cracking down on tax evaders. The government agency requires U.S. citizens to report ownership of foreign assets or have financial interest or signature authority for financial accounts in foreign countries. Failure to do so may lead to the IRS confiscating up to half of the account balance.

Many Americans do have offshore bank accounts, some of whom are retirees with second homes in other countries, people who frequently travel and others who inherit accounts from overseas relatives. If you do have offshore accounts, please make sure you understand the rules, the guidelines and responsibilities that come with owning them.

Voluntary disclosure of foreign bank accounts

At tax time, individuals here in Massachusetts and across the country are required to report all income received for the particular tax year. The IRS refers to this as voluntary disclosure. It applies not only to domestic accounts but also to foreign bank accounts.

If you failed to report income held in a foreign bank, it could lead to civil and/or criminal accusations. Under these circumstances, time is of the essence. In order for a disclosure to be considered voluntary, it must occur before the IRS approaches you about the funds.

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