Tax Balance Due: 3 Steps to Address IRS Notice CP14
May 8, 2018
Three Steps to Address an IRS Notice CP14
Unfortunately, filing your tax return isn’t always your only contact with the IRS for the year. If the federal tax agency finds errors on your return that lead to an assessment, they will send Notice CP14 for collection. This isn’t a time to freak out as long as you follow the appropriate steps to address the issue.
If applicable, you’ll receive your “balance due” notice within four weeks of your return being processed. This letter is the first contact from the IRS to collect overdue taxes. If you ignore or neglect to pay what’s owed, then the IRS sends additional notices and begin aggressive collection actions, like liens and levies. Here are three steps to take when you get your “balance due” notice:
1. Review the Notice CP14 Details
The first thing to do when receiving Notice CP14 is to know why you received it. The notice includes the following:
- The tax year for which taxes are due
- The notice issue date
- Your Social Security Number
- IRS phone number
- Tax amount owed
- Payments and credits
- Penalties charged on taxes owed
- The final amount due to be paid
- The deadline for paying the amount owed
The notice also includes information on payment options, penalties, and interest.
2. Determine If the IRS is Correct
Before agreeing or disagreeing with the notice, check to see if your return had errors that led to the assessment of taxes due. If you find errors, you will need to pay the amount owed before the payment deadline in order to avoid further penalties and interest.
If you don’t see any errors or you find a different amount than what the IRS determined, you can call the IRS on the phone number indicated on the notice. An IRS representative will assist you in resolving the issue.
3. Pay the Amount Due
You can make the payment using IRS Direct Pay, a service that allows you to electronically pay your taxes directly from your savings or checking account. Alternatively, you can pay by credit or debit card.
If you can’t pay the full tax owed, either send a request to the IRS to receive up to an additional 120 days to pay or set up an Installment Agreement payment plan. An Installment Agreement allows you to pay your tax bill in fixed monthly installments. Get help from a tax relief professional before requesting your Installment Agreement to ensure you get the best tax debt resolution for your situation.
The Truth About the IRS’s Private Debt Collection Agencies
April 19, 2018
The IRS has called for backup from the private sector, and these four companies could be coming after your tax debt in lieu of the IRS. Here’s what you need to know about private debt collection agencies (PDCs) to stay informed, lawful and safe.
What’s the deal with Private Debt Collection Agencies (PDCs)?
PDCs aren’t rookies to the federal tax debt collection game – they assisted the IRS in both 1996-1997 and 2006-2009. Despite warnings from the IRS and National Tax Advocate on the unsuccessfulness of these previous efforts – wasting money, yielding half the amount of collections, and contributing to inequities in the U.S. tax collection system – it seems that history is repeating itself.
Congress passed Fixing America’s Surface Transportation Act (FAST Act) in December 2015, which includes a section requiring the IRS to use PDCs for outstanding tax debt that the IRS is no longer pursuing. Now, the program is in full swing. The IRS has hired four PDCs: Conserve, Pioneer, Performant Recovery, and CBE Group. Though not all tax debt cases are eligible for PDCs to handle (e.g. offer-in-compromise, innocent spouse cases, deceased), you may be getting a notice that your account will be in new (private) hands.
What are the risks associated with PDCs?
The problems don’t necessarily lie with the four companies themselves, but the program’s loopholes. Here are some of the dangers associated with private debt collection:
- Scam magnets: More scam artists can pretend to be PDCs, especially because PDCs aren’t required to identify themselves as IRS contractors. Here’s a smart rule of thumb: Do not disclose any personal information to someone randomly demanding payment over the phone or internet.
- Elevated risk for low-income taxpayers: PDCs have an agenda to push people to make payments, even if the taxpayers can’t afford it. This can create economic hardship for people who would otherwise qualify for alternative payment plans by the IRS. National Taxpayer Advocate reports half of taxpayers outsourced have incomes of less than 250 percent of the federal poverty level (FPL) and nearly a quarter are at less than 100 percent of the FPL. The result is low-income, elderly, and income-restricted individuals are buried deeper in economic woes and unpayable debt.
- A lack of consumer awareness: The IRS wants consumers to know what’s up, but public awareness campaigns are minimal at best due to drastic IRS funding cuts. As a result, consumers are left in the dark and even more vulnerable to scams.
What you need to know to protect yourself:
- How the IRS works – The IRS isn’t like your crazy ex – the agency will never call or text you out of the blue to demand payment, but rather send you notices in the mail that progressively increase in urgency to act. If your case has been assigned to a PDC, the IRS will let you know so it won’t be a surprise.
- Don’t pay the PDC directly – Though the PDC is hired to collect your debt, you’re not actually writing out your check to them. All your repaid debt will go straight to the IRS as usual.
- Consult with a licensed tax professional – Turning to a licensed tax professional, which may include CPAs, enrolled agents or tax attorneys, can give you the support and direction you need regarding your tax debt. These experts can negotiate with the IRS on your behalf to relieve tax debt or tie-ups like liens, levies and wage garnishments.
While the lawfulness of PDC use is under scrutiny, it is today’s reality. The key to avoiding trouble is being smart about tackling your tax debt and not going at it alone.
Remember: It’s crucial that you never disclose information to someone calling or messaging to collect immediate payment. Instead, call the IRS directly to see if you owe taxes, or call Tax Defense Network for a free consultation at (877) 588-1098.
4 Things to Look for in a Tax Debt Resolution Company
July 11, 2017
If you owe the IRS and don’t know where to start, then you’re one of over 8 million Americans who are in the same boat. And while many financial pros can claim to help, selecting one isn’t the same as choosing a candy bar at the grocery checkout line.
Tax debt resolution professionals help clients figure out the best approach to relieving tax debt or resolving issues concerning the IRS, but they’re not all cut from the same cloth. That’s why it’s important to evaluate which company can best serve you (and who you can trust) before signing on the dotted line.
Here are four things to consider when choosing a tax debt resolution provider:
1. Proven experience and dynamic resources – When tax relief can seem like rocket science, you’ll inevitably have questions for the pros. Look for a company that not only knows their stuff (hint: check their website, social media accounts and credentials), but grants clients direct access to licensed professionals such as attorneys, CPAs and enrolled agents. It’s a good sign that you’ll have a fast pass to the resources you need when these professionals are on staff.
Industry expertise pairs well with practice, so consider how long the company has been in the market and its track record. Is it a law firm that recently added tax services? Is it a bike shop turned tax solutions provider? In short, the longer the company has been successfully helping customers like you, the better.
2. A commitment to client empowerment – When you owe the IRS thousands of dollars, you don’t exactly feel powerful. Client empowerment occurs when a company puts forth effort in communication, guidance and transparency to help you feel valued. A tax resolution company that not only empathizes with your situation, but is a partner to you throughout the process, can be your best catalyst for regaining confidence. If you have a designated consultant on your case, this is a good sign you’ll be in good, steady hands.
3. Accreditation and stellar ratings – There are many unbiased, third-party review sites that provide valuable insight into a company’s business practices and the client experience. Organizations like Better Business Bureau (BBB), Best Company or Trustpilot take real customers’ reviews and ratings to grade companies. For example, the BBB rates companies from F (lowest) to A+ (highest), so you can ensure a company has a “passing” grade.
4. A broad range of service offerings – Here’s a little secret: Most tax resolution companies offer the same basic services. Sift out a true diamond in the rough by seeing if the company goes beyond the basics. Look for a tax services provider offering (and mastering) complex issues such as:
- Federal and state taxes
- Business tax solutions
- Self-employment tax solutions
- International filing
- Trust and estate taxes
- Offshore Voluntary Disclosure Program (OVDP)
Ideally, you want a partner you can trust for all tax-related services or guidance you may need now and in the future.
When you check “yes” to these four must-have qualities, you’ll be on your way to resolving tax issues in no time.
Tax Defense Network has been in the business of helping taxpayers resolve their issues for 10 years and has an A+ rating with the Better Business Bureau. To start the journey to tax debt relief alongside experienced professionals you can trust, call Tax Defense Network at (877) 588-1098 or chat with an analyst today.
What Happens to Your Tax Debt When You Die?
June 30, 2016
Planning the logistics of your departure from this world may not be a comfortable activity, but a little time and energy on your part can save those you leave behind from an arduous task. You want to be certain that your money, property and assets are divided and distributed according to your wishes. As you navigate this essential activity, it’s critical to determine how your taxes – and any existing problems – can upset your postmortem financial blueprint.
The Life of a Tax Debt
Any delinquent federal tax balance has a lifespan of ten years. This liability clock begins on the date of assessment and ends ten years later. For example, a tax debt assessed on June 1, 2017 will not be excused until June 1 2027. There are factors that can extend this time frame, but if you did nothing to resolve your debt, you can expect that it will be collectible for a full decade.
During Your Debt’s Life Cycle
Any unresolved IRS balance is subject to collection activity. This means that you are vulnerable to efforts such as a levy against your bank accounts, a wage garnishment or even a property seizure. The longer you wait to make resolution efforts, the more likely you are to experience aggressive collection measures.
When You Die
Unfortunately, even your death does not necessarily excuse your tax debt. If your delinquent balance has five years left before it reaches expiration, then collection activity may continue to be taken for this time. And while you obviously won’t be liable for payment, your family may be.
In the event that you filed a joint tax return with your spouse and that ultimately yielded a tax debt, both you and your spouse are initially responsible for the balance. Should you pass away before this sum is paid, your spouse will still be subject to IRS collection efforts. Your partner can make an innocent spouse request if he or she had no knowledge of (and no reason to know about) filing errors which led to the tax debt; if approved, the IRS will not pursue collection activity against your surviving spouse.
While your family and friends won’t be vulnerable to IRS collections for your tax debt, the money and/or property you intend to leave them can be. Following your demise, any outstanding tax liability must be paid before your assets are allocated to your heirs. Failing to plan properly can make a mess of your affairs; one that those you leave behind will be forced to clean up before receiving what’s left of your estate.
How to Be Ready
You can never be completely prepared to shuffle of this mortal coil, but with some careful planning, you can be reasonably sure that a tax debt won’t complicate matters for your spouse and family. You may wish to consult with a fiduciary when arranging your affairs and, if a tax debt exists, consider speaking with a licensed tax professional. As long as a resolution is in place for any IRS issue, you can rest easier knowing that you’re working towards outliving your tax debt – a proposition that both you and your family can appreciate.
Tax Debt and Your Job
June 16, 2016
Discovering that you owe tax debt can be a truly stressful (and embarrassing) experience. Your IRS problems may even spread beyond the relative comfort of your home, potentially impacting your job or employment prospects.
Before dismissing a delinquent tax balance as “something to handle later,” first consider what consequences can befall your professional life. Also, understand that resolving your tax debt is within your power, and is certainly in your best interest. Your work reputation might just depend on it.
Tax Debt Escalation
It’s helpful to first examine how a tax debt becomes a problem larger than simply a bill to pay. The IRS will typically afford you a certain period of time to either pay your tax debt in full, or negotiate a formal resolution. However, if you take no action after receiving delinquent notices, you open yourself up to the full scope of the IRS’ collection apparatus.
When you don’t willingly attempt to resolve your tax debt, the IRS can take aggressive steps to take what is due. One collection method that you may be subject to is a wage garnishment. This involves a percentage of your earnings being withheld in order to satisfy your tax debt. Your employer will not learn the specifics of your delinquent tax bill, but a wage garnishment will provide an unfortunate illustration of your circumstances.
If you are a contract worker, the full amount of your earnings can be taken rather than just a percentage. Regardless of whether you are a contractor or traditional employee, your employer will be expected to comply with the IRS’ garnishment instructions. In other words, you won’t be able to negotiate with the boss, no matter how friendly you are.
Whether you are rooted in your current position or you’re pursuing a new job opportunity, there is another IRS collection tactic to keep in mind: the lien. The IRS can place a lien against you when you have a delinquent balance, which effectively tells other creditors that they are first on line to collect from you. This action will negatively impact your credit, impairing your ability to secure a mortgage, loan or even rent.
But your work life may also be in trouble when a lien is present. Many employers will require you to maintain healthy credit as a condition of employment. This is particularly true if your position requires security clearance or necessitates the use of a professional license. Finally, prospective employers are more frequently examining candidates’ credit scores as a part of the hiring process; a tax lien can jeopardize what might otherwise be a tangible opportunity.
No matter what type of collection action you’re facing or are already experiencing, you always have the option to reach a formal resolution with the IRS. This will likely involve reaching an agreement over how you will pay your tax debt over an extended time, although a variety of options may be available to you. You may wish to consult with a licensed tax professional to explore the full range of tax solutions.