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San Jose, CA tax law attorney for IRS examinations

Many people have felt the sinking feeling that accompanies receiving a letter from the Internal Revenue Service (IRS). While it may be tempting to simply put the letter in a drawer and forget about it, ignoring the IRS can result in serious consequences. If you are contacted by the IRS and asked to make an office audit appointment, you should be sure to schedule the appointment, contact a tax lawyer for help if you need it, and attend the meeting. If you have already missed an audit meeting, you may wonder about the consequences you may face and what steps you can take to protect yourself.

Voluntary Appointments Versus Required Appointments

When the IRS examines a tax return and decides that the tax filer has misfiled, it may send a letter requesting an appointment. The tax filer may respond to the letter and schedule an appointment, or s/he may choose not to. If you have received a letter and did not schedule the appointment, the IRS has the authority to request a legal summons from a judge and demand that you attend it. If you fail to show up at an appointment that you personally scheduled, you will likely get the chance to reschedule the meeting without any major consequences. However if you were required to be at the appointment because of a legal summons and do not show up, the consequences will be much more serious.

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San Jose, CA tax lawyer for innocent spouse relief

Married couples have the option to file a joint tax return instead of separate tax returns. There are often benefits to choosing this filing status, but there can also be drawbacks. Couples who file jointly are “jointly and severally” responsible for any tax liability, interest, or penalties due. The terms “jointly and severally” mean that each spouse is legally responsible for the entire tax debt. When one spouse does not adequately fulfill his or her tax obligations, this can leave the other spouse in serious trouble with the Internal Revenue Service (IRS). Fortunately, there are several ways that a spouse in this situation can be released from tax liability. One of these types of tax relief is called “innocent spouse relief.”

What Is Innocent Spouse Relief?

Imagine this scenario: your wife is a business owner who struggles to keep track of her profits and expenses. When you jointly file your tax returns, the IRS notices that there are inconsistencies with the business income, expenses, and/or deductions. You are audited. As a result, both of you now owe a significant amount of money in back taxes. In situations like this, innocent spouse relief, also called innocent spouse protection, may help a guiltless spouse avoid his or her spouse’s tax liability.

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San Jose, CA tax law attorney for expatriates

When an individual chooses to move to another country, he or she may relinquish his or her United States citizenship. However, many of these former citizens may not know that they have unfulfilled tax obligations to the United States. Unpaid back taxes can result in additional debt due to accruing interest as well as serious penalties. Fortunately, the Internal Revenue Service (IRS) recently announced the creation of several procedures through which former citizens can be relieved of their U.S. tax responsibilities.

Former Citizens Must Meet Certain Criteria for Tax Relief

If you are an expatriated person who is not currently compliant with U.S. tax laws, you may worry whether or not you can even afford to pay your back taxes. Unfulfilled tax obligations can quickly spiral out of control – especially when a person was not aware that he or she even owed back taxes. In an effort to help former citizens come into compliance with the law, the IRS is allowing qualifying individuals to be relieved of their tax obligations. These individuals must meet certain criteria in order to be eligible for tax relief. The criteria for “Relief Procedures for Certain Former Citizens” include:

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: San Jose tax relief lawyerWhen an individual fails to pay his or her taxes, the Internal Revenue Service (IRS) has the authority to collect taxes, penalties, and interest by garnishing the individual’s wages. Typically, creditors are required to get a judgment before they can garnish wages, but the IRS does not need to meet this requirement. Furthermore, the IRS is often authorized to garnish a much greater amount of a person’s wages than other creditors can take. The best way to avoid wage garnishment is to prevent collection actions in the first place. However, this is not always possible. Fortunately, there are still actions you can take that may be able to stop wage garnishment.

Responding to a Collection Due Process Notice

When tax debt goes unpaid, the IRS may issue you a Collection Due Process notice. This notice is to inform you that your future wages will be intercepted for the purpose of debt repayment. You then have 30 days to request a hearing and formally respond to the notice. The most common ways to prevent IRS collection actions such as wage garnishment include:

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San Jose, CA quarterly tax payment attorneyIf you have to pay estimated quarterly taxes, it is critical to pay the correct amount. Underpaying can result in a penalty, and overpaying gives what is essentially an interest-free loan to the government that cannot be recouped until a return is filed.

This is especially true in light of the Tax Cuts and Jobs Act of 2017, which substantially changed income taxes. The law altered the tax brackets and tax rates for individual or married taxpayers, made changes to the allowable deductions for business expenses, increased the standard deduction and child tax credit, took away personal exemptions, and limited or ended other deductions. Because of this, many taxpayers will need to adjust the amount of the taxes they remit each quarter via estimated tax payments. 

Who Must Pay Estimated Quarterly Taxes?

Typically, taxpayers have to make estimated tax payments if they expect to owe tax of $1,000 or more when their returns are filed. One common category of taxpayers who should pay estimated quarterly taxes are people who are self-employed. In addition, investors and retirees often need to make these payments because they have a substantial portion of income that is not subject to withholding. Other income that is typically not subject to tax withholding includes interest, capital gains, stock dividends, alimony or spousal support, and income from rental property.

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