The IRS cp40 letter is a notice that your collection case, at least for a particular year, has been turned over to private collection. In certain circumstances it may be best to leave it there.
Understanding how the IRS operates, the laws the govern how the IRS deals with taxpayer debt, and conducting a complete analysis of the situation and the rules that apply... are the most important steps in dealing with an IRS debt.
In 2011 and 2012 the IRS felt the need to make some changes in an effort to help Americans struggling with tax debt. Bankruptcy filings were up, and many people were still dealing with the effects of a serious economic downturn. The changes weren't what many think they are, even now. The Fresh Start initiative wasn't an entirely new program that eased the ability to settle debt... and in the end, it doesn't seem to have made a difference in taxpayers' ability to settle IRS debt.
The IRS garnishes paychecks and issues levies on accounts every day. It can seize homes, 401k's, business equipment and almost everything else.
If the IRS has been "quiet" and you are wondering what is going on...there are ways to find out about your file without waking it up...for now.
Streamlined Installment Agreements with the IRS work well when it's best to avoid disclosure of assets, income etc.
Yes it's possible to settle tax debt with the IRS. But...it seems that many people have a misunderstanding about how it works. The ability to settle and the amount of the settlement depend on your unique situation and how that situation is applied to the law and rules. The settlement process isn't informal.
Surprisingly, bankruptcy is often the best way to deal with tax debt while solving some other problems as well.
The five most common ways people reduce IRS debt.
According to the IRS, it had about 77,000 employees in 2017. (See IRS Budget and Workforce Online Report) But for the vast majority of taxpayers with large tax debt problems, the only IRS employee they may ever meet in person is the IRS Revenue Officer.
The IRS Offer in Compromise isn't always necessary or available. Most people with tax debt just don't make good candidates for the IRS' formal “settlement” program.
The law under Internal Revenue Code Section 6330 requires that the IRS send out a “Final Notice of Intent to Levy” before it can actually levy an account or garnish a wage. It usually follows the law in this regard, and sends a specific letter out by certified mail.
Large credit card debt is bad enough with it's high interest rates and payments that never end. Mix in some tax debt and you've really created a serious problem.
Many of our clients have large IRS debt and some don't qualify well to settle their debt in an IRS offer in compromise. The truth is…most people with tax debt don't.
Certain IRS debts are dischargeable in Bankruptcy. Sometimes, bankruptcy makes the most sense. To know whether it makes sense, you need to have an attorney review your situation who has experience dealing with IRS debt in bankruptcy court.
Tax Debt left unattended will result in IRS collection activity…levies, liens and property seizures. IRS collection activity just doesn't stop on it's own. It will happen after the tax debt has been: a. Assessed (entered into the books as a debt) b. You have been sent a notice o...
1. BANKRUPTCY – WHAT IS IT? Bankruptcy is a process that takes place in Federal Court. The Bankruptcy Code governs the process and it is designed to provide debt and other relief to consumers and small businesses. Most consumers and small business people file a bankruptcy as a “liq...
1. YOU WILL LOSE YOUR HOME In Arizona, a person or married couple is allowed to protect the first $150,000.00 equity in their personal residence from creditors. This rule applies in bankruptcy as well.For example, if you own a home, you live in it, and it is worth $200,000.00 and yo...
Tax Debt? You Have Options
Creditors like to issue 1099-c documents if they've worked out a settlement and decided to forgive the debt entirely. Creditors also issue 1099 forms when bankruptcy is filed and it discharges the obligation to pay the debt. There are ways to avoid paying tax on the forgiven debt.
When the IRS is owed more than $10,000.00, it will record a notice of federal tax lien in the County in which you or your real property are situated. It will do this unless you've arranged a streamlined installment agreement, or you file a bankruptcy case before the recording occurs. Understanding how the lien may affect you in relation to bankruptcy is very important. ...
Just because you are in an IRS Installment Plan with the IRS doesn't mean that your work is done. One of the common questions I get is “why did the IRS terminate my installment plan?”.
IRS CP 504 Letter vs. IRS LT 11 Letter
If self-employed, it's usually best just to make the estimated tax payments monthly instead of quarterly.
There are dozens of issues that have to be recognized, discussed, and planned for… before a bankruptcy is filed. For people with IRS debt and an IRS lien, the issue of avoiding IRS seizure of a retirement account after bankruptcy is a big one.