The tax laws are quite complex, and the section of the Taxpayers Bill of Rights exempting certain properties from IRS seizure is no exception. If you have questions after reading this article or other research, contact a tax professional.
The weekly amount of wages that are exempt from IRS seizure are those that is equal to your standard tax deduction plus allowable personal tax exemptions divided by 52. The amount of exemptions varies from one type to another. For example, the amount of personal property exempt from IRS seizure is $6,250.00 for fuel provisions, furniture and household items. The amount of tools, books, machinery or equipment used in a business or profession that can be exempt is $3,125.00. Non-exempt business property may not be seized unless an IRS district or IRS Assistant Director determines that the taxpayers' other assets are insufficient to cover the tax liability or that the collection of the tax is high risk.
A personal residence is exempt from IRS seizure if the unpaid amounts is less than or equal to $5,000. When the tax liability amount exceeds the $5,000 rule, the IRS must obtain written approval from the U.S. District Court Judge to seize the taxpayer’s personal property. The IRS must then give a (30) day written notice of intent on seizing the property in order to give the taxpayer a chance to contest the tax levy if it is erroneous. During the waiting period, however, the IRS may freeze the taxpayers assets.
The tax notice must meet certain criteria including a clear description of the tax levy procedures, the options of avoiding the tax levy such as installment payments of overdue tax, and steps for redeeming your property in the event that the IRS seizes it. The bank will hold your account for (21) days after receiving notice of an IRS tax levy before releasing the money to the IRS. This freeze allows you the time needed to contact the IRS. If the IRS attempts to tax levy your property and you have already paid the overdue tax bill, if the statute of limitations has expired, or if the property is exempt under the bankruptcy rules, then you should file an appeal with the IRS to release the tax levy. Make sure that you send a written statement to the IRS district director in the district where you live and the lien was filed, informing the director of the grounds of the appeal.
Showing posts with label Internal Revenue Service Fines. Show all posts
Showing posts with label Internal Revenue Service Fines. Show all posts
Wednesday, August 5, 2009
Thursday, July 30, 2009
Internal Revenue Tax Audit, IRS Audits
Being audited by the IRS is very stressful. One of the best methods of combating a bad situation is to be educated and informed. You should know what the infractions and penalties are that you could get hit with.
If you get a late filing infraction, your tax penalty could result in 5% per month of the net tax due to the IRS with a maximum of 25%. If you IRS tax return is more than 60 days late, the minimum IRS tax penalty is the smaller of $100 or 100% of the tax owed. If the late filing is due to fraud, you will get a tax penalty of 15% per month of the net tax due to the IRS with a maximum of 75%.
If you make late tax payments to the IRS, your penalty could be 0.5% per month of the unpaid tax due to the IRS with a maximum of 25%. This amount increases to 1% after the IRS issues an IRS tax notice of their intent to levy.
For negligence or disregard of IRS tax rules and regulations you could get a penalty of 20% of tax underpayment that would otherwise be due to the IRS. If you were being fraudulent then the penalty would increase to 75% of the tax underpayment that would be due to the IRS. If you substantially understate your income, which is greater than 10% of the correct tax liability or $5,000, then your penalty could be 20% of the tax underpayment due to the IRS.
If your infraction was overvaluating by 200% or more but less than 400% of the correct amount then your penalty could be 20% of the tax underpayment due to the IRS. Over Valuations of more than 400% would be subject to a penalty of 40% of the tax underpayment that would be due to the IRS.
If your infraction deals with Estate and gift tax under valuation or 50% or more of the correct valuation and if the tax underpayment exceeds $5,000 then 20% of the tax underpayment would be due to the IRS. If the same is true but the under valuation is 75% or more and the tax underpayment exceeds $5,000 then the tax underpayment penalty due to the IRS becomes 40%. I hope this helps you to determine what penalties could result from your IRS audit.
If you get a late filing infraction, your tax penalty could result in 5% per month of the net tax due to the IRS with a maximum of 25%. If you IRS tax return is more than 60 days late, the minimum IRS tax penalty is the smaller of $100 or 100% of the tax owed. If the late filing is due to fraud, you will get a tax penalty of 15% per month of the net tax due to the IRS with a maximum of 75%.
If you make late tax payments to the IRS, your penalty could be 0.5% per month of the unpaid tax due to the IRS with a maximum of 25%. This amount increases to 1% after the IRS issues an IRS tax notice of their intent to levy.
For negligence or disregard of IRS tax rules and regulations you could get a penalty of 20% of tax underpayment that would otherwise be due to the IRS. If you were being fraudulent then the penalty would increase to 75% of the tax underpayment that would be due to the IRS. If you substantially understate your income, which is greater than 10% of the correct tax liability or $5,000, then your penalty could be 20% of the tax underpayment due to the IRS.
If your infraction was overvaluating by 200% or more but less than 400% of the correct amount then your penalty could be 20% of the tax underpayment due to the IRS. Over Valuations of more than 400% would be subject to a penalty of 40% of the tax underpayment that would be due to the IRS.
If your infraction deals with Estate and gift tax under valuation or 50% or more of the correct valuation and if the tax underpayment exceeds $5,000 then 20% of the tax underpayment would be due to the IRS. If the same is true but the under valuation is 75% or more and the tax underpayment exceeds $5,000 then the tax underpayment penalty due to the IRS becomes 40%. I hope this helps you to determine what penalties could result from your IRS audit.
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