IRS notices and tax problems in Southlake, TX

Read it carefully and keep it. The IRS says that if it asks you to respond, you should act by the due date. Check the notice number in the top right corner, compare the letter with your return, and gather your records. Our guide on what to do with an IRS notice lists the steps. Wallace CPA can read the notice with you and help plan a reply.

An IRS bill starts the collection process. The IRS says unpaid balances collect interest that compounds daily, plus a monthly late payment penalty. The first step is to learn the amount, the tax years and what has been filed. Then the options can be compared, such as a payment plan or an offer in compromise. A penalty abatement request may also apply. See the post on IRS penalty relief.

Unfiled returns can lead to penalties and collection steps. Late filing penalties are usually five percent of the tax owed for each month, up to 25 percent, according to the IRS. A CPA can gather your income records, prepare the missing returns and file them. The IRS also expects returns to be filed before it considers some collection options.

The IRS offers short-term plans of 180 days or less and long-term monthly plans, called an installment agreement. Which one is open to you depends on your balance and filing history. Interest and penalties continue while you pay. Read our guide on payment plans and offers in compromise.

An offer in compromise may allow a taxpayer to settle for less than the full amount owed if paying in full is not possible or would cause hardship. The IRS looks at income, expenses and asset equity, and generally does not accept an offer if you can pay through a plan. Wallace CPA can help you check whether to apply. We cannot promise the IRS will accept an offer.

A tax lien is a legal claim against your property. A tax levy is the actual seizure of property, which can include wages and bank funds. If you get a Final Notice of Intent to Levy, the IRS says to contact it right away because the notice carries a deadline. Call our office on (877) 682-1171 so we can review the letter.

Payroll tax problems come from late deposits, unfiled employment returns or unpaid withholding. The IRS says you must deposit and report employment taxes on time. Wallace CPA can review the notices, compare them with your payroll records and help you reply. If you want help going forward, see our payroll service and the glossary entries for payroll tax and Form 941.

Innocent spouse relief can remove a spouse's responsibility for extra tax on a joint return when the other spouse understated the tax and the first did not know of the errors. The IRS reviews many facts before deciding. Request it as soon as you learn of the tax. Learn the term in our glossary entry on innocent spouse relief.

With a signed power of attorney, a CPA can usually communicate with the IRS for you on matters you list. The IRS says taxpayers have the right to retain an authorized representative of their choice. See the glossary entry on Form 2848 and on an IRS audit. Bankruptcy and legal disputes need an attorney. We cover the tax side.