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How Does the IRS Calculate Penalties and Interest?

The Internal Revenue Service is well known for its enforcement of stiff penalties and interest for tax liabilities. In fact, some of the first questions I get from prospective clients facing federal tax debt are along the lines of “How much of this bill is penalties and interest” or “Is there any way you can remove the penalties and interest”. The most common penalties imposed by the IRS are (1)…

What You Need to Know About Tax Relief Companies

We’ve all heard, ad nauseum, the constant television and radio commercials from tax relief companies claiming they can settle your tax debt for “pennies on the dollar” while prompting you to call some 1-800 number. These companies often refer to the IRS “Fresh Start” program and mislead taxpayers by saying they qualify for an IRS hardship or settlement program, a determination that is ultimately made by the IRS. The Federal…

When the IRS Comes Knocking: Understanding an IRS Summons

The IRS has broad authority through its summons power when conducting an audit or investigation to obtain and examine information from taxpayers and third-parties. In fact, I.R.C. § 7602 allows the IRS to issue a summons to: (1) a person liable for tax, (2) an officer or employee of such person, (3) a person with possession, custody, or care of the business books of a person liable for tax, or…

The IRS Offer in Compromise: Doubt as to Collectability

One of the most powerful tools available to taxpayers facing federal tax debt is the IRS offer in compromise – doubt as to collectability. This is typically what those “1-800” tax service company commercials are referring to as “pennies on the dollar” tax settlements. Taxpayers often do not realize how this process works and the complexities that can arise through the course of submitting an offer in compromise. An offer…

What You Need to Know About Resolving IRS Tax Debt

Many American taxpayers face income tax debt with the IRS and are subjected to severe IRS collections efforts, including levies, garnishments, and liens.  Taxpayers facing what may seem like the full force of the federal government breathing down their necks far too often give up on a disputed tax issue or back taxes that they just can’t pay.  With a better understanding of their rights, taxpayers can perhaps find some…

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