back taxes or tax debt Archives

IRS private collections program less successful than expected

A tax collection program that relies on private companies to chase down debts brought in just more than it cost to set up and operate, according to an audit by the Office of the Inspector General. The Internal Revenue Service set up the program based on legislation from 2015 to pursue overdue taxes in Maryland and across the U.S. The expectation of lawmakers was that these companies would net $2.4 billion for the U.S. Treasury by 2025.

Those with tax debt may have trouble traveling abroad

Creating the Foreign Account Tax Compliance Act (FATCA) is among a series of steps that the government has taken to close the international tax gap. This gap is the difference between what the IRS takes in each year from overseas filers compared to what it is owed. However, Maryland residents and others who live or travel internationally may face passport restrictions for not paying taxes or filing tax returns in a timely manner.

Tax debt and passports

Many Maryland residents will not be allowed to apply for passports or renew their existing travel documents due to their unpaid taxes. Federal officials are renewing their efforts to enforce a 2015 law passed by Congress that compels the Internal Revenue Service and State Department to revoke or deny passports for individuals with tax debts of at least $51,000.

Tax woes for student loan borrowers

Many people living in Maryland are struggling with debt from student loans. For those with government loans, options are available that can reduce their monthly payments and provide debt forgiveness after a long period of repayment. However, what many people entering these programs don't realize is that they could face significant tax issues after the debt is forgiven.

3 approaches to resolving tax debts

Tax season does not always result in federal tax refunds for people in Maryland. A variety of reasons could cause someone to owe taxes at the end of the year and face challenges in coming up with the money for the Internal Revenue Service. According to the IRS, tax penalties hit roughly 10 million people every year. A tax bill cannot be ignored, but people sometimes have options for gaining more time to pay or negotiate a settlement.

Private tax debt collectors

Many people living in Maryland experience difficulty paying their federal taxes. While these individuals and couples may make good-faith efforts to work with the IRS, sometimes these efforts fail. The IRS is permitted to contract with private debt collection companies to pursue delinquent taxpayers.

E-filing can carry risks of late tax payment

Taxpayers in Maryland are increasingly using e-filing technology to submit their tax returns to the Internal Revenue Service each year. Tax returns must be filed each year in a timely fashion in order to avoid potential penalties. In the past, this simply meant mailing off a paper return before the due date, and the famous "mailbox rule" applied to tax returns filed close to the deadline. Lines at U.S. post offices were a frequent sign as April 15 approached.

IRS stepping up enforcement of "nanny tax"

Maryland residents may not think much of paying a household worker in cash. However, it may be a mistake to not withhold payroll taxes for those who made more than $2,000 in either 2016 or 2017. While children and parents are exempt from this requirement, others such as maids and gardeners may be subject to the nanny tax. Those who are classified as independent contractors will pay their own taxes at the end of the year.

How to avoid serious IRS penalties

A Maryland resident who owes money to the IRS could lose the ability to leave the country. The IRS can ask the State Department to not issue a passport or to decline to renew an existing passport. Typically, the IRS will only do this if an individual owes $50,000 or more in back taxes or more than $50,000 after penalties and interest are accounted for.

You do have tax resolution options: The Offer in Compromise

Since its inception, our blog has dedicated considerable time to discussing the many tools or "enforcement options" the Internal Revenue Service has at its disposal. As disconcerting as this type of information can be to learn, the purpose hasn't been to cause unnecessary alarm, but rather to impress upon people why it's so important for them to take federal tax matters seriously.

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