The IRS recently announced it is ending its longstanding practice of surprise in-person visits to taxpayers. Optima CEO David King and Lead Tax Attorney Philip Hwang provide helpful insight on what communication you can expect to receive from a Revenue Officer moving forward and what you can do to resolve your tax burden with the IRS.
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Life can be challenging when facing both financial difficulties and health issues. Many taxpayers ask themselves, “Can I get disability if I owe back taxes?” For individuals experiencing a debilitating condition while also owing back taxes, the situation can seem overwhelming. However, it’s essential to know that there are options available to help ease the burden. In this article, we will explore the process of obtaining disability benefits while managing tax debt, providing a comprehensive guide to assist those in need.
Disability benefits are designed to provide financial support to individuals who are unable to work due to a severe medical condition. These benefits can be crucial for maintaining a basic standard of living and accessing medical care. Two primary types of disability benefits are commonly available: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
SSDI is a federally funded program that provides financial assistance to individuals who have worked and contributed to Social Security but can no longer maintain gainful employment due to a disability. To qualify for SSDI, an applicant must meet specific criteria set by the Social Security Administration (SSA):
SSI is another federal program that provides assistance to disabled individuals with limited income and resources, regardless of their work history. Eligibility for SSI depends on the applicant’s financial need, age, disability status, and citizenship or residency status. To qualify, you must:
While owing back taxes can complicate your financial situation, it generally does not disqualify you from receiving disability benefits. However, it’s essential to understand the potential impact on your benefits.
If you have unpaid tax debt that includes Social Security taxes, you may not be eligible for SSDI. This is because in order to qualify for SSDI, you need to have paid Social Security taxes for at least five of the last ten years. If you haven’t paid enough tax, you may not qualify for these benefits, even if your medical condition is serious. If you already receive SSDI, the IRS can garnish your pay, including up to 15% of your SSDI benefits, to pay off your tax debt.
You can still apply for SSI benefits even if you owe back taxes. As of October 2015, the IRS no longer levies SSI benefits.
Navigating disability benefits while owing back taxes can be a complex journey. However, it’s crucial to understand that these challenges are not insurmountable. By staying informed about your rights, seeking professional advice, and addressing tax debt proactively, you can improve your financial situation and focus on your health and well-being. Remember, help is available, and with the right approach, you can overcome these obstacles and find stability in challenging times. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.
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Tax evasion and tax fraud are federal crimes. Both involve the willful attempt to either evade the assessment or the payment of taxes. But at what point does the IRS pursue criminal charges for these actions? What consequences are included in the criminal charges? How does one prevent these charges from being brought upon them? Here’s what you need to know about how and when the IRS pursues criminal charges against a taxpayer.
The IRS typically does not pursue criminal charges unless you exhibit a pattern of intentionally breaking tax laws. This can include non-filing, filing fraudulent returns, falsifying information on your return, not paying taxes, and more. The IRS statute of limitations could trigger charges to be filed. Currently, the IRS has six years from the return filing date to pursue criminal charges that relate to failing to file and underreporting income. Finally, if you are ever audited, do not attempt to falsify records or omit information. This is a sure way to be implicated in a tax crime.
If the IRS opens a case against you, they will refer it to the Department of Justice for prosecution. In order for the IRS to be successful in convicting someone for tax evasion, they must prove without reasonable doubt that the accused taxpayer (or nonpayer) acted in a deliberate and willful manner to avoid paying their taxes.
While these charges are not as common as others, the penalties are very harsh and can have life-altering consequences. Being guilty of tax fraud can result in heavy fines, interest, penalties, and even jail time. The average jail sentence for tax evasion varies between three to five years. The sentence will depend on the severity of the case. In addition, you can be fined up to $100,000, or up to $500,000 for corporations. If you are found guilty of filing false tax returns, you can be fined up to $100,000 and up to three years in prison. Even misdemeanors, like failing to file, have harsh consequences. For example, you could owe up to $25,000 for each year of non-filing, and up to one year in jail.
On the more extreme side, willfully hiding offshore bank accounts can result in up to $500,000 in fees and up to ten years in jail. Even if the action was not willful it will result in penalties.
The answer is simple: always remain tax compliant. Avoid committing tax evasion or tax fraud, and always file and pay your taxes. If you’re unable to pay, contact the IRS immediately to see what options you have. If you find yourself stuck in a tax dispute with the IRS, consider hiring an attorney to fix the issue while it’s at the civil level to avoid the charge becoming criminal.
Remember, you are guilty even if you are only helping someone else evade their taxes, according to Section 7201 of the U.S. Internal Revenue Code. In any case, working with the IRS can help avoid criminal charges being filed against you. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.
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IRS Notice CP14 is sent to taxpayers to inform them of an outstanding balance on their federal tax account. It serves as a bill for unpaid taxes. It includes details such as the amount owed, accrued interest, and any penalties incurred. While receiving this notice might not be a shock for many, some taxpayers impacted by a declared disaster area may be surprised to see a CP14 in their mailbox despite IRS promises of tax relief. If you are one of these taxpayers who mistakenly received IRS Notice CP14 despite being in a disaster area, don’t panic. Many erroneous CP14s have been issued by the IRS. Here is what you need to know.
The IRS has continued to issue automatic tax extensions to those impacted by natural disasters. These areas have included impacted counties of the following 12 states:
It also includes the impacted areas of Guam and the Mariana Islands. A full list of impacted qualified disaster areas can be found at https://www.irs.gov/newsroom/tax-relief-in-disaster-situations. All taxpayers in impacted areas were automatically given an extension of time to file. They might’ve also received an extension to pay until October 16, 2023, or another form of tax relief.
IRS Notice CP14s have been sent out because the IRS is legally required to if a balance is due. However, many Californian taxpayers living or working in disaster areas have received this notice which demands payment to the IRS within 21 days. Unfortunately for Californians impacted by disaster, this sends mixed messages. The IRS has issued guidance to let these taxpayers know that they do indeed have until October 16, 2023 to file and pay their 2022 taxes.
If you received IRS Notice CP14 but you have been given an automatic tax extension due to disaster relief, you do not need to worry about submitting payment within 21 days as the notice instructs. In fact, these letters should also include a specific insert stating that the payment date indicated in the letter does not apply to anyone covered by a disaster declaration, and that the disaster dates still apply.
While it may seem counter-intuitive, affected taxpayers do not need to call the IRS for confirmation. Doing so may result in extremely long wait times. The IRS has issued an apology for the confusion this has caused. At Optima, we understand how intimidating an IRS notice can be.
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The Inflation Reduction Act of 2022 has equipped the IRS with more than $80 billion in funding. That means more audits and more enforcement. CEO David King and Lead Tax Attorney Philip Hwang provide helpful tips on what you can expect from the IRS moving forward and how you can resolve your tax burden.
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