Oklahoma Back Taxes: Resolution Options and Collection Activities

The Oklahoma Tax Commission (OTC) administers personal and business taxes in Oklahoma. You can file individual, corporate, franchise, and partnership income tax returns with the OTC as well as Oklahoma sales and withholding tax returns. 

But what if you can't afford to pay your Oklahoma tax liability? The state offers several options for taxpayers who cannot pay their tax bills in full, but you need to act promptly. The OTC outsources tax collection to private collection agencies, and once your account has been assigned to an agency, you can no longer make arrangements with the OTC. 

To help you out, this guide explains the resolution options for back taxes in Oklahoma. Then, it looks at what can happen if you don't pay your back taxes. 

Oklahoma Back Tax Resolution Options

If you cannot afford to pay your taxes, the OTC recommends filing your return and paying what you can. Then, the OTC will send you a billing notice outlining the tax, penalties, and interest due. At that point, you need to contact the OTC directly or work with a tax professional to make arrangements for your tax liability. 

Oklahoma Tax Commission Contact Information:

• Individual Taxes: (405) 521-3160
• Business Taxes: (405) 521-3160
• General Inquiries: (405) 521-3160
• Other Inquiries: (405) 521-3160
• Website: Oklahoma Tax Commission

The options vary based on your situation. Here is an overview of the essentials as well as links to pages with more information on OK payment plans and offers in compromise. 

Payment Plans for Oklahoma Back Taxes

The OTC is willing to let taxpayers pay off their back taxes in monthly installments. To set up a payment plan, you must owe more than $100, and you must meet the eligibility criteria. 

Most importantly, you must contact the OTC to set up the payment plan before your account is placed with a third-party collection agency. To learn more, check out our overview of an Oklahoma tax commission payment plan.

Oklahoma Offer in Compromise

If you meet strict qualifications, you may be able to settle your OK taxes for less than you owe through the state's offer-in-compromise program. To apply, you must complete a lengthy application process and convince the OTC that your offer is the most the agency is likely to be able to collect. Find everything you need to know on the OK state offer-in-compromise page. 

Innocent Spouse Relief

Oklahoma offers innocent spouse relief to taxpayers who are divorced, separated, widowed, or deserted. To qualify, you must prove that your spouse understated the tax on your state return without your knowledge and that it would be unfair to hold you responsible. 

Note that innocent spouse relief relieves you of state income tax related to your spouse's income. You still must pay the tax due to your own income. When assessing your application, the OTC considers your involvement in your family's financial affairs, your business or educational background, and whether or not you benefited from the unpaid tax. 

The application asks questions about all of these issues. It also has a space where you can include information about domestic violence and abuse. 

To apply for this program, submit Form L-21 (Request for Innocent Spouse Relief in Oklahoma). You also need to include copies of your divorce petition, divorce decree, or late spouse's death certificate as well as your federal income tax returns for the years you're requesting relief. If you have received innocent spouse relief from the IRS, you should include your determination letter with your application. 

Hardship Status

The OTC does not advertise a hardship program for state income taxes. If you cannot afford to pay your state income tax, you may want to consult with a tax professional about the best options for your situation. 

However, at the time of writing, the OTC has a hardship plan in place for sales tax. If you had a hardship or a good reason for not filing a sales tax return, you can get an abatement on penalties and interest until April 10, 2023. This program was designed to help businesses as they get into compliance with the state's new sales tax rules implemented in 2018 after the South Dakota Vs. Wayfair ruling. 

Penalty Abatement

You can request a waiver of your penalties once you have paid the tax in full. The OTC will consider why you paid the tax late as well as your previous history of compliance. Typically, you cannot request penalty abatement if you still have an outstanding balance. 

Appeals Process for Oklahoma Taxes

If you disagree with an order, ruling, or finding of the OTC, you have the right to appeal. You can request an appeal trial de novo in the district court of Oklahoma County or in the county where you live. You must appeal within 30 days of receiving a notice from the OTC. If you disagree with the results of the appeal trial, you can appeal directly to the Oklahoma Supreme Court. 

Appealing assessed taxes can be a complicated process. You have the legal right to represent yourself, but to protect yourself and your assets, you may want to work with a tax attorney or another tax professional such as a certified public account (CPA) or enrolled agent (EA). 

Enforcement Actions for Oklahoma Back Taxes

If you ignore your Oklahoma back taxes, the OTC Collection Division can pursue involuntary collection actions against you. The state has many different collection options at its disposal. Take a look at the enforcement options that you may face if you owe back taxes in Oklahoma. 

Oklahoma Warrants for Unpaid Taxes

Oklahoma can issue tax warrants for unpaid taxes. Also called tax liens, the warrants declare that the state has the right to a taxpayer's personal or real assets. Oklahoma state tax warrants supersede any other liens placed against the assets after the warrant. 

Once a warrant has been attached to your property, you will not be able to sell or take loans out against the property. To get the lien removed, you must pay the tax, interest, and penalties in full. If you pay with a debit card, electronic funds transfer, or automatic withdrawal, there will be a 30-day hold for lien removal. The state will immediately release the lien if you pay by credit card, cash, money orders, or certified check. 

Liens expire after 10 years. But as long as the state acts before the lien expires, it can issue a new lien. The second and all other subsequent liens also last for 10 years. 

Oklahoma Tax Levy

Once the state has issued a tax warrant, the sheriff in the county where the lien has been issued has the right to sell your personal or real property. The sheriff does not have to evaluate or appraise the assets prior to selling them, and the sheriff has the right to collect unpaid taxes, penalties, interest, advertising costs, and collection fees through the sale. 

The state also has the right to garnish wages and seize bank accounts for unpaid taxes. In Oklahoma, wage garnishment is called a "continuing garnishment" because it continues until the tax liability has been paid in full. A bank account garnishment is called a "one-time garnishment".

Tax Penalties Charged

The OTC assesses a one-time penalty of 5% of the tax due for unpaid taxes. The penalty applies if you are even a day late, but it can also apply if you don't pay your quarterly taxes on time. 

There is a 10% one-time penalty for paying business taxes late. The state also charges interest at a rate of 1.25% per month on both personal and business taxes. If you owe over $1,000 and underpay your estimated taxes, the interest rate is 20% per year. That is 1.667% per month. 

Other Enforcements for Unpaid Oklahoma Taxes

The state publishes a list of the top 100 tax delinquencies over $25,000. This list is on the OTC's website, and Oklahoma-based newspapers often reprint the list. To be on the list, your total amount due must be over $25,000 and more than 90 days delinquent. 

However, you do not necessarily get a spot on the list if your unpaid taxes are over $25,000. Instead, you need to be in the top 100, and at the time of writing, every person or business on the list owed over $450,000. Appearing on this list can hurt your personal and business reputation significantly. 

In the past, the state dismissed employees who owed state back taxes. Luckily, this law was overturned (almost unanimously) in 2020. Now, state employees can keep their jobs, but the state has the right to garnish their paychecks for unpaid taxes. 

Statute of Limitations on Oklahoma Tax Liabilities

Under Section 53 of Article 5 of the Oklahoma State Constitution, the state legislature does not have the right to extinguish any debts to the state. There is an exception for property taxes, but the state cannot extinguish other tax liabilities. In other words, Oklahoma has no statute of limitations on tax liabilities. The state has the right to collect them indefinitely. 

In 2005, the state legislature proposed amending the constitution to place a 10-year statute of limitations on state tax liabilities. But, unfortunately for people with Oklahoma back taxes, this amendment did not pass. 

Third-Party Collections for Oklahoma Back Taxes

As of 2022, the OTC outsources income tax collection to Harris & Harris LTD (H&H) and Linebarger, Goggan, Blair & Sampson, LLC (LGBS). These are private collection agencies, and they have different options available to help you negotiate arrangements for your tax liability. Once your tax liability has been placed with a collection agency, you cannot set up a payment plan with the state. 

If a collection agency contacts you and you want to ensure that they are legitimate, you can contact the OTC Collections Division directly at 405.521.2212. They can let you know how much you owe and whether or not your account has been referred for third-party collections. 

Get Help With Oklahoma Back Taxes

If you owe back taxes in Oklahoma, you should get help from a tax professional. Don't call the big-name tax resolution firms that charge excessive fees and make promises they can't keep. Instead, reach out to a local tax pro. 

Using the search feature on TaxCure, you can look for Oklahoma tax professionals based in your area who have experience with your specific tax concern. To learn more, contact an OK tax pro for help today. 

How To Qualify and Setup an Oklahoma State Tax Payment Plan

Qualifying taxpayers can pay off their Oklahoma personal or business taxes in monthly installments. 

If you cannot afford to pay your individual or business tax in full, you may want to apply for a payment plan. An Oklahoma installment agreement allows you to make monthly payments on your tax liability until it is paid in full. To set up a payment plan, you must meet the eligibility criteria and stay current on your filing and payment requirements while the plan is in effect. 

Want to set up monthly payments on your OK taxes? Here is an overview of the process. 

How to Apply for an OK Tax Commission Payment Plan

You can apply for an Oklahoma tax payment plan online through the Oklahoma Taxpayer Access Point (OKTAP). The online application asks a few basic questions about your situation and then guides you through the process of setting up a payment plan. 

You need a collection letter to use the application — you won't be able to move forward with the process unless you have the letter ID and your Social Security Number. If you don't meet the criteria to request a payment plan online, you can contact the OTC directly at (405) 521 2212, or find a tax pro to help you.

Eligibility Requirements for OK Tax Payment Plans

To qualify for a payment plan, you must be able to pay at least $25 per month. You also must pay off the tax liability in two to 12 months. To calculate your minimum monthly payment, divide your state tax liability by 12. For instance, if you owe $2,400, you need to pay at least $200 per month.

The OTC may be willing to offer longer terms and smaller monthly payments. But if you need smaller payments or longer than a year to pay, you need to contact the agency directly or work with a tax professional. The agency also requires you to meet the following criteria:

Set Up the Plan Before Collection Agency Assignment

The OTC uses private third-party collection agencies to collect unpaid state taxes. You cannot work with the state to set up a payment plan if your account has already been assigned to a collection agency. Once your account has been assigned to a collection agency, you must work with that agency to make arrangements on your tax liability. 

As soon as one of your tax balances is assigned to a collection agency, you lose the ability to set up payment plans with the state. For instance, imagine that you owed state taxes for 2019, and the OTC sent that year to a collection agency. If you go online to request a payment plan for 2020 taxes, you will not be able to. 

Even though the tax liability for that particular year has not been assigned to a collection agency yet, you lost the chance for a payment plan when the other account was sent to the collection agency. Because of this, it's critical to contact the state before they outsource the collection on your account. 

You Must Owe More Than $100

The OTC does not advertise an upper threshold for payment plans. In most cases, as long as you can pay off the tax liability in 12 months or less, you can make payment arrangements on tax liabilities of nearly any amount. However, you must owe more than $100. 

If you owe less than $100, you are not eligible to set up a payment plan. But you still owe the tax so you should try to send the state as much as you can.

Don't Have a History of Default on Oklahoma Payment Plans

If you have defaulted on an Oklahoma payment plan in the past, you may still be eligible to set up a payment plan, but you must make a 50% down payment. For example, if you owe $10,000, you can make a down payment of $5,000 and then make payments on the rest. 

You are not eligible for a payment plan if you have defaulted twice in the last five years. Once you default three times over any time period, you are no longer eligible for a payment plan on state taxes. 

Be Up-to-Date on State Tax Filing Requirements

For the best results, you should be up to date on your state tax filing requirements. The OTC is willing to accept payment plans from some people who are not up-to-date on their state tax filing requirements. However, the rules vary based on your situation and the number of returns you have missed. 

When you apply for an OK payment plan online, the application tool will request additional information about your filing gaps and missing returns. Then, it will let you know if you are eligible for a payment plan or if you have to do anything special like make a down payment. 

Rules for Oklahoma Payment Plans

If the OTC accepts your request for a payment plan, you need to make the payments as directed to keep your plan active. Missing payments can put your plan into default, and again, once you start defaulting on OK payment plans, you reduce your ability to set up payment plans in the future. 

You also need to stay compliant with your new filing and payment requirements. If you assume new tax liabilities while on a payment plan, your plan may go into default. To ensure you don't get behind on your income tax requirements, you may need to increase your withholding or send in larger quarterly payments. 

What to Expect from an Oklahoma Tax Payment Plan

While you're making payments, interest will continue to accrue on your balance. You may want to make slightly larger payments to compensate for the interest. If you apply for another program, you should continue to make payments while the OTC assesses your application. 

For instance, if you apply for an OK offer in compromise while you're already on a payment plan, you should continue making payments as agreed upon. Then, if your offer is accepted, you can quit making payments at that time. If the state rejects your offer, your payment plan will still be active. If you had stopped making payments, you would be in default. 

Get Help with Oklahoma Payment Plans

If you want help setting up a payment plan or talking about other resolution options for Oklahoma back taxes, reach out to an OK tax pro today. On TaxCure, we made it easy to search for high-quality tax pros in your local area with the experience you need. To find a tax pro experienced with the OTC, search for an OK tax pro today. 

Oklahoma State Offer in Compromise: Understand How You Can Settle

The Oklahoma Tax Commission is willing to settle some back taxes for less than owed. To apply, you must submit a lengthy application and meet strict financial criteria. To give you a sense of whether or not an offer in compromise is the right option for your Oklahoma back taxes, this guide explains the rules and procedures of this program. 

How to Apply for an Offer in Compromise in Oklahoma

To apply for an offer in compromise on Oklahoma back taxes, you must submit the following forms. You can download these forms and instructions from the Oklahoma Digital Prairie, the state's electronic library system. 

• Form OTC-600 (Application for Settlement of Tax Liability)
• Form OTC-600-A (Statement of Financial Condition for Individuals) 
• Form OTC-600-B (Statement of Financial Condition for Businesses)
• Form OTC-600-C (Worksheet to Calculate Collection Potential)
• Form OTC-600-D (Document Checklist)
• Form-OTC-600-E (Authorization to Release Financial Data)
• Form BT-129 (Power of Attorney)

You also must include the supporting documents listed on the document checklist as well as any other documents requested by the OTC. All of these forms and documents work together to convince the OTC to accept your offer. You can file them on your own, but to be on the safe side, you may want to work with a tax professional.

What Taxes Can You Settle in Oklahoma?

The OTC will consider settling tax liabilities if you are insolvent due to factors beyond your control or if paying the tax would cause you to declare bankruptcy. The OTC will also consider settlements in cases where the tax liability is due to another person's actions and it would be unfair to hold you responsible. 

Finally, in the case of trust fund taxes, the OTC will only settle these taxes if you believe you didn't need to collect them and never collected them from customers. Sales tax, for example, falls into this category. If a business owner never collected sales tax from their customers and truly believed that they weren't supposed to, they may qualify for an offer in compromise. If you collected sales tax from your customers, you cannot qualify for an OIC settlement. 

Eligibility Criteria for OK Offers in Compromise

Appointed or elected state officials cannot apply for an offer in compromise. Anyone else can apply as long as their tax liability falls into one of the above categories and they meet the following criteria:

• The tax liability is final. 
• All appeals or other administrative remedies have been exhausted.
• You are not in an open bankruptcy case.
• You are not under criminal investigation or persecution by the state. 

You also must stay compliant with state tax filing and payment obligations while the state reviews your application and until you have paid the settlement.

Supporting Documents to Include with OK OIC Application

If you're applying for an OIC due to potential bankruptcy or insolvency, you need to include supporting documents about your income and expenses. Even if you are the only person liable for the tax, you need to include income documents for everyone who lives in your home. The IRS uses that information to determine your share of the household expenses. 

Business owners and self-employed taxpayers generally need to include both an individual and a business financial condition statement. Businesses often have to include individual financial condition statements from their corporate officers and partners. 

If you have recently applied for an OIC through the IRS, you can use those financial statements instead of the state forms, but you still need to use the OTC's worksheet to compute your offer. Note that getting accepted for an IRS OIC does not mean that the OTC will approve your application. Oklahoma and the IRS use different criteria for these programs. 

You do not need to include all of these financial documents if you're applying for a settlement based on someone else's actions or uncollected trust fund taxes. In these cases, however, you need to include a written explanation of the situation. You must make a compelling argument about why the tax liability should be reduced through an OIC.

How Much to Offer with an OK Offer in Compromise

When people apply for offers in compromise, this is one of their biggest questions — how much should I offer? Taxpayers often want to get out of the situation for the lowest amount possible. The state, on the other hand, won't accept an offer unless it represents the most the state is going to be able to collect.

To strike the right balance here, you need to understand how the OTC calculates your collection potential. For both businesses and individuals, the OTC looks at your monthly disposable income and your net worth. Your monthly disposable income is the amount left after paying bills, and your net worth is the difference between the value of your non-exempt assets and your liabilities. 

For instance, if you owe $60,000 in credit card debt and have $65,000 in non-exempt assets, your net worth is $5,000. Then, if you have $100 left over after paying your bills, that's your disposable income. 

The OTC believes that you should include four years' worth of disposable income in your offer if you can pay it off within 90 days. If you need longer, you have to take five years of disposable income into account. To continue with the above example, if you can pay off your settlement in 90 days or less, you multiply your disposable income ($100) by 48. Then, you add the result to your net worth. In this case, your collection potential is $9800. In most cases, the OTC won't accept an offer lower than that amount. 

However, if you wanted longer to pay off the settlement, you need to multiply your disposable income by 60. Based on a disposable income of $100 per month, that increases that portion of your offer to $6,000. Then, when you add that amount to your net worth, you have a collection potential of $11,000.

What to Expect After You Apply for an OIC in Oklahoma

When you submit your application, the OTC will stop collection actions on your account. However, if the OTC believes that you're only applying for an OIC to delay collections, the agency can pursue collection activity. Interest and penalties will continue to accrue on your account while the OTC processes your OIC application. If you're in an installment plan, you should continue to make payments as usual until you get a response. 

The Account Maintenance Division will review your application, and the Division may request additional information or verify the financial documents you have submitted. If the Division believes that a larger settlement is necessary, it will give you the chance to amend your application. Finally, the Division will recommend if the OTC should accept or reject the settlement. 

When reviewing your offer, the OTC will also take extenuating circumstances into account. In particular, the agency will look at your history of tax compliance, whether or not you benefited from the unpaid taxes, and your involvement in the economic activity that lead to the tax debt. 

If the savings on the settlement exceed $10,000, the Oklahoma County District Court must approve the settlement. 

What Happens If the OTC Accepts Your Offer in Compromise?

The OTC will notify you by mail if it accepts your offer. At that point, you must pay the offer by the date printed on your notice. When you apply for the OIC, you select a timeline that varies from a lump sum payment to monthly payments over a two-year time period. Your due date will be based on the offer you made. 

Once you pay the full offer, the OTC will remove any state tax warrants that have been issued against you. If applicable, you must provide a copy of the Oklahoma County District Court's approval of the agreement. 

What Happens If the OTC Rejects Your Offer in Compromise?

The OTC will also notify you by mail if your offer has been rejected. Collection actions will restart on your account, and the balance will be due in full immediately. You can apply to set up a payment plan if desired. 

If you send a down payment with your application, the OTC will apply the payment to your balance. Accepting the payment does not require the OTC to accept your offer. 

Get Help Applying for an Oklahoma Offer in Compromise

Applying for an offer in compromise in Oklahoma can be a delicate and tricky process. State OIC programs vary drastically from federal OIC programs, and to protect yourself, you need to work with a tax professional who has in-depth experience with Oklahoma tax resolution practices. 

At TaxCure, we know that it can be challenging to find local tax professionals so we set up a directory to help you. Using the TaxCure search feature, you can look for OK tax professionals with the experience you need. To get help with Oklahoma back taxes, find an OK tax pro today. 

Guide to Florida Sales & Tax Penalties

To sell goods or services in Florida, you must collect sales tax. You will face penalties and interest if you don't file or pay your Florida sales tax correctly and on time. Sales tax evasion can lead to criminal charges. 

To help you out, here is an overview of Florida's sales tax rules and penalties. 

How Much Is Sales Tax in Florida?

Florida sales tax is 6% for most sales of goods, services, hotel rooms, and short-term rentals. The state also applies a 4% sales tax to amusement machine rentals, a 5.5% sales tax on leases and licenses of commercial property, and a 6.95% sales tax on electricity. 

Many counties also add a discretionary surtax rate, but with some sales, only $5,000 of the sale is subject to the county sales surtax. The state allows counties to assess sales surtaxes from 0.5% to 2.5%. 

For example, if you have a retail store or a restaurant in Miami-Dade County, you must assess the state sales tax of 6% plus the county's discretionary surtax of 1%. This makes the total sales tax 7%. If you sell a $100 item in this county, you must collect $7 in sales tax from the customer and remit that to the Florida Department of Revenue with your sales tax return. 

Who Needs to Collect Florida Sales Tax?

Essentially, anyone who sells products or services in Florida needs to collect Florida sales tax. If you sell any of the following types of items or services, you need to collect sales tax:

• Retail items
• Food and beverages from restaurants and caterers.
• Rent or lease payments for vehicles or other goods. 
• Repairs and alterations.
• Services such as burglar protection, nonresidential cleaning, and nonresidential pest control. 
• Admissions to amusement parks, sport games, etc. 
• Rent for commercial spaces.
• Rents for short-term (transient rental accommodations) such as hotels, campground sites, and RV parks 
• Memberships to recreation or fitness facilities. 
• Vending or amusement machines. 

Sometimes, sales tax can be complicated. For instance, an auto repair shop should charge sales tax on repairs that involve parts, but if the repair doesn't involve any parts, they don't need to collect sales tax.

When Is Florida Sales Tax Due?

Sales tax returns and payments are due on the 1st of the month following the reporting period, but they are not late until after the 20th. The final due date is the next business day if the 20th falls on a weekend or holiday. For example, your sales tax return for March sales is due April 1st, but it is not late until after April 20th or the following business day. 

For your return to be on time, you must e-file, postmark, or deliver it in person by the 20th. Payments are considered on time if they are postmarked or delivered by the due date, but if you pay online, you must make the payment by 5 PM ET on the business day before the 20th. For instance, if the 20th falls on a Monday, you must make your e-payment by the previous Friday.

What Is the Penalty for Not Collecting Sales Tax in Florida?

You can lose your business license if you don't collect Florida sales tax. The Florida Department of Revenue can issue a warrant for the delinquent sales tax, interest, penalties, and the cost of collection. The county sheriff can execute the warrant to seize your real or personal property. The state also has the right to garnish your bank accounts, wages, and payments from third parties such as clients. 

What Is the Penalty for Not Paying Sales Tax in Florida?

Failure to pay Florida sales tax can lead to severe penalties. Under Florida state law, failure to file a sales tax return for six consecutive months is a felony. 

If you willfully attempt to evade Florida sales tax by submitting a false or fraudulent return, the state can impose an additional penalty of 100% of the tax due. For instance, if you owe $3,000, the penalty will be $3,000. 

You can also face the following criminal penalties for not paying Florida sales tax:

• For the first or second offense of not paying sales tax of less than $300 — second-degree misdemeanor and up to 60 days in prison. 
• For the third and subsequent offenses of not paying sales tax of less than $300 — third-degree felony and up to five years in prison. 
• Failure to pay sales tax of more than $300 and up to $20,000 — third-degree felony and up to five years in prison.
• Failure to pay sales tax of $20,000 or more but less than $100,000 — second-degree felony and up to 15 years in prison. 
• Failure to pay sales tax of $100,000 or more — first-degree felony and up to 30 years in prison. 

Unpaid sales taxes can add up quickly. If a business with $500,000 in annual revenue fails to pay state sales tax for the year, it will owe $30,000 for the year. Unpaid taxes at that level can lead to significant fines, penalties, and over a decade in prison. 

Florida Sales Tax Late Filing Penalty

If you file or pay late, you incur a penalty of 10% of the tax owed. This penalty applies monthly, and it can get up to 50% of the balance. For instance, if you owe $2,000 and don't pay for six months, you will incur a $1,000 penalty. 

The state assesses a minimum penalty of $50. For example, if your sales tax due is $3,000, the late penalty is $300. If your sales tax payment is $500 or less, the penalty is $50. 

You still must file if you don't owe sales tax for the month. If you don't, you will incur the $50 late penalty. The Florida Department of Revenue also assesses a late penalty if your return is incomplete. 

Can I Avoid Paying the Florida Sales Tax Penalties?

The best way to avoid sales tax penalties is to file a complete and accurate Florida sales tax return on time. However, you can apply for penalty relief. It is always better to contact the Department of Revenue before the agency contacts you. 

If you apply for penalty relief on your sales tax before the Department of Revenue contacts you, the Department of Revenue can waive some of your penalties. Still, there is a mandatory penalty of the lessor of $1,000 or 10% of the total tax due. Once the department contacts you, the mandatory penalty increases to the lessor of $5,000 or 20% of the tax due. 

Florida Sales and Use Tax Audit

The Florida Department of Revenue can do audits of sales and use tax. Generally, they will send notice DR-840, which is a full audit notice, or a DR-846, which is a limited audit scope notice. The taxpayer will have 60 days to prepare for the audit and may request certain documentation or information. It is important for businesses to be aware of these notices and their rights as they prepare for a sales and use tax audit. Businesses that deal with a lot of cash, such as restaurants may be subject to higher audit rates than most other Florida businesses — due to industry complexities, sales tax returns for Florida restaurants are more prone to errors.

How to File and Pay Florida Sales Tax

You can file your Florida sales tax return through the mail using Form DR-15 (Sales and Use Tax Return). Or file online with the Florida Department of Revenue. Filing online tends to be faster and easier. 

Where Do I Register My Business for the Florida Sales Tax?

You must register your business with the Florida Department of Revenue. You can register through the mail using Form DR-1 (Account Management and Registration). To register online, visit the state's online Florida Business Tax Application. 

Florida Sales Tax on Online Sales

If you sell goods online to Florida residents, you must register and pay sales tax if your Florida sales exceed $100,000 in the previous calendar year. This rule only applies to out-of-state dealers. You must pay Florida sales tax if you have a physical presence in Florida or are a Florida resident, even if your business is exclusively online. 

Get Help With Florida Sales Tax

If you have gotten behind on your Florida sales tax returns or payments, you have options. A Florida tax professional can help you file delinquent sales tax returns, negotiate payment arrangements, and deal with the Department of Revenue. Unfortunately, you generally cannot get a settlement (aka offer in compromise) on sales tax, but you may be able to compromise the penalties incurred.

To get help, reach out to a local Florida tax pro today who has experience with sales tax issues, or read more about the best tax resolution companies in Florida now. They can answer your questions and help you find the best path forward. 

Phone Numbers for Contacting the IRS & How to Reach a Live Person

The IRS's main phone number is 800-829-1040. However, there are many other numbers for specific questions and concerns. This guide explains how to contact the IRS, what you need when you call the IRS, and how to reach a real person at the IRS. Whether you’ve got a quick tax question or an absolute mess of documents that don’t make sense to you, we’ll show you the easiest way to deal with the IRS. Read on to learn how to speak to someone at the IRS, the documents you’ll need to do so, and a guide on what does and doesn’t warrant a call to the IRS.

Table of Contents: Contacting the IRS

Reasons to Call the IRS

You can call the IRS for the following reasons:

• To ask questions about your tax refund.
• To get the balance due on your account.
• To check if the IRS has received a payment you've sent for an individual tax return.
• To ask questions about an existing payment arrangement. 
• To find the location of an IRS office.
• To learn about free tax prep services for qualified people. 
• To report that your W2 or 1099-R was lost, incorrect, or not received.
• To ask questions about federal taxes.
• To ask questions about tax returns or other tax-related issues. 

This list covers a broad range of concerns. If you don't see your particular issue, you may need to call one of the specific numbers listed below instead of the IRS's general number. For some of the reasons above, the IRS has tools that are designated to answer those questions. It may often be faster to use the IRS tools rather than calling to get your answer (status of a refund, balance due, finding an office location, checking payment status). See the available tools below to answer some common questions without having to call the IRS. 

How to Avoid Calling the IRS: Tools to Help

Don't want to sit on hold? Trying to avoid calling the IRS? Luckily, there are all kinds of tools that can provide you with the info you need, so you don't have to call the IRS.

• Check the status of your refund.
• Find out how much you owe the IRS.
• Make a payment or check if the IRS received your payment. 
• Get answers to tax questions with the interactive tax assistant.
• Order a tax transcript.

Or you can contact a tax professional. They can call the IRS on your behalf and help you navigate the complex tax rules. If your problem doesn’t fall under one of these categories, it may be time to learn how to speak to someone at the IRS. 

What You Need When You Call the IRS

After you finally get through the long hold and reach a real person at the IRS, the last thing you want is to have to hang up and call back. That's why it's essential to be prepared before you call the IRS. Here's what you need when you call the IRS:

• A copy of your last year's tax return. The IRS uses info from the return to verify your identity. 
• Social Security numbers and birthdates of everyone on the tax return you're calling about. This information will be on the tax return, but some tax prep software blacks out these numbers on the printed copy of the return.
• Individual Taxpayer Identification Numbers for anyone on the return who doesn't have a Social Security Number. 
• Filing status from your last tax return.
• Any notices or letters you've received from the IRS. 

To make the call easier, you may want to write down the questions you want to ask. Then, you won't forget anything once you get a live IRS agent on the phone.

What You Need When Calling the IRS About a Deceased Person

If you're calling the IRS about a deceased person, you need court approval or the IRS form for estate executors. Before calling, grab the person's death certificate and the court approval letter or IRS Form 56 (Notice Concerning Fiduciary Relationship).

IRS Hours: Best Times to Call the IRS

You can call the IRS Monday through Friday from 7 am to 7 pm local time. Generally, your phone number determines local time rather than your location. If you live in Alaska or Hawaii, you can call between 7 am and 7 pm Pacific Time. Puerto Rico residents can call from 8 am to 8 pm local time. 

The hours vary for certain tax issues. Here are the phone numbers and times if you have questions about individual, business, non-profit, estate, gift, or excise taxes.

• Individual Taxpayers (800) 829-1040
  7 am to 7 pm local time
   
• Business Taxpayers (800) 829-4933
  7 am to 7 pm local time
   
• Non-profit taxes (877) 829-5500
  8 am to 5 pm local time
   
• Estate and gift taxes (Forms 706/709) (866) 699-4083 
  8 am to 3:30 pm Eastern time
   
• Excise taxes (866) 699-4096
  8 am to 6 pm Eastern time

The best time to call the IRS is generally early in the morning and late in the week. Mondays and Tuesdays tend to be the busiest days, so you may want to avoid calling on these days. Presidents Day weekend and around the filing deadline are also busy times. 

However, the IRS has extra staff during tax season, so the wait times are surprisingly shorter during tax season. According to the IRS, the average wait time to reach an agent is 13 minutes during tax season. Outside of tax season (from May to December), wait times average 19 minutes. The exact wait time varies based on why you're calling. Due to the recent staffing shortages and backlog at the IRS, the wait times can be significantly longer.

IRS Phone Numbers for Specific Tax Issues

In many cases, you shouldn't call the main number. You'll get faster and better service if you call one of the IRS's specific phone numbers. Here is a list of the IRS's phone numbers and links to resources with more information about each of these topics.

Tax Assistance for deaf or hard of hearing	800-829-4059	Tax Assistance for Individuals With Disabilities
Make an appointment with a local IRS office	844-545-5640	How to find a local IRS office
Find a tax clinic near you	800-906-9887, 888-227-7669	Low-income taxpayer clinics
Order a tax transcript	800-908-9946	How to obtain a tax return transcript
Make a payment with the Electronic Federal Tax Payment System (EFTPS)	800-555-4477	Guide to payroll taxes and what to expect if you can't pay
Check the status of your tax refund	800-829-1954	The IRS's where's my refund tool
Check the status of a tax refund being held	866-897-3315	Federal offset program — why the IRS keeps some tax refunds
Check the status of an amended tax return	866-464-2050	Guide to filing and amending IRS tax returns
Report incorrect income on a substitute for return (SFR)	866-681-4271	Substitute for return and other consequences of not filing a tax return
Find your balance due	800-829-0922; 800-829-7650; 800-829-3903	How much do I owe the IRS?
Contact the Taxpayer Advocate Service	877-777-4778	IRS Taxpayer Advocate Service
Help for self-employed taxpayers	800-829-4933	Tax tips for the self-employed
Questions about estate and gift taxes	866-699-4083	What happens when someone dies and owes taxes?
Disaster victims with tax concerns	866-562-5227	Tax relief in disaster situations
Taxpayers who live overseas	267-941-1000	Taxes for US Citizens abroad
New PINS for identity theft victims	800-908-4490	IRS identity theft
Questions about excise taxes	866-699-4096	Excise taxes
Help with business taxes	800-829-0115	Business tax problems, filing, and considerations
Check IRS agent badge number, report tax scams	800-366-4484	Recent tax scams
Questions about tax liens	800-913-6050	Guide to IRS tax liens
Questions about bankruptcy and tax debts	800-973-0424	Bankruptcy and IRS taxes
Innocent spouse relief questions	866-681-4271	Guide to innocent spouse relief
Check on tax refund offsets	800-304-3107	IRS refund offset program
Help applying for an EIN	800-829-4933	Employer ID numbers
EIN application for international businesses	267-941-1099	Employer ID numbers
Lost your ITIN documents	800-908-9982	Individual taxpayer identification number
Check status of adoption tax ID number	737-800-5511	Adoption tax credits
Report tax fraud/whistle blower hotline	800-829-0433	How to become a tax whistleblower
Request IRS tax forms	800-829-3676	Tax relief forms
Tax questions for corporations, partnerships, and non-profits	866-255-0654	Guide to business taxes
Non-profits, governments, and tax-exempt organizations	877-829-5500	How to contact the IRS for tax-exempt entities
E-filing tech support for domestic employers	866-455-7438	E-file employment tax forms
E-filing tech support for international employers	304-263-8700	E-file employment tax forms

 

IRS Phone Numbers for Tax Pros

The IRS also has specific phone numbers for tax professionals. If you're a tax pro who needs to contact the IRS, use these numbers.

• Account or tax law questions: 800-829-8374
• E-filing questions: 866-255-0654
• Tax practitioner priority service: 866-860-4259
• Overseas tax professionals: 512-416-7750; 267-941-1000

If you're calling the IRS for someone else, you need verbal or written permission to discuss their account. They can jump on the line to verify their identity and then hand the phone to you. Otherwise, you need Form 8821(Tax Information Authorization) or Form 2848 (Power of Attorney and Declaration of Representative). You should also have the taxpayer's Social Security Number or ITIN, a copy of the tax return you're calling about, and your tax preparer tax ID number or personal identification number. 

How to Speak to Someone at the IRS

To reach the IRS, just pick up the phone and call 1-800-829-1040. Then, prepare to wait on hold for a long time. Make sure you're ready when the agent answers — if you're not, you will have to hang up and start the process over again. 

The IRS's phone trees are impossibly long, and although most menus let you push "9" to hear your options again, it typically only repeats once before disconnecting you. 

To reach a live person at the IRS about your individual taxes, select these options: 1, 2, 1, 3, 2, ignore two requests for your Social Security Number, 2, 4. 

If you want to talk with a live person about your business taxes, select these options: 1, 2, 1, 3, 2, ignore two requests for your Social Security Number, 1, 4.

Here's exactly what happens when you call. These instructions are correct as of September 2022, but the IRS phone tree is subject to change.

• Select 1 for English
• Select 2 for personal income tax returns
• Select 1 for tax forms, tax history, or payments
• Select 3 for all other questions
• Select 2 for all other questions. 
• Then, the system will ask for your Social Security Number or Employer Identification Number. It will ask twice. Just wait; don't enter anything. 
• Then, press 2 for individual taxes or 1 for business taxes. 
• Finally, press 4 for all other inquiries. 

At this point, you will be put on hold until a live agent answers the phone. This is the fastest way to reach a real person at the IRS. 

Other Ways to Reach the IRS

There are other ways to reach the IRS. You don't have to call the IRS. Instead, you might want to try some of these options.

Find a Local IRS Office

If you can't reach a live person at the IRS, you may want to make an appointment at a local Taxpayer Assistance Center Office. Use the IRS local office locator to find a location in your area. 

Put your zip code in the search box and the radius you're willing to travel. Then, a list of local Taxpayer Assistance Centers will appear. Each listing will show the address of the IRS office, its hours, and a list of local services. You can't just show up. You need to schedule an appointment. Regardless of where you live, you can call 844-545-5640 to make an in-person appointment with IRS taxpayer assistance. 

Call the Taxpayer Advocate Service

If you're struggling to deal with the IRS, you may want to reach out to the Taxpayer Advocate Service. This is an independent section of the IRS with local offices in every state. 

Unfortunately, many states only have one or two offices, so you will have to drive if you live in an unpopulated area. You can search for a local Taxpayer Advocate Office on the IRS's website. Simply select your state from the pull-down menu. Then, you will see a list of the offices in your state with their local phone number and links to directions. 

You can also call the Taxpayer Advocate Service toll-free at 877-777-4778. Or fill out Form 911 (Request for Taxpayer Advocate Service Assistance). You can mail the form, but for the fastest results, you should fax it to your local office.

Check Your IRS Online Account

You can create an online IRS account. This allows you to order tax transcripts, look at old tax forms, check your payment history, and more. Go to the IRS's website to set up your online account. You may need your ID, a copy of your last tax return, and other details to verify your identity.

How to Contact Your State Agency

Every state has a different agency that collects personal and business taxes at the state level. To find out how to reach your state agency, you can check out our guide to state taxes. Simply scroll down the page and click on your state for more details.

What You Need to Know About IRS Phone Scams 

Generally, the IRS does not call taxpayers — there are exceptions to this rule, but typically, by the time the IRS calls, you should have received several letters or notices from the IRS. 

Unfortunately, scam artists frequently call people, say they're from the IRS, and then demand payment. To protect yourself, you must know the signs of an IRS phone scam. If any of the following occur, the person on the phone is probably a scammer:

• Demanding immediate payment of your tax debt.
• Requiring payment over the phone, especially in the form of a prepaid debit card, gift card, or wire transfer. 
• Threatening to call the police or immigration officials. 

Does the IRS Make Calls or Visits?

In some cases, the IRS may call you, but as of 2023, revenue officers do not make unannounced visits to taxpayers' homes and/or businesses. This was a common practice for decades, but it was stopped in 2023 for safety concerns. 

How Do You Tell If an IRS Agent Is Real?

Here are signs the IRS agent is real. If an IRS agent doesn't meet these criteria, they are not legit. 

• They only request payments to the US Treasury — not to any other entity.
• They don't demand money. 
• They tried to reach you by certified mail first.
• They have an HSPD-12 card.
• They can provide you with a toll-free number to verify their identity. 

IRS employees will always try to contact you by mail before calling. However, if the mail doesn't reach you for some reason, they may call. They may also send a 725-B letter requesting that you schedule a meeting. In extremely rare cases involving summons or subpoenas (a couple hundred a year), IRS officers may make unannounced visits. To verify their identity, ask to see their HSPD-12 cards. You can also call 800-366-4484 to verify the agent's badge number. 

Do Collection Agencies Call About IRS Tax Debt?

Yes, the IRS outsources some of its debt collection to private debt collection companies. Here are signs that the collection agent on the phone is legitimate:

• They identify themselves. 
• They only request payments to the US Treasury.
• They don't ask for prepaid debit or gift cards.
• They don't threaten enforcement actions such as jail time or calling immigration.

The IRS will always send a notice to you before assigning your account to a collection agency. Typically this is notice CP40. The collection agency will also send you a placement notice. 

When to Have a Tax Professional Contact the IRS on Your Behalf

You don't have to deal with the IRS on your own. A tax professional can help you contact the IRS. Here are some signs you should reach out for help from a tax professional:

• You can't get the resolution you want when you talk with an IRS agent.
• You don't understand the tax issue.
• You disagree with the balance due on your account.
• You want to appeal a tax assessment or a collection enforcement action.
• You want to apply for an offer-in-compromise or innocent spouse relief.
• You want to remove penalties from your account.
• The IRS has filed a substitute for return for you.
• You feel overwhelmed. 
• You want help from someone who understands how to deal with the IRS.

Using TaxCure, you can search for local tax professionals in your area. Then, you can narrow down your search to find a tax pro who has experience with your specific concern. Want help calling the IRS? Then, contact a tax pro today by starting a search for your tax problem.

Reviewed by: Manuel W. Vetti, CPA

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About the Author

Charles Corsello, EA

Charlie Corsello is the Co-Founder and Managing member of TaxCure, LLC. He is a licensed tax professional with a mission to provide more transparency within the tax resolution industry. He is an Enrolled Agent, licensed by the US Treasury, a credential that allows him to represent taxpayers before the IRS in all fifty states. He has worked in the tax resolution industry for over 15 years and is the previous owner of a successful tax resolution firm. Although Charlie doesn't practice anymore, he enjoys contributing content when he can.

Taxpayer's Guide to Notice CP11 (Math Error on Return – Balance Due)

What This Notice Means and How to Respond If You Receive It

The IRS sends CP11 notice to alert you about miscalculations on your tax return. This notice also explains changes the IRS made to your return, and it details how much you owe due to the changes. Usually, the IRS only sends this notice if the changes made to your return changed your balance by at least $5. 

This guide explains why you received this notice and how to respond to it. 

Why Did You Receive Notice CP11?

You received IRS Notice CP11 because the IRS believes there was a miscalculation on your tax return. In other words, there was a math error on your tax return. Generally, this tends to happen with paper returns. 

If you use tax filing software, the software does the calculations, and math errors are virtually impossible. You may enter the wrong number with tax filing software, but the calculations will always be correct. If you received this notice after submitting a paper return, you might want to switch to e-filing in future years.

What Changes Did the IRS Make to My Tax Return?

The changes the IRS made will be detailed on your CP11 notice. Again, in most cases, this notice relates to calculation changes. Typically, the IRS uses other notices if the agency changes the information you report on your return. 

Often, the changes are explained on page four of IRS Notice CP11. There should be a section that says "Your tax calculations."This section will see a description of the element changed and where it appears on your tax return. 

For example, if the IRS made changes to your adjusted gross income, this section will say "adjusted gross income, line 11." Then, it will show your original entry followed by the IRS's new entry. Note that line numbers are subject to change yearly as the IRS updates tax forms. These are just examples based on the 2021 version of the individual income tax return.

The IRS may also make adjustments to your payments and credits. These also typically appear on page four of the notice. For instance, in this section, you may see "federal income tax withheld, line 25" or "estimated tax payments, line 26". These descriptors should be followed by the numbers the IRS used when it updated your return. 

If you want more clarification about the changes, you can contact the IRS directly. Or you can contact a tax professional and ask them for help. 

Notice CP11 and the Recovery Rebate Credit

In recent years, the IRS has commonly used this notice to alert people about the Recovery Rebate Credit mistakes. Available in tax years 2020 and 2021, this credit allowed people to claim stimulus payments on their tax returns if they didn't receive them before they filed. 

To calculate this credit, you needed to note information about the stimulus payments you received. If you put in the wrong information, the IRS will correct your numbers and send you this notice. 

Notice CP11 and the Advance Child Tax Credit

IRS Notice CP11 is also used to alert people about mistakes related to the advance child tax credit. In 2021, the government sent out advance child tax credits to millions of taxpayers. To determine their final child tax credit on their 2021 tax return, they needed to note how much they had received during the year. 

Many people weren't sure how much they received, and others received letters from the IRS with incorrect numbers. If you accidentally entered the wrong numbers in this section, the IRS may also send you Notice CP11. 

What to Do If You Agree With Notice CP11

If you agree with the changes on the CP11 notice, you should correct the copy of your tax return that you kept for your records. But, you shouldn't send the corrected return to the IRS. The IRS has already made the changes to your account, and it doesn't need an amended return from you. 

Then, you should make arrangements to pay the additional tax liability. If you can afford to pay it in full, you can just mail a check to the IRS or pay online on the IRS's payments page. However, you weren't expecting this new bill, and if you cannot afford to pay it, you may want to explore the following options: 

• Set up a payment plan. 
• See if you qualify for a partial payment installment agreement. 
• Request innocent spouse relief — this only applies if the tax issues were due to your spouse or ex-spouse's actions and the tax liability is related to their income. 
• Apply for an offer in compromise.
• Ask for currently not collectible status. 

A tax professional can help you set up a payment plan or help you determine if you might qualify for one of the IRS's tax relief programs. For instance, if you qualify for innocent spouse relief, you may be able to get a separation of the tax liability so you're only responsible for your portion of the tax bill. 

What to Do If You Disagree With Notice CP11

If you disagree with Notice CP11, you should contact the IRS as soon as possible. You must respond within 60 days if you want the IRS to consider reversing the changes.

The agency recommends calling the phone number on the notice. Then, you can talk with an IRS representative about the notice. You may need to mail or fax in additional documentation. 

For best results, you may want to have a tax professional deal with the IRS on your behalf. They talk with IRS representatives every day, and they have an in-depth understanding of the best negotiation methods. 

Alternatively, you can respond to Notice CP11 through the mail. Include a copy of the notice. Then, explain why you disagree with Notice CP11 and provide financial documents to support your case. If you respond through the mail, you should expect to wait at least 30 to 60 days before you get a response. 

What Happens If You Contact the IRS Because You Disagree With Notice CP11?

If the IRS agrees with your argument, the agency can reverse most of the changes it made. But, again, you must contact the IRS within 60 days from the date on the notice. You don't necessarily have to provide additional documentation, but you should provide it if you have information to support your claim. 

The IRS may start an audit on your return if you don't provide information to support the details you included on your tax return. If that happens, an auditor will contact you in about six weeks to explain the process.

What If You Miss the Deadline to Respond to Notice CP11?

The IRS is strict about deadlines. The IRS will not reverse the changes if you miss the 60-day deadline to respond to Notice CP11. You also lose the right to appeal the information on the notice. 

If you wait longer than 60 days to take action, you need to pay the tax. Once you pay, you can dispute the changes and file a claim for a refund. You have until the later of three years from the date you filed the original tax return or two years from the date of your last payment to appeal and request a refund. 

Do Taxes on Notice CP11 Incur Penalties?

If you receive Notice CP11, the taxes assessed with the notice were due on the date your return was due. Even though you weren't aware of these taxes when you filed your return, they are still considered late. As a result, they face late payment penalties. 

However, you can apply for penalty abatement. The IRS is often willing to remove penalties — especially if this was your first offense or if you had a reasonable cause for making the mistake. But you need to request abatement. Generally, the IRS doesn't spontaneously remove penalties from your account.

Is There Interest on Notice CP11 Taxes?

Interest will also accrue on your new tax liability. However, the interest won't start until the due date noted on the return. If you pay the tax liability before that date, you usually won't incur any interest. In most cases, you cannot get the interest removed unless the IRS made a mistake.

How Do You Adjust Estimated Tax Payments After Receiving Notice CP11?

In a lot of cases, the IRS sends Notice CP11 to people when there was an issue with their estimated tax payments. If you want to ensure that you're making the correct estimated tax payments, you should check out Form 1040-ES (Estimated Tax for Individuals). 

This form guides you through calculations that help to ensure you remit the correct amount of estimated tax on your self-employment income during the year. 

Differences Between Notice CP11 and Notice CP12

Both of these notices mean that the IRS made changes to your return. However, while Notice CP11 alerts you that you owe additional tax or that your refund has been reduced, CP12 has the opposite effect. The IRS sends this notice if the changes on your return lowered your tax liability or increased your refund. 

How to Get Help With Notice CP11

Receiving a notice from the IRS can be scary and confusing — especially if the notice says that you owe additional tax. A tax professional can answer your questions and help you make a plan to respond to this notice. 

If you agree with the notice, they can help you make arrangements on your tax liability and show you how to stay in compliance with the IRS moving forward. They can also help you request penalty abatement. But keep in mind that the IRS makes mistakes — if you disagree with the notice, a tax professional can help you respond to the IRS and appeal as needed. 

At TaxCure, we have created a directory of tax professionals from around the country. We are committed to helping you find a licensed tax professional from your local area who is experienced with your particular issue. To get help with Notice CP11, use TaxCure to find a local tax professional today.

Can the IRS Seize Your Pension or 401K for Back Taxes?

To protect your retirement accounts and retirement income, you need to make payment arrangements on your tax liability before the IRS issues a levy or garnishment.

Yes, the IRS can seize your retirement accounts and/or garnish your pension payments and Social Security benefits for back taxes. Typically, the IRS tries to avoid seizing retirement accounts, but the agency will pursue this collection action as needed. 

If you're worried about the IRS taking your retirement funds, you should make arrangements on your tax liability as soon as possible or reach out to a tax professional for help. In the meantime, here is an overview of the rules and general practices, so you know what to expect.

Can the IRS Take Your 401(k) or Other Retirement Accounts?

Legally, the IRS has the right to seize funds from any of the following retirement accounts to cover unpaid tax liabilities:

• 401(k)s.
• Independent Retirement Accounts (IRA).
• Self-employed plans such as SEP-IRAs and Keogh plans.
• Pensions.
• Company profit-sharing plans.
• Stock bonus plans under ERISA.
• IRC 403(b) retirement plans.
• Thirft savings plans owned by federal employees
• Eligible deferred compensation plans.

The IRS can only seize funds that you have the right to withdraw. The IRS can also place a levy against your vested rights, but it cannot accelerate payment. 

For example, say that you have a defined-benefit pension plan through your employer, but you don't have the right to withdraw any funds until retirement. The IRS generally cannot seize those funds. In contrast, imagine that you have a 401(k) and you have the right to make a withdrawal at any time. The IRS can levy those funds. 

In some cases, you may have a right to the funds in the future, but you cannot withdraw them now. In those situations, the IRS can issue the levy, but the agency cannot seize the funds until you have the right to withdraw the money. 

Can the IRS Take Your Pension for Back Taxes?

Generally, if you have the right to withdraw the funds right now, the IRS has the right to seize those funds for back taxes. Similarly, if you have a guaranteed future right to the funds, the IRS may also be able to seize those amounts. 

If you cannot make a withdrawal now or don't have a guaranteed future right to your funds based on the vesting rules of your account, the IRS cannot seize those funds. To learn about your particular retirement account, consult with your plan administrator. A tax professional can also help you figure out the rules that apply to your situation. 

How Does the IRS Decide Whether or Not to Take Your Pension?

The IRS instructs revenue officers to seize pensions as a last resort. If the revenue officer needs to seize assets to cover your back taxes, they should consider other assets before taking your retirement accounts. In most cases, they should also let you set up a payment plan before seizing your retirement accounts. 

However, if you were flagrant about the unpaid taxes, the IRS becomes more likely to seize your retirement accounts. Flagrant means conspicuously or obviously offensive. In relation to retirement accounts and unpaid tax liabilities, the IRS considers several different actions to indicate flagrant behavior. 

What Flagrant Behavior Can Lead to the IRS Garnishing Your Retirement Accounts?

If you've engaged in any of the following activities, the IRS revenue officer may decide that you've engaged in flagrant conduct:

• Contributing to your retirement account while not paying your taxes — Note that making automatic contributions based on a low percentage of your income to a 401(k) plan is not flagrant behavior. 
• Committing tax fraud or evasion.
• Helping others to commit tax fraud or evasion. 
• Owing tax based on illegal-sourced income — By law, you are supposed to report and pay tax on all income. So, if your tax bill is from selling illegal drugs or embezzling money from a company, the IRS becomes more likely to seize your retirement accounts. 
• Refusing to provide a Collection Information Statement (CIS) if requested by the IRS. 
• Repeatedly failing to take actions to reduce your tax liability — For example, if you owe tax every year and you don't adjust your withholding or make estimated payments, a retirement account levy becomes a bigger risk. 
• Having trust fund recovery penalties assessed against you in the past — These are penalties for unpaid payroll taxes withheld from employees' paychecks. If you have incurred trust fund recoveries in the past, the IRS may be more likely to levy your retirement accounts.
• Exhibiting a pattern of uncooperative behavior — The IRS has a lot of resolution options, but if you don't cooperate, the agency will become less willing to work with you. 

The IRS also takes into account extenuating factors. If you have suffered an illness, lost a loved one, become unemployed, or been the victim of identity theft, the IRS will be less likely to levy your retirement account. 

How Much Can the IRS Garnish From Your Pension or Retirement Accounts?

The IRS can garnish your entire retirement account. As explained above, however, the IRS can only garnish the amount to which you have access. The agency will also consider if you rely on the funds for your current or future income. For example, if your account is just large enough to take a small minimum required distribution every year, the IRS may decide that you need that money to afford your bills during retirement, but to protect yourself, you should consult with a lawyer, especially if you've already received a Final Intent to Levy.

How to Protect Your Retirement Account From Being Garnished?

To protect your retirement accounts from being garnished, you should be proactive about setting up a payment arrangement for your tax liability. Here are the most popular options and links to more information. 

• Installment Agreement — Make monthly payments on your tax liability for up to 10 years or by the collection expiration date if sooner, until it is paid in full. 
• Partial Payment Installment Agreement — Make monthly payments on your tax liability until the collection statute expires, and then the IRS will settle the rest of the liability. 
• Hardship status — Get the IRS to mark your account as currently not collectible and stop collection actions against you. 
• Offer in compromise — Prove to the IRS that you cannot afford to pay the tax liability in full and convince the agency to settle for less than you owe. 

Depending on your situation, you may also be able to apply for innocent spouse relief or request penalty abatement. A tax pro can help you identify the best resolution method to protect your retirement accounts and other assets from being seized. 

Retirement Benefits the IRS Cannot Levy

Again, the IRS cannot levy retirement accounts that you cannot access. Levies can only attach to fixed and determinable rights. In other words, if your rights to your retirement account are not guaranteed yet or if the amount is not determinable, the IRS cannot seize those accounts. 

Additionally, the IRS cannot take the funds you need now or in the near future. The IRS uses financial standards that outline basic living costs to assess this — these standards are not generous. Ideally, you should make arrangements to take care of your tax liability before the IRS starts holding you to these standards. 

The IRS also takes into account longevity tables. Basically, the agency considers standard life expectancies and very minimal living costs. If your retirement account can cover more than those essentials, the IRS can seize the rest. The agency will also consider extenuating factors about your budget and any other retirement money you have. 

Taxation of Levied Retirement Accounts

If the IRS levies your retirement account, you will be taxed on the distribution as usual. The plan administrator will typically withhold 20% of the distribution for federal income taxes, but your exact tax rate will vary based on your income. 

For instance, if you have $5,000 in a retirement account, the IRS can levy all of that, but once the plan withholds 20%, the IRS will only receive $4,000. Even if you ultimately owe less than this amount of tax, the IRS only has the right to levy the $4,000. 

Retirement Account Levies and the 10% Early Withdrawal Penalty

Normally, you face a 10% penalty when you take a distribution from your retirement account before reaching age 59.5 years. The 10% penalty does not apply in this case. 

When the IRS sends you a notice of levy for your retirement account, the agency will also send a letter explaining that you are not subject to this penalty. You may receive Letter 3257 (Excise Tax for Early Withdrawal Not Due if by Levy to Retirement Plan Administrator) and Letter 3258 (Excise Tax for Early Withdrawal Not Due if by Levy to Taxpayer). 

You can show these letters to your plan administrator, so they know you are not subject to the 10% penalty. You may also need these letters when you file your tax return. 

Bankruptcy and Retirement Account Levies

Taxes must meet specific rules to be discharged through bankruptcy. If you have taxes discharged in bankruptcy, the IRS may still have the ability to levy your retirement accounts to cover those taxes. 

If the IRS filed a tax lien before you filed bankruptcy, the IRS has the right to seize accounts that were exempt from the bankruptcy case. Additionally, the IRS also seize retirement accounts that were excluded from bankruptcy even if the liens were not filed on time. 

Garnishment of Social Security Benefits

The IRS also has the right to garnish your Social Security retirement income. The agency can garnish up to 15% of your Social Security benefits, but it cannot take lump-sum death benefits or benefits paid to children. Additionally, if you only receive partial benefits due to repaying a liability to Social Security, the IRS won't levy those benefits. 

Before levying your monthly Social Security benefits, the IRS will send you Notice CP 298 (Final Notice Before Levy on Social Security Benefits) or a similar notice. Once you receive the notice, you have 30 days to make arrangements. If you set up a payment plan or make other arrangements, the IRS won't start the levy. 

The IRS has the right to garnish 15% of your benefits, regardless of how much you receive. But if the garnishment causes you financial hardship, you can apply to have it removed. The IRS uses a strict set of financial criteria to assess hardship. Just because you feel strained doesn't mean the IRS will agree. 

Garnishment of Pension and Retirement Payments

The IRS can also garnish any pension plans or payments you're receiving from your retirement accounts. There is a common misbelief that the IRS will only garnish 25% of your pension payments. This is not true. 

Pension payments and other payments from retirement accounts are subject to the same rules as other IRS wage garnishments. Basically, the IRS only has to leave you with enough money for living expenses, and then the agency can garnish the rest. 

Get Help With Back Taxes

Don't let the IRS levy your retirement accounts or garnish your pension payments. The agency typically only garnishes these sources in severe situations, but if you ignore your tax liability long enough, the agency may decide that the situation is severe. Usually, you will receive a notice of intent to levy before the IRS takes your assets. To be on the safe side, you should reach out for help as soon as possible. 

Get help before the IRS seizes your assets. At TaxCure, we have curated a directory of local tax professionals. Using our search feature, you can look for a tax pro based in your area with the experience you need. Protect yourself — find a local tax pro to help you today.

What Happens If Your Spouse Owes Back Taxes?

When your spouse owes a tax debt to the IRS or a state tax authority, you may be liable for that tax’s repayment. It depends on when your spouse incurred the tax debt, your tax return filing status, and other factors. Our guide will help you understand the consequences of your spouse’s unpaid tax debt.

Marriage often brings certain tax benefits such as increased income thresholds for different tax rate brackets along with deduction and credit opportunities. However, marriage can also present risks as a taxpayer if you do not have strong knowledge of your income, finances, and tax obligations. If your spouse lies on your return, for example, you may be unaware of the inaccurate income reporting and the unpaid tax debt that will likely follow. It's important to know your rights as a married taxpayer and how you can protect yourself from the unpaid taxes of your spouse. Here's what you need to know about dealing with your spouse's back taxes.

Your Tax Filing Status Will Affect Your Liability for a Spouse’s Unpaid Tax

As a married taxpayer, you have two filing status options when you prepare your federal income tax return and submit it to the Internal Revenue Service (IRS). You and your spouse can file as either married filing jointly or married filing separately. When signing your tax returns, you and your spouse certify the accuracy of the reporting, and you both become responsible for the tax bill. At the same time, you also take responsibility for any underreporting or underpayment of tax and any resulting penalties. 

In other words, spouses who submit joint tax returns will assume responsibility for both spouses’ tax debt obligations on the return. In contrast, married filing separately taxpayers only certify their individual income and tax liability. If you file separately, you're only responsible for the tax debt shown on your individual return unless you live in a community property state.  

Are You Liable for Tax Liabilities a Spouse Accumulates During Marriage?

If you file your tax return as married filing jointly, you are liable for the tax liabilities regardless of whether they relate to you or your spouse. You are generally liable for the tax liabilities that a spouse accumulates during marriage when you submit your tax returns under a married filing joint status. When you file a joint tax return, the IRS views you and your spouse as a single taxable entity and will seek to collect owed tax amounts from either party, regardless of who earned the income resulting in tax liability.

In contrast, if you use the filing status of married filing separately, you are only liable for your own tax bill. Again, however, this rule changes if you live in a community property state. There are more details on that below. Here are some other questions you may have about taxes your spouse incurs while you are married.

Are You Liable for Your Spouse's Tax Debt From Their Business?

Your liability for your spouse's business taxes depends on the business structure and how you file taxes. If the business is a sole proprietorship or a partnership, the profits are pass-through. That means that they aren't taxed on the business level, they are taxed on the personal level. If you own the business with your spouse, you are naturally responsible for the business's taxes. However, if you don't own the business jointly, your liability for your spouse's tax debt depends on how you file your taxes. If you file jointly, you will be responsible for the business's taxes on your joint return. But if you file separately, you won't be responsible.

If your spouse owns a corporation, the corporation will pay its own income taxes, but your spouse will have to report any income or dividends that they receive from the company on their tax return. Again, you will be responsible for the taxes due to this income if you file jointly. You won't be responsible if you file separately. 

Of course, there are other business taxes such as sales taxes, payroll taxes, and excise taxes to name a few. Generally, if you don't own the business, you won't be liable for these taxes. However, you still need to be careful. You own property with your spouse, and in a lot of cases, the IRS may be able to seize jointly owned property even if just one person owes the tax. 

What Can the IRS Do to Collect Unpaid Taxes Against Married Taxpayers?

If you fail to voluntarily pay owed back taxes, the IRS may take certain actions against you or your spouse to collect the owed tax:

• Withhold or offset your tax refunds in future years.
• File a federal tax lien notice on your property.
• Serve a notice of levy to seize your property.

The IRS can attempt to collect unpaid tax from any of your personal or real property. This includes property such as bank accounts, investment accounts, wage garnishment, and other personal belongings of value.

When Can Innocent Spouse Relief Be Used If I Am Liable?

In some situations, the IRS will provide innocent spouse relief to those who unknowingly submit tax returns when their spouse underreported taxable income, claimed excessive credits, or misrepresented other necessary tax information. To qualify for innocent spouse relief, you must meet certain eligibility criteria:

• You filed a joint return that understated your tax obligations because of your spouse’s erroneous item (i.e., a misstated calculation of income, deductions, credits, or property basis).
• You can prove that when you signed the joint return, you either didn’t know and didn’t have a reason to know that your spouse understated their taxes.
• Holding you accountable for your spouse’s understated tax would be unfair under the circumstances.

For the element of fairness, the IRS will consider whether you received any financial or other benefits more than typical support. To maintain eligibility for innocent spouse relief, you must initiate the request within two years from when the IRS started its collection actions against you. However, if you apply for equitable relief, you have three years from the date you paid the tax to request a refund and up to 10 years from the tax filing deadline to request relief from the tax liability.

Separation of Relief If Your Former Spouse or Late Spouse Has Unpaid Taxes

In addition to innocent spouse relief, you may have the opportunity to avoid your spouse’s unpaid taxes through separation of liability relief. Separation of liability relief is when you distinguish your tax liability from your spouse on the joint return as though you had filed separately. To qualify for separation of liability relief, you must meet one of the following requirements:

• Be divorced or separated from your spouse.
• Be widowed.
• Not have been a member of the household as the spouse you filed the joint return within the 12 months ending on the date you file for relief.

Separation of liability relief also requires that you did not have actual knowledge of understatement of tax. However, you can have knowledge of the situation if you were coerced to sign the return or if you were under duress at the time when you filed.

Equitable Relief When It's Unfair to Hold You Responsible for a Spouse or Former Spouse's Back Taxes

Equitable relief is a final method of innocent spouse relief the IRS offers to spouses or ex-spouses in situations where it would be unfair to hold them liable for their partner’s understatement of tax. You can also apply for equitable relief if your spouse underpaid the taxes. For instance, this might apply if you thought your spouse paid the tax bill, but they stole the funds for personal use. In cases of equitable relief, the IRS will consider factors such as abuse or a lack of financial control when deciding.

How Do Community Property States Deal With Spouse Back Taxes?

In community property states, you are generally responsible for your spouse's tax bill even if you file separately. To give you an example, imagine that you live in a community property state, you report $5,000 in income on your return, and your spouse separately reports $95,000 in income. In a common law state, you're only responsible for the tax bill on the $5,000 of your income. But in a community property state, you are responsible for half of the total income — in this case, that's $50,000. 

However, community property states have different rules concerning both IRS and state tax debts. You may have different options for avoiding your spouse’s tax liability if you live in a community property state such as:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

To benefit from your state’s community property laws, you will usually have to file your tax returns as married filing separately. However, the rules vary. That's why it's critical to work with a tax pro who has experience in your particular state. They can help you deal with both the IRS and your state tax agency.

Married Filing Separately and Spouse Owes Back Taxes

When you submit tax returns as married filing separately, you are usually only liable for the taxes owed on your income. That means the IRS will have difficulty going after your assets to collect the unpaid taxes of your spouse. Again, the rules are different in community property states. In all cases, even though you won’t technically be liable for your spouse’s unpaid tax, you may find your joint assets (e.g., joint bank accounts) with your spouse in jeopardy because of the IRS’s efforts to collect the owed tax. Additionally, gifted property from your spouse could also find itself the target of tax liens or levy if the transfer was made to avoid payment of unpaid tax.

Can You Be Liable for a Spouse’s Premarital Taxes?

You won’t generally be liable for a spouse’s underpayment of taxes for years before the marriage. As mentioned above, your liability for a spouse’s unpaid tax is most concrete in situations where you filed jointly. Although, you may have to deal with the consequences of your spouse’s unpaid tax during the marriage and it may impact any joint assets you have – similar to situations where you submit as married filing separately. The IRS has 10 years from the date of assessment to collect unpaid tax, which means spouses could have fallout from their partner’s tax liability well before they ever married.

Can the IRS Take Money From My Spouse?

It depends on the situation. If you owe taxes from a joint return that you filed with your spouse, the IRS can go after your spouse for the tax debt incurred from that return. However, if you have tax debt incurred from a separately filed return, from a business that your spouse doesn't own, or from a return jointly filed with another person, your spouse isn't liable. The IRS can't take money from your spouse for these taxes.

If you have unpaid taxes and you want to protect your spouse, the best thing to do is make arrangements to take care of the tax debt. If you set up a payment plan, get an offer in compromise, or make other arrangements, the IRS won't have to enforce involuntary collection actions against you or your spouse. 

Can the IRS Take My Tax Refund for My Spouse's Debts?

Generally, the IRS cannot take your tax refund for your spouse's tax debts. If the IRS seizes your joint tax refund to cover a debt related solely to your spouse, you can request to get your portion of the refund back. This is called Injured Spouse Relief.

To give you an example of how injured spouse relief works, imagine that your spouse owes $2,000 in back taxes from 2018 and $3,000 in child support from 2020. You get married in 2021 after they gave incurred these debts. Then, you file a 2021 return jointly and earn a $5,000 tax refund. However, the IRS keeps the entire tax refund to cover your spouse's debts. You think this isn't fair so you apply for Injured Spouse Relief. The IRS agrees that you should not be responsible for your spouse's old debts so the agency looks at your return and it figures out which portion of the refund is due to you. Let's say that you and your spouse made the same amount of money, and half of the refund was yours. In that case, the IRS will send you your half of the refund ($2500).

When Can the IRS Garnish My Wages for My Spouse's Tax Liability?

If you filed married filing jointly, the IRS can garnish your wages from your spouse's tax debt on that return. The IRS can actually garnish both of your wages in this situation. With wage garnishments, the IRS only leaves you a very small amount to live on — the exact number depends on your filing status, number of dependents, and costs of living in your area. If the IRS says it's going to garnish your wages, you should make arrangements on the tax bill before that happens. Garnishments can be harsh. However, the IRS won't garnish your wages if your spouse has a tax debt from a married filing separately return or from a tax debt incurred before the marriage.

Can the IRS Hold Me Responsible for my Spouse's Ex-Spouse's Tax Debts?

The IRS cannot hold you responsible for unpaid taxes due to your spouse's ex-spouse. However, in some cases, your spouse may still be liable for their ex's tax debts, and that can affect you. To give you an example, imagine that your spouse filed a joint return with their spouse for tax year 2018. They didn't pay the tax bill, and the majority of the bill was due to the ex. In 2020, you and your spouse got married. In 2021, the IRS contacted your spouse about the unpaid debt.

Because a joint return was involved, your spouse is responsible for that old debt. If your spouse or their ex doesn't pay, the IRS may take involuntary collection actions against your spouse. This can include wage garnishments, bank account levies, and asset seizures. Remember the IRS has 10 years to collect on unpaid taxes so this cloud can hang over you for a while. If your spouse believes that they are truly not responsible for their ex's tax debt, they may want to look into innocent spouse relief.

Do I Owe My Spouse's Taxes If We Get Divorced?

If you file jointly, you will continue to be responsible for the taxes owed on your joint return even after your divorce. If possible, you should ensure that the divorce decree stipulates who should pay the taxes. However, it's important to note that a divorce decree doesn't necessarily override the IRS's rules. The IRS may still have the right to hold you responsible for your spouse's tax liability from a joint return, regardless of what the decree says. That said, if you get a divorce or are separated, you may be able to seek relief on your spouse's part of the liability through the IRS's separation of liability program. If you qualify, this program breaks down the return and figures out who owes what. Then, you're only responsible for your portion of the bill. 

What Can You Do to Protect Yourself When Your Spouse Owes Taxes?

When you become aware of your spouse’s unpaid tax or receive a notice from the IRS, you should consider a few different actions. The first step may be to consult with a tax attorney to get a better sense of the validity of the unpaid tax claims and your options for possible innocent spouse relief or other pardons. You may need to take actions to separate your finances such as opening your own bank account and diverting any W-2 wages or other income to this account instead of to your joint accounts. You will also likely need to cease filing joint returns with your spouse. 

Find a Local Tax Professional Near You with TaxCure

At TaxCure, we have a large network of tax attorneys and other tax professionals who provide representation and advice to spouses dealing with the aftermath of their partner’s unpaid taxes from underreporting. If you need help obtaining spousal relief or received notice from the IRS, find professionals nearest you to get the assistance you deserve. You can start your search here by viewing local professionals with experience with spousal tax problems.

IRS Summons: Why the IRS Sends Summons & What to Do If You Receive

An IRS summons is an official order to provide information or testimony. The IRS issues summonses to people who are being investigated or who may have important information related to an investigation of another entity. 

A summons is serious, and you should not ignore it. But you may want to consult with a tax attorney before responding. 

Types of IRS Summonses

The most common IRS summons is Form 2039 (Summons). This form explains what the IRS wants. It may demand documents from you about yourself or a third party. Or, it may explain that the IRS has requested information about you from a third party. Form 2039 also outlines the relevant section of the Internal Revenue Code and your right to contest the summons. 

IRS agents may alternatively decide to issue the following specialized summonses:

• Form 6637 (Summons Collection Information Statement) — to collect an assessed tax.
• Form 6638 (Summons Income Tax Return) — served on taxpayers who need to file an unfiled return. 
• Form 6639 (Financial Records Summons) — may be served on third parties.

A direct summons is a summons sent directly to the person under investigation. For instance, if the IRS believes that you are hiding income, the agency may summon your bank account records. A third-party summons, in contrast, is sent to a third party to gather information about another person. 

IRS Notices Before Sending Summons

In most cases, you will get several notices before you receive the IRS summons. The IRS typically starts with Form 4564 (Information Document Request). If you don't respond, the IRS will send a delinquency letter saying that you haven't responded. 

A pre-summons notice follows this letter. Then, finally, the IRS sends the summons.   

What to Do If You Receive a Summons

If you receive an IRS summons, you can hand over the information or appear as requested. For many people, that is the best option. Others resist handing over information because they're worried about incriminating themselves or hurting their relationship with a third party. But, this can trigger a criminal investigation. 

You have the right to contest the summons. But unfortunately, the IRS wins over 95% of these arguments. To ensure you're making the right decision, you may want to consult with a tax attorney or tax professional who has experience with IRS summons. 

What If You Don't Respond to an IRS Summons

If you ignore a summons, the IRS will show the courts that the requested information is relevant to a legitimate investigation. IRS agents must follow strict rules when sending out a summons. They tend to follow the rules closely, and by extension, the courts hold up most summonses. 

If the district court says that the summons is enforceable, you can receive a citation for contempt if you continue to ignore it. That can lead to criminal persecution and jail time. 

Your Rights When You Receive a Summons

When you receive a summons, you have the right to an explanation of the process. You can represent yourself or find a professional to represent you. If you are summoned for a meeting, you can record it, but you must request to do so in advance. Again, you also have the right to contest the summons.

What Makes an Enforceable Summons

When you contest a summons or request to have it quashed, the IRS must prove that the summons is enforceable. Based on the outcome of the United States vs. Max Powell, the summons must meet these criteria to be legally enforceable:

• Related to an investigation conducted for a legitimate purpose.
• Based on an inquiry relevant to the investigation's purpose.
• Used to request information that the IRS doesn't already have.
• Issued in line with all relevant sections of the Internal Revenue Code.

To establish that these four criteria are in place, the IRS usually uses a sworn affidavit from the agent who issued the summons. At this point, the burden of proof shifts to the taxpayer.

How to Contest an IRS Summons

You can use the following arguments to contest an IRS summons in court: 

• The IRS already has the requested information. 
• The statute of limitations has expired for the tax years related to the summoned information.
• The summons violates your constitutional rights. 
• The summons was not issued properly. 

A tax attorney can help you decide which argument is relevant to your summons. Or they can help you decide if another approach is more advantageous. 

How Does the IRS Use Summoned Information?

The IRS summons information to get a better sense of your tax situation. The agency may summon information to back up details on your return during an audit. But the agency may also use summoned information for the following:

• To create a substitute for return (SFR).
• To locate assets for tax collection purposes. 
• To investigate civil or criminal tax offenses

Can the IRS Summon Information About Me From Other Parties?

IRC Section 7602(a) gives the IRS the authority to confirm information about a filed return through third parties. This typically occurs when a taxpayer has refused to provide requested information during an audit. The IRS can reach out to the following people:

1. A person who owes tax. 
2. An officer or employee of that person.
3. A person who has possession of or takes care of the business books of that person. 
4. Any other person as deemed necessary. 

In other words, the IRS can reach out to nearly anyone about your taxes. If the IRS believes that you haven't been paying payroll tax, for example, the agency may reach out to your employees to get information about your payroll practices. The IRS can also reach out to your bookkeeper, your accountant, or even just your Aunt Nancy who stores your bookkeeping records at her house. The category "any person deemed necessary" is obviously infinitely broad and subjective. 

Notice for Third-Party Summons

Before serving a notice to a third party about you, the IRS must give you notice. You must be notified at least three days before the third party is served and at least 23 days before the deadline (compliance date) on their notice. 

Your notification must include a copy of the summons and an explanation of your rights. If the IRS has requested a meeting with a third party to obtain information about you, you can request to have a representative at the meeting, but the third party must agree to the request. 

How to Quash a Third-Party IRS Summons

If the IRS issues a third-party summons, you will receive a copy and you have 20 days to file a petition in U.S. District Court to quash the summons. Quash refers to a legal request to have a judge annul the summons. This is the same process as contesting the summons.

You must meet a relatively narrow set of criteria to get a summons quashed. You can show that you already provided the information or that the information doesn't exist. Alternatively, you can contest the summons by saying that it disrupts attorney-client privilege, tax-advisor privilege, or work-product privilege. Or, you can argue that the examiner didn't follow the correct procedures when issuing the summons. 

If you request to quash a summons and the third party already sent in the documents, the IRS cannot look at the documents unless you give your consent or the courts grant permission. 

IRS Summons and the Statute of Limitations

There is a statute of limitations on tax collection. Typically, the statute expires 10 years after the return was filed or the taxes were assessed. The statute of limitations pauses when you request to quash a summons. It stays paused while the rest is pending and until it is resolved. 

What Is a John Doe Summons?

A John Doe summons is a blanket request for information about multiple taxpayers in a group. For example, the IRS used John Doe summonses to request information about taxpayers with offshore bank accounts at several foreign banks. In its recent focus on cryptocurrency compliance, the agency successfully used a John Doe summons to obtain information on thousands of Coinbase account holders. 

What to Do If You Receive a Third-Party Summons

If you receive an informal request for information about a third party, you may want to respond quickly to resolve the issue or wait until you receive a summons before providing the information. The optimal choice depends on the situation. 

In some cases, you may be able to respond to an information request without compromising yourself. However, if you're an accounting professional, you may want to wait until you receive a formal summons or authorization from the client to ensure that you don't violate client confidentiality rules. Additionally, financial institutions need to ensure that they don't violate the Right to Financial Privacy Act. 

This is not legal advice. Consult with a tax attorney or tax professional to decide the best way to respond to an IRS summons for information. 

Elements of an Enforceable Third-Party Summons

To be enforceable, a third-party summons must contain the following details:

• Name and address of the person whose tax returns are under examination. 
• Tax periods under examination.
• Identity of the person being summoned — in the case of a corporate summons, this should be the corporate officer, director, managing agent, or another authorized person.
• Description of the summoned items — the IRS cannot require you to create documents that don't exist.
• Date, place, and time by which the information must be received — If summoning someone to appear, the IRS must give them at least 10 days. 

Get Help With an IRS Summons

In most cases, if you receive a request for information from the IRS, you should probably respond. However, the best course of action can vary based on the type of information requested, your risk of criminal exposure, and your relationship with the taxpayer in the case of a third-party summons. 

To get help responding to a summons or deciding what to do after you receive an IRS summons, you should reach out to an IRS audit attorney or another experienced tax professional. At TaxCure, we have a directory of tax professionals in your area. To get help and guidance, search for a tax pro experienced with IRS summons today.

Enrolled Agents: How They Can Help & How to Find an EA Near You

If you need assistance with tax issues, you may want to contact an enrolled agent. But finding an enrolled agent can be tricky. This guide explains how to find an enrolled agent near me. It also outlines what these professionals do and how they can help. 

What is an IRS Enrolled Agent?

An Enrolled Agent (EA) is a tax professional who represents taxpayers in matters relating to the Internal Revenue Service (IRS) tax laws. An EA is licensed to represent taxpayers before the IRS on disputes, they can prepare tax returns, and they can answer questions regarding tax laws. This designation is comparable to an accountant or an attorney that specializes in IRS matters relating to tax laws.  However, unlike an attorney or CPA, they receive their authority from the federal government instead of state governments. The IRS Enrolled agent can choose to represent any taxpayer and may specialize in certain areas of tax law that they practice. The benefit of working with an enrolled agent is that they specialize in dealing with the IRS.

Typically the enrolled agent acts as a legal representative for the taxpayer in issues that relate to IRS tax matters. The enrolled agent must pass the three parts of the Special Enrollment Exam (unless they qualify from having years of experience working for the IRS) which certifies that the agent has proven competence in the areas of tax law. Moreover, enrolled agents must complete 72 hours of continuing education every three years to maintain their status.

What Do Enrolled Agents Do?

Like other tax professionals, Enrolled Agents perform a variety of tasks. Some of them focus on helping clients with unpaid taxes. Others perform the following types of services as well:

• Bookkeeping
• Financial planning
• Help with tax audits
• Business tax preparation
• Individual tax preparation
• IRS representation

The US Treasury Department publication Circular 230 outlines the rules for enrolled agents to practice in front of the IRS. Enrolled agents have unlimited practice rights in front of the IRS, except in Tax Court. 

Generally, only tax attorneys can represent people in Tax Court, but if an enrolled agent passes the Tax Court exam, they become a US Tax Court Practitioner and they can also represent clients in court. Only a very, very small number of enrolled agents have this credential. 

Enrolled agents can handle tax prep, unfiled returns, tax audits, tax appeals, and other tax-related issues for the following types of taxpayers:

• Corporations
• Estates, gifts, and trusts
• Exempt organizations
• Farms and ranches
• Individuals
• Partnerships
• All other taxpayers

Taxpayers with unique tax concerns can turn to enrolled agents for help. Here are some of the issues they can help with:

• Taxes for people in the military
• Taxes during and after divorce
• Tax concerns about pensions, annuities, and IRAs
• Multi-state taxation
• International taxation
• Taxation for expatriates

Enrolled agents deal with individual and corporate income tax, but they also deal with employment tax, sales tax, and other local, state, and federal taxes. When looking for an enrolled agent near me, you should look for an enrolled agent with experience in your state, who specializes in your area of concern. 

At TaxCure, we have a directory of enrolled agents, and our site makes it easy to search for an enrolled agent near me. 

Should I Find an Enrolled Agent Near Me to Help File My Taxes?

It depends on your tax situation and your comfort level. If you have a very simple tax situation, you can often file your own return using tax software. As your taxes get more complicated, such as itemizing deductions, earning investment income, or starting a business, you may want to reach out for help. 

Most big tax prep companies hire tax preparers who do not have professional credentials. These people receive a small amount of training, and while they can help with some tax issues, they simply don't have the knowledge or expertise of an enrolled agent or a CPA.

If you want to work with someone who has the highest IRS credentials, you should work with an enrolled agent or a CPA. Note that you can select these professionals when you work with a big tax prep company such as H&R Block, Jackson Hewitt, or Turbotax, but they are not the default option. If you want to work with an enrolled agent near me at one of these companies, you need to request that type of professional specifically. 

When to Work With an Enrolled Agent

Here are some situations where you may want to work with an enrolled agent near you:

• You own a small business or are newly self-employed. — An enrolled agent can help optimize your business deductions and guide you through tax planning. 
• You've had major life changes. — If you've just bought or sold a house, cashed out a major investment, received an inheritance, gotten a divorce, or adopted a child, an enrolled agent can ensure you handle your taxes correctly. Even if you just work with them for a year, their efforts can make a difference. 
• Your taxes are complicated. — Whether you're trading crypto or trying to claim deductions for home upgrades to support a disabled family member, you may need extra support during complicated years. This is the perfect time to find an enrolled agent. 
• You made a mistake on a return and need resolution services. — Don't worry. This happens to a lot of people, and an enrolled agent can help you deal with the IRS or state tax agencies.
• You can't pay your taxes or are facing collection actions — If you are facing a situation where you can't pay your taxes or the IRS is taking collection actions against you, enrolled agents can represent you before the IRS and help you get back into compliance.

Essentially, if you want extra help dealing with the IRS or state tax agencies, you should contact an enrolled agent. 

Various Tax Problems an Enrolled Agent Can Help With

Tax laws and the regulations issued by the IRS can be overwhelming. An enrolled agent can assist the taxpayer with understanding the inner workings of the law and know the best strategy to deal with the unique circumstances for their tax-related issues. An enrolled agent understands Federal tax law, IRS regulations, and specific situations that relate to taxpayers and, most importantly, how to obtain the best, most cost-effective outcome for the taxpayer.

If any of the following circumstances apply to you, an enrolled agent is one type of tax professional that can provide needed relief.

• Tax Audit: Tax audits happen rarely, but when they do, an enrolled agent can help.  An enrolled agent can help you navigate the process and provide support along the way.
• IRS investigation: Being investigated by the IRS is a very critical matter. Depending on your situation, an IRS enrolled agent who knows the IRS laws inside and out can offer a level of consult to you and coach you through an investigation. Furthermore, a tax attorney can help if the investigation becomes criminal.
• Tax Fraud:  If you have committed tax fraud such as underreporting income, claiming false or deductions or claimed credits that you did not earn, this could be considered tax fraud.  A tax attorney or an IRS enrolled agent can help you to navigate through the process of the investigation.
• Failure to file and failure to pay tax penalties:  Failing to file tax returns, or not paying taxes owed eventually results in tax penalties that can become expensive depending on the amount of time that has passed.  An IRS Enrolled Agent can work in your favor to reduce significantly the tax penalties and costs associated with the consequences of failing to file taxes under IRS regulations.
• Unfiled tax returns: Having unfiled tax returns can lead to steep penalties and interest from the IRS. An enrolled agent can help you file old taxes and ensure that you get the maximum amount of deductions as well as helping you work through any penalties and interest that you may incur.
• Tax Liens: If you have had a tax lien filed against you, it is a good idea to seek the help of a tax professional. An enrolled agent is one type of tax professional that can analyze your situation and find the best course of action to get the tax lien removed and prevent the IRS from taking any further collection actions.
• Tax Levies: A tax levy is a serious matter, and the IRS will continue to seize assets until they have taken enough to cover all the taxes owed plus penalties and interest. An enrolled agent is aware of the many different ways tax levies can be stopped. It is a good idea to seek help from a tax professional when faced with this situation.

FAQs About Enrolled Agents

Here are some frequently asked questions about enrolled agents. Contact us directly or in the chatbox if you have additional questions about enrolled agents. 

How Much Do Enrolled Agents Charge?

Enrolled agents often charge a fee based on the project, but if they charge an hourly rate, it tends to range from $200 to $400. Some enrolled agents charge less than this range, while others charge more. According to the Bureau of Labor Statistics, the median annual salary for an enrolled agent is $54,890. 

How Do I Find a Good Enrolled Agent?

Talk with people you know. Read reviews of local enrolled agents, but keep in mind best practices for evaluating tax pro reviews. Use a site such as TaxCure to search for enrolled agents in your area, read reviews, and find the best tax pro for your needs. Also, consider looking for EAs who have completed additional certifications such as Tax Representation Consultant certification. You can follow this link here to see the enrolled agents closest to you and you can further filter by your particular tax situation to find the best-suited enrolled agent to help you.

Is an Enrolled Agent Better Than a CPA?

No. CPAs and enrolled agents can both provide help with tax-related issues. There are several differences and similarities between CPAs vs enrolled agents. The important thing is to find a CPA or enrolled agent with experience in your area of concern. 

Is an Enrolled Agent Worth the Cost?

Yes. When you're dealing with complicated tax matters, unaffordable tax bills, or a dispute with the IRS, an enrolled agent can be invaluable. They know the tax codes and how to negotiate with the IRS and state tax agencies. They save their clients time and money in the long run.

Resolution to Tax Issues

An enrolled agent can offer sound advice about many of the solutions to tax issues provided by the IRS. The complexity of the solutions provided by the IRS to deal with tax problems are something that an enrolled agent is highly trained to negotiate.

The following are examples of some of the resolutions that an IRS enrolled agent can negotiate on your behalf.

• Penalty Abatement
• Payment Plans
• Offer in Compromise
• Innocent Spouse Relief
• File Unfiled Tax Returns

The IRS enrolled agent or tax attorney may focus on resolving tax problems and be well versed in the regulations and workings of the IRS. Because the enrolled agent has passed both competency and certification to practice, taxpayers have peace of mind knowing that they are not risking getting “scammed” by the many self-proclaimed tax relief companies that advertise their services over the internet. If you are interested in the help of an enrolled agent, you can start your search below. Once you start the search, you will be given the ability to show only enrolled agents that match your search results. Our algorithm will show local professionals that have experience dealing with your unique situation.

History of the Enrolled Agent

When the IRS was formed in 1862, anyone could represent taxpayers in front of the IRS. After the Civil War ended in 1865, dubious representatives found clients and offered to represent them in exchange for a percentage of their claims. 

These representatives claimed that their clients had suffered expensive losses during the war, but in most cases, they overstated the value of the losses. In particular, they trumped up the value of lost horses. 

This debacle convinced the IRS that it needed to define parameters around representing taxpayers in front of the IRS. In 1884, The Enabling Act, also called the Horse Act, was signed into law. This act created enrolled agents, and it established a standard people needed to meet to become one of these professionals. 

Enrolled Agent Versus CPA

Enrolled agents and CPAs overlap in many ways, and both of these professionals can represent you in front of the IRS. However, there are a few differences between enrolled agents and CPAs.

CPAs are licensed in their state, while enrolled agents are licensed federally. To become an enrolled agent, you need to pass a three-part exam or work at the IRS for at least five years. CPAs typically must earn a bachelor's degree plus 30 additional credits in accounting. Then, they must log a year's work experience under another accountant and pass the CPA licensure exam for their state. 

The main difference between enrolled agents and CPAs is their area of focus. Enrolled agents are 100% focused on tax-related issues. CPAs can focus on taxes, but they can also do public accounting, corporate accounting, and accounting for government and not-for-profit organizations. CPAs also audit businesses and provide assurance that their financial statements are free from material misstatement. 

Both enrolled agents and CPAs must complete continuing education credits every year. This ensures they stay abreast of changes to the industry and the tax laws. 

Enrolled Agents vs. CPAs vs. Tax Attorneys

All three of these pros have the credentials to represent you in front of the IRS, but before hiring one, you also need to make sure they have the right experience. CPAs and tax attorneys complete years of education to earn their credentials, but these pros don't have to focus on tax resolution. There are all kinds of other specialties within the accounting and legal sectors. Enrolled agents, in contrast, do not need years of education, but they do need to pass a difficult three-part IRS test and complete continuing education every year. 

Enrolled agents almost always focus on tax prep or resolution work, and they often work alongside CPAs and tax attorneys. If you're trying to decide between a CPA, tax attorney, or enrolled agent, carefully consider their experience and look for someone who has a history of helping clients with similar concerns as yours. 

What Is The National Association of Enrolled Agents?

For over 50 years, the National Association of Enrolled Agents has provided support to enrolled agents. The NAEA has over 10,000 members, and it invites organizations to become strategic partners. 

The NAEA publishes information online and in the EA Journal on how to become an enrolled agent. The organization also provides professional support to these people. When asked about the benefits of NAEA membership, enrolled agents say the organization provides invaluable help and resources to get them through tax season. 

The NAEA also works to support the industry as a whole. And the organization fights against laws that may stymy the work of these professionals.

The NAEA Education Foundation (NAEA-EF) has existed since 1972. It helps people who want to become enrolled agents and even offers scholarships to aspiring candidates as they study for their Special Enrollment Examination (SEE). Additionally, it helps existing agents maintain their status. 

How to Find an Enrolled Agent Near Me

If you're looking for an enrolled agent near me, you can simply contact the local agents who appear in a web search. Alternatively, you can ask other local taxpayers or business owners if they have worked with an enrolled agent in your area. The NAEA also offers a database of enrolled agents. 

One of the most effective options is to search for an enrolled agent near me on TaxCure. At TaxCure, we have a directory of enrolled agents and other tax professionals from around the country. You can easily search for an enrolled agent who has experience with your tax concern in your area. You can also read more about the enrolled agent and look at reviews. TaxCure allows taxpayers to find the tax professionals that have the most experience with resolving their particular tax problems.

Don't wait. Get help with your tax concerns now. Contact an enrolled agent near you today.

Enrolled Agent Search

At TaxCure, we have created a unique search to find enrolled agents that help with tax problems. Not only can you search for enrolled agents, but you can search for CPAs and tax attorneys as well. Since tax attorneys and CPAs overlap with services that enrolled agents perform, you can be sure that you can find the best professional to help in your area. You can start your search to find a local enrolled agent, or a tax resolution professional using the "find a local tax pro" button located near the top of the page. You can then filter by tax professional type or just view all the professionals that can help with your unique tax problem.

Enrolled Agents by State

Looking for an enrolled agent close by? Click your state below to see enrolled agents who serve your area. If your location access is allowed on your device, you will see the tax pros closest to you that can assist with various IRS or state tax problems. You can then filter further by your type of tax issue or your desired solution to find the best enrolled agent near you.

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