Tax debt help for special circumstaces:
Innocent Spouse, Tax Liens, & Wage Garnishment
When youíre married, you usually file a joint tax return to keep your tax liability at a minimum. But filing a joint return means you are equally liable with your spouse for all taxes, penalties, and interest that may accrue from
your return. This can be true even if you divorce and your agreement states that your former spouse assumes responsibility for taxes. But the IRS does provide for protections when one spouse is innocent of the otherís mistakes. If you are in this situation, there are three possible tax relief remedies:
Innocent spouse relief
You may be able to take advantage of this of this if there was an understatement of tax or a flawed tax return due to errors your spouse made. In these cases the IRS would have assessed an additional liability on unreported income or disallowed deductions. To get this relief you must show that when you signed your tax return, you had no knowledge of, or a reason to know, that your return understated your tax liability. The IRS considers all your submitted facts and circumstances, and decides if it would be unfair to hold you liable.
If your circumstances donít qualify you for innocent spouse relief, you might instead qualify for equitable relief. In such situations, the IRS can make a determination that you arenít to be considered liable for tax understatements or underpayments made by your spouse. Equitable relief is mainly sought when you believed your spouse or former spouse would pay the tax due on your joint return but did not do so. When it investigates, the IRS must contact your spouse, giving him or her an opportunity to present information that could help the IRS decide the extent of your possible relief from liability. Itís important to note that the IRS, by law, will not provide information to your spouse or former spouse that could violate your privacyóthis is intended to protect you from possible retaliation.
Separation of liability
You may qualify for this form of tax relief if there was an understatement of tax or other deficiency on a tax return. In these cases the goal is to separate the liability for the understated tax. So, potentially you would be granted relief from liability that didnít apply to you. To qualify you must be divorced, legally separated, or living apart from your spouse or former spouse for at least 12 consecutive months prior to making your request.
If the IRS believes it cannot collect back taxes you owe, it can issue a Notice of Federal Tax Lien. This gives the IRS ownership of your property as payment for your tax liability. To file a tax lien certificate the IRS must make a demand for payment in writing and wait at least 10 days for your response. A tax lien certificate removes your rights to the property in question. Your creditors are informed of the lien, and very like this will affect your credit rating.
However, a tax lien can be removed if you act to ďreleaseĒ it. This can happen when you pay your debt, have it
adjusted appropriately, or provide a bond that the IRS accepts as guarantee of your payment. A lien can also be withdrawn if it is determined that its filing didnít conform properly to procedure, if you commit to a payment plan once the lien is filed, if your payment can be made more quickly otherwise, or if it would be in the common interest of you and the IRS to make another arrangement. If there are other circumstances to be considered, you may appeal the filing of the lien.
The IRS may initiate wage garnishment when you owe taxes and it chooses not to wait to collect them from you.
The IRS isnít trying to victimize youóitís attempting to get you back into its tax payment system. Wage garnishment is just one of the ways it goes about this. Hereís how it works and what you can do about it.
If you have a salaried job, the IRS has the right go after your paycheck. When the IRS intends to garnish your pay, it gives you advance notice with a demand that you pay within 10 to 30 days (this depends on the type of tax owed). If you donít arrange to pay, the IRS may issue you a final notice of its intent to garnish and a notice of your right to a hearing about your case. Depending on the circumstances, the IRS may move forward with the wage garnishment thirty days after issuing the such notice.
How much does the IRS take from your pay? It calculates the tax owed, the number of dependents you claim and
other issues to arrive at the amount. Often this is between 30 and 70 percent of your paycheck.
Because, as mentioned, the IRSís goal is to get you back into it taxpaying system, thereís a means by which you
can negotiate about a wage garnishment. And although you can deal with the IRS on your own, you should consider this carefully. When you speak to an IRS agent, anything you say can be used against you. So, itís advisable to engage the help of a tax attorney or tax specialist who deals with these issues on regular basis. He or she is likely to be able to get the IRS to significantly reduce or even completely eliminate a wage garnishment in exchange for a payment plan. In some circumstances a tax professional will recommend pursuing an ďoffer in compromise.Ē If the IRS agrees, this also could erase or substantially reduce your tax debt.