1. What are the purpose and significance of IRS filing a tax lien against me?
    
2. What is an IRS levy? Can IRS levy on my house? On my wages? On my bank accounts? What about retirement funds?
     
3. Can IRS seize my cars, trucks and other vehicles? 
    
4. How can I prevent IRS from levying on my assets?
     
5. What is an Offer in Compromise and how does it work?
    
6. Many web sites advertise that they can settle your tax debt "for pennies on the dollar." Is there any truth to such claims?
    
7. What is an installment agreement and how does it work?
     
8. Is it possible to completely "walk away" from any tax liabilities?
    
9. Can I wipe out taxes by filing for bankruptcy protection?
     
10. I have a business, and the company owes employment taxes to IRS; am I personally liable for those unpaid employment taxes?
     
11. I owe taxes that have nothing to do with my present spouse; can they seize his or her assets to satisfy those tax debts?
      
12. I have not filed tax returns for a number of years; should I file those returns? What may happen if I don't?
     
13. Can I be prosecuted for not paying my taxes? 
      
14. Your office is in Cleveland, Ohio, from which I am some distance away. Does that make it difficult for you to represent me regarding my tax problems?
     
15. How are your fees determined? Will I know in advance how much your services will cost?
     
16. If you can’t eliminate my overdue taxes can you at least delay the time when I’ll have to pay them until some future date when I’m in a better financial position?
     

1. What are the purpose and significance of IRS filing a tax lien against me?
 

A: A tax lien, usually filed with your county recorder, serves as notice to those who may loan you money (home or car loan, bank loan, credit card advances, etc.) that once the lien is filed IRS's claim against you for taxes will come before those of anyone loaning you money after the filing. With certain exceptions it attaches to all property, real and personal, tangible and intangible, in which you have an interest, wherever the property may be located. It does not result in the seizure of any property, real estate or other forms. Further, before IRS can file a lien against your property it must give you 30-day notification that it intends to do so, which may give you time to make payment or other arrangements.   top ^
  

2. What is an IRS levy? Can IRS levy on my house? On my wages? On my bank accounts? What about retirement funds?
  

A: A levy usually means that the property is actually seized by IRS. In the case of real estate it means that IRS can force a sale of the property and keep the proceeds, up to the amount of taxes, penalties and interest owed. Yes to all four kinds of property. However, since The Restructuring and Reform Act of 1998, IRS must obtain an order from a federal judge or magistrate authorizing a levy with regard to a personal residence. Thus, as a practical matter, except in very extreme cases IRS no longer does that. A certain portion of wages, commissions, etc. are exempt from levy, the amount depending upon a number of factors, such as how many dependents the taxpayer has. All forms of bank accounts - savings, checking, CD's are subject to levy in full. However, a bank levy reaches only amounts on deposit when the levy is served. In order to catch subsequent deposits IRS must serve a new levy on the bank. Once wages are levied upon the same levy reaches all subsequent wages, commissions, bonuses, etc. No forms of retirement funds are exempt from levy, including social security payments and other forms of government pensions. However, unemployment and workers' compensation benefits are exempt from levy, as are SSI payments and some forms of public assistance. A small amount of household and personal effects, and tools and equipment used in the taxpayer's trade or business, are exempt from levy.  top ^
  

3. Can IRS seize my cars, trucks and other vehicles?
  

A: Yes, but as a practical matter, unless the vehicles are of unusual value or type, IRS rarely resorts to that.  top ^
  

4. How can I prevent IRS from levying on my assets?
  

A: Once the taxpayer begins cooperating with IRS, in terms of making sure that all tax returns that are due have been filed, all estimated taxes and taxes withheld from employees currently due are paid, and the taxpayer supplies IRS with detailed financial information regarding his or her ability to pay the taxes due, the collection officer who has the account will normally suspend collection activity - at least for a while.   top ^
  

5. What is an Offer in Compromise and how does it work?  
  

A: An Offer in Compromise is just what it suggests - That in certain circumstances IRS will accept less than the full amount due for taxes, penalties and interest in full settlement of that amount. Usually it is based upon inability to pay that full amount. In order for IRS to determine whether it will accept such an offer, it is necessary to submit to IRS complete and exhaustive financial information, including assets, liabilities, and current average monthly income and expenses. If the offer is accepted it will completely satisfy the tax obligations with respect to which the offer is submitted, and any tax liens that have been filed regarding those taxes will be released. IRS is prohibited from levying on assets while an Offer in Compromise is pending.  top ^
  

6. Many web sites advertise that they can settle your tax debt "for pennies on the dollar." Is there any truth to such claims?  
  

A: From time to time IRS issues a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise (OIC) Program. Here is an example of what IRS has said about such claims: "Some promoters are inappropriately advising indebted taxpayers to file an OIC application with the IRS. This bad advice costs taxpayers money and time. IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements. We urge taxpayers not to be duped by high-priced promises.  top ^
   

7. What is an installment agreement and how does it work?  
  

A: In some cases IRS will enter into an agreement with the taxpayer permitting him or her to pay the taxes due over a period of time. However, penalties and interest will continue to accrue on the unpaid portion of the taxes. As with regard to Offers in Compromise, while a proposed installment agreement is pending or in effect IRS may not levy on the taxpayer's assets.  top ^
  

8. Is it possible to completely "walk away" from any tax liabilities?  
  

A: Yes. With certain exceptions IRS has 10 years from the date a tax is assessed to collect that tax; once the 10 years is up all collection activity must cease and any tax liens that have been filed must be released. (Typically a tax is "assessed" as the result of processing a tax return shortly after it is filed.) The three major exceptions to the 10-year rule are 1) if the taxpayer is involved in bankruptcy proceedings, 2) if he or she files an offer in compromise which is either rejected by IRS or withdrawn by the taxpayer, and 3) if the taxpayer enters into an "installment agreement" with IRS, in which case IRS often requires the taxpayer to extend the 10-year collection period. If any of those things occurs the 10-year period is extended, for various lengths of time.

Further, if the taxpayer is a corporation and the taxes owed are employment taxes, a portion of such taxes can made to "go away" by effecting a form of corporate restructuring.  top ^
  

9. Can I wipe out taxes by filing for bankruptcy protection?
  

A: Certain kinds of taxes can be wiped out in that manner, primarily income taxes that are more than three years "old;" in other words, that were assessed more than three years prior to the bankruptcy filing. However, taxes known as "trust fund" taxes (meaning taxes withheld from employees but not paid over to IRS or that should have been but were not withheld) cannot be eliminated in bankruptcy.  top ^
  

10. I have a business, and the company owes employment taxes to IRS; am I personally liable for those unpaid employment taxes?
    

A: What are referred to as "responsible officers" of a business are personally liable for all taxes that either were withheld from employees and not paid over to IRS or which should have been withheld from employees and were not. However, in order to hold a responsible officer personally liable for those taxes the failure to withhold or to pay over must have been "willful," meaning, usually, that the responsible person must have given preference to other creditors of the business. Therefore personal liability can be avoided by showing either that he or she was not a responsible officer or that the failure to collect or to pay over was not willful.   top ^
  

11. I owe taxes that have nothing to do with my present spouse; can they seize his or her assets to satisfy those tax debts?
  

A: No. However, in determining whether to accept an Offer in Compromise or in evaluating a proposed installment agreement IRS insists on knowing everything about the spouse's assets, liabilities and monthly income.   top ^
   

12. I have not filed tax returns for a number of years; should I file those returns? What may happen if I don't?
  

A: Willful failure to file a tax return that was required to be filed is a federal crime - a misdemeanor punishable by up to a $25,000 fine (in the case of an individual) and up to 1 year in prison. A return is required to be filed even if no tax is due, if the individual had enough gross income to require the filing. If a prospective client advises me that he or she has not filed and was required to do so, I insist that the first thing accomplished is to have all required returns prepared by a competent tax return preparer and filed. Also, usually the government will not prosecute if the returns are filed as part of a "voluntary disclosure," meaning before IRS notifies the taxpayer that it is aware that returns have not been filed.  top ^
  

13. Can I be prosecuted for not paying my taxes?
  

A: If you have filed accurate tax returns for all periods of time in question and you do not make misrepresentations to IRS regarding your finances when asked about them, the answer is "No". It is not a crime not to pay your taxes, even if you had funds and paid other bills instead of paying IRS.  top ^
  

14. Your office is in Cleveland, Ohio, from which I am some distance away. Does that make it difficult for you to represent me regarding my tax problems?    
 

A: Not at all. Almost all of the services to be rendered in handling tax payment problems are accomplished by telephone discussions and correspondence with IRS agents. (The same applies, incidentally, regarding any state and local taxes that you may owe.) In the unlikely event that I am asked to attend a conference with an agent, I can ask that the file be transferred to Cleveland or other nearby city; such a request is usually granted.   top ^
  

15. How are your fees determined? Will I know in advance how much your services will cost?   
  

A: When you telephone or write to me for the initial free consultation that I offer I will obtain some basic information from you, such as the years and kinds of tax in question, the amounts owed, and other background information. I will also probably ask you to send me copies of documents recently received from IRS or other taxing authorities. Once I evaluate the information and documents I will be in a position to tell you what I can accomplish for you and what my services will cost. If the fee is agreed upon verbally I will then send you what is called an "engagement letter," which sets forth what services I will be rendering and what the agreed-upon-fees will be. Only then will you be obligated to pay me any fees, and only for work that I actually do for you as set forth in the engagement letter.   top ^
  

16. If you can’t eliminate my overdue taxes can you at least delay the time when I’ll have to pay them until some future date when I’m in a better financial position?   
  

A: Yes, I can. By taking advantage of and utilizing several forms of administrative and judicial appeals provided for by law and authorized by Congress, I can delay the “day of reckoning” by as much as two years, and in some cases longer.   top ^