The IRS and the State Tax Agencies take tax debt serious and will go to great lengths to get them paid. Most taxpayers know that they will receive an IRS or state tax board notice immediately if they have any misstep with their returns. It should come as no surprise that the IRS and State Tax Agencies use a variety of methods to encourage taxpayers to adhere to all tax regulations.
One method is to have penalties and interest compound; the hope being that people address their tax debt sooner than later. Many taxpayers are frustrated to find out that their already unmanageable tax liability has increased drastically due to penalties and interest that have accrued on balances owed. Unpaid tax debt can increase by 50% or more, in some cases, due to various penalties and interest that continue to accrue until the outstanding balances have been paid or a tax settlement has been agreed upon.
Once a taxpayer has incurred tax debt for which they are unable to pay, prompt action is always best. By confronting the problem when it has occurred, some taxpayers may be eligible for abatement of penalties, offer in compromise acceptance, or one of the various tax settlement installment agreement types.
Many taxpayers are not aware that the California Franchise Tax Board is authorized to publish as a matter of public record a list of the 250 largest tax delinquencies in excess of $100,000 in an effort to collect outstanding tax debts. Although a taxpayer may be warned in advance, that notice like all others from the IRS or state tax boards, and it cannot be ignored. The California Franchise Tax Board is required to provide preliminary written notice to the taxpayer before making a delinquency public. The delinquency is published on the list If the amount due is not remitted or payment arrangements are not made within 30 days after issuance of the notice.
How does someone get off the FTB's most wanted list? The taxpayer's name must be removed no later than five business days after any of the following, if:
· The person liable for the tax debt has contacted the appropriate agency, and a resolution of the delinquency has been arranged
· The taxpayer has initiated a verifiable bankruptcy proceeding
· A verifiable bankruptcy proceeding has been completed and there are no available assets to pay the delinquency, or
· The agency determined the delinquency is currently not collectible.
Each calendar year, the Franchise Tax Board is required to make the list available to the public. The amount for which a notice of state tax lien has been recorded is the amount published as owed by a taxpayer. The term does not include a delinquency for:
· A taxpayer that has entered into an installment agreement
· If the taxpayer has filed for bankruptcy, or
· If the taxpayer has contacted the Franchise Tax Board in an attempt resolve the tax debt and such resolution has not yet been rejected by the FTB.
This is clearly one list you do not want to find yourself on! There are options to achieve tax settlements for all types of tax debt, but a taxpayer must take action, and not ignore the problem. To further explore these options, contact one of the licensed experts at Professional Tax Resolution today!
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