FAQs - taxpayer question and answers about concerns related to tax problems.

Frequently Asked Questions

Welcome to our FAQs page at The Tax Relief Company, your trusted source for expert tax resolution services. Are tax problems weighing you down? Are you in need of effective tax relief solutions? Look no further! We’re here to answer your questions and provide comprehensive answers to questions that trouble you. Whether you’re seeking guidance on tax problems, exploring tax resolution options, or simply aiming to understand the process better, you’re in the right place. Delve into our FAQs below to discover how we can assist you in finding peace of mind.

Question: What is the difference between a tax levy and a tax lien?

Answer: Here is an explanation of the differences between a tax levy and a tax lien in simple terms:

Tax Lien:

  • The IRS files a legal claim to your property as collateral for unpaid taxes.
  • It attaches to your property, like your house or car.
  • The property can then be sold to pay off the debt.
  • It doesn’t take your property right away. You can still sell or transfer it if you pay off the taxes owed.

Tax Levy:

  • This is when the IRS seizes your assets like money, wages, or property to pay off taxes you owe.
  • They can take your bank accounts, retirement accounts, social security benefits, rental income, accounts receivables, etc.
  • The money is actually taken by the IRS to directly pay the tax debt.
  • You lose access to the levied asset immediately.

The main difference is a lien just holds your property as collateral, while a levy actually takes your assets and money to satisfy the tax debt. A lien comes before a levy if you don’t pay the owed taxes.



Question: Do you pay taxes on student loan forgiveness?

Answer:Taxable Income? Under current law, the tax code treats forgiven or canceled debt as taxable income, with some exceptions. If a borrower has debt forgiven, it is treated as if the borrower earned additional income in the previous tax year equal to the amount forgiven.


Question: What happens if you owe the IRS taxes and can’t afford to pay?

Answer: When you file your tax return, pay whatever you can. The IRS will bill you for the rest. You’ll owe interest on the balance, and you might owe a late payment penalty. If you owe $50,000 or less in combined taxes, interest, and penalties, you can request an installment agreement.


Question: I am an employee, getting a W-2 every year. My boss does not reimburse me for my job-related expenses. I am hearing that I cannot deduct these expenses anymore.

Answer: With the passing of the Tax Reform Act in December 2017, these expenses, sometimes referred to “tier 2” deductions, are no longer deductible. Other such expenses that are lost are job hunting expenses, tax preparation fees and hobby expenses.

Question: I’m currently separated from my spouse, who owns his own business, and we are in the process of getting a divorce. I have always filed jointly with my spouse, and now the IRS is sending me notices stating I owe $35,000. I have no idea how they are coming up with this amount, as my spouse said he was paying the IRS.

Answer: You may be able to avoid this liability entirely under the IRS’s Innocent Spouse Relief rules. Under federal law, if an income tax return is signed by both partners. Both spouses are 100% responsible for the taxes owed. However, the law permits special consideration where a spouse cannot be held responsible for mistakes that are attributable to the other spouse.

If you meet the following criteria, you may be able to apply for innocent spouse relief:

  • Your spouse didn’t report all their income, and you were not aware of it and had no reason to know about it when you signed the tax return; it would be unfair to hold you liable for the taxes owed due to your spouse’s error.
  • If you feel you were deceived by your spouse or tricked into signing a return you thought was correct, this will help your case too. There are many other ways you may be eligible for relief under the IRS’s innocent spouse rules, and we can help sort this out and determine the proper path for resolution.
Question: How much are penalties and interest on unpaid taxes?

Answer: The failure-to-file penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to a maximum of 25%. If your return is over 60 days late, there’s also a minimum penalty for late filing; it’s the lesser of $210 or 100 percent of the tax owed.

Question: I owe back taxes and am not sure how to resolve this issue, and I’m panicking. What should I do?

Answer: If you owe back taxes to the IRS, some amount of panic is understandable. After all, the Internal Revenue Service has the power of the federal government in its corner, something no other debt collector can claim. They are considered the most brutal collection agency on the planet. It is easy to freeze up and just do nothing when you owe back taxes to the IRS. But hiding from or doing nothing about your tax debt will not make it go away. In fact, ignoring the taxes you owe will only make the situation worse. Interest and penalties can add up.

You also risk having your paycheck garnished (the IRS does need a court order to do this) or your bank account levied. The IRS can also file a Notice of Federal Tax Lien, making it all but impossible to obtain financing for a car or home. So instead of panicking about your tax debt and hoping the problem will go away, you need to take some proactive steps.

Now is not the time to panic and hide – now is the time to start taking action. Some of these steps you can do on your own if you’d like, while others will likely require the intervention of an experienced tax resolution expert. There are some proactive steps you can take to get a handle on your tax debt.

Question: My wife owes back student loans. As a couple, our tax refunds have been applied to her student loans for the past several years. I was told that if we filed married filing separately, only her refund would be applied to her back student loans. Therefore, I should receive my refund. Is this right?

Answer: There are two ways you may be able to file a tax return when you are married in your specific situation. They are:

  1. Married Filing Separately – This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. The problem is that you will usually pay more tax because there are “special rules” that apply.
  2. Married Filing Jointly – Generally, if you file jointly, the IRS will take any refund available to pay either a federal tax debt or debt owed to another federal or state agency. However, when a joint return is filed, and only one spouse owes a past-due amount, the other spouse can be considered an injured spouse. This is a very complicated issue, and your tax professional can share additional information.
Question: I was self-employed and haven’t been able to pay my taxes for 3 years. Now I’m a W-2 employee, but I’m getting letters from the IRS demanding payment and threatening to garnish my paycheck. What should I do?

Answer: The IRS doesn’t like being ignored, and they want you to know they won’t go away. They have a lot of power over your life. They have 10 years to collect from the date you filed your return. Not only can they freeze your bank accounts and take the money, but they can also garnish your wages and legally take as much as 75% of your net paycheck. All without a court order! The IRS can and will slap a lien on your house and other property as well. If you sell your house, the IRS gets their money first before you do.

Federal Tax Liens will damage your credit, making it harder to rent an apartment, get a car, obtain credit, and even get a job. The IRS can even show up at your door! Interest and penalties continue to accrue on a daily basis. You need professional expert help to deal with the IRS! You can’t do this on your own. We offer immediate relief by protecting you from the long arm of the IRS. This is what we do on a daily basis. Don’t let the IRS take what you worked so hard to earn.

Question: I received a Notice of Federal Tax Lien via certified mail for unpaid back taxes, and I’m scared and don’t know what to do. Can you help?

Answer: Yes. A Notice of Federal Tax Lien (NFTL) is a public record and is filed with the County Recorder where you reside. A federal tax lien will also negatively impact your credit report scores. It is a notice to all your other creditors that the IRS has a secured interest in all your real and personal property you have now and acquired in the future.

A federal tax lien will make it very difficult, if not impossible, for you to purchase a home, vehicle, and other property on credit. It may also prevent you from accessing the equity in real estate that you may have built up over the years.

However, the IRS has several different solutions that can resolve your NFTL if you qualify. You can resolve a federal tax lien by paying it in full, or if that is not an option, you can find out if you qualify for a “Release of Lien,” a “Lien Subordination,” a “Lien Discharge,” or “Lien Withdrawal” It is essential to keep in mind that IRS problems didn’t just happen overnight and will take some time to resolve.

The good news is that, generally, you won’t have to meet or even speak with the IRS while we’re retained. It’s important to consult with a tax resolution professional to see which Lien relief solutions you may be eligible for before the IRS starts enforcing aggressive collection action against you. We can help protect what you have and preserve your rights!!

Question: I owe a lot in back taxes. I’m continually getting threatening letters from the IRS. This has become a big problem that I have no idea how to solve. Can you help me?

Answer: For what it’s worth, take some comfort in knowing that you are not alone. There are millions of Americans in similar situations, dealing with debt hanging over their heads and concerned about how it will affect their future.

The good news is: You have many options. To fully understand and take advantage of your options, we urge you to see a qualified tax resolution professional. The tax resolution professional will take a close look at your previous returns, looking for mistakes that may have resulted in an inflated tax debt amount. This process alone can substantially lower your IRS debt.

Once you and your qualified tax professional have analyzed your previous returns, the next step is to negotiate a resolution with the IRS. You will most likely be looking at one of two options – the Offer in Compromise or the Installment Agreement.

The Offer in Compromise was created for people who owe a substantial amount to the IRS but who, for whatever reason, are unable to pay their tax debt off, even over time. The Offer in Compromise allows taxpayers to negotiate a settlement amount that will take care of the entire tax debt once and for all. This settlement agreement can lower the tax debt by a significant amount.

If you do not qualify for the Offer in Compromise – and to do so, you must be able to prove eligibility – then you may consider the Installment Agreement, which allows you to pay off your debt by making manageable monthly payments.

Question: I received a notice from the IRS because I did not have the funds to pay the taxes I owed on my 2016 income tax return. I also was late in filing my tax return. Not only is the IRS demanding the tax I owe, but they have slapped on these huge amounts for penalties and interest. I had extenuating circumstances that caused all of this. This isn’t fair…what can I do?

Answer: Your Tax Resolution Specialist can request a removal (abatement) of penalties in two ways: 1) “First Time” Penalty Abatement and 2) a Reasonable Cause Argument. The IRS writes off billions of dollars in penalties every year, but you must know how to do it correctly.

Question: I am planning on getting married, but my boyfriend owes money to the IRS, and he has not filed taxes in several years. How can I protect myself from his tax debts? Will I be liable?

Answer: However, if these late returns result in a tax due and he does not pay, they can levy your joint bank accounts.

After the wedding, you have to decide whether to file jointly or married filing separately. I would keep a minimal amount in a joint bank account, but you should also open separate accounts, one for just you and one just for him.

If you file jointly, any joint refund can be used to pay down his debt, even if the tax refund is due to your activity.

Filing separately may cost more tax for each of you, but it avoids this issue.

Another option is to file jointly and then file an injured spouse claim.

Question: If I receive a CP2000 notice, will that affect my current refund?

Answer: It depends. If you owe back taxes to the IRS, they may keep your refund.

The CP2000 notice means that the income and/or payment information the IRS has on file for you doesn’t match the information you reported in your return.

You’ll need to:

  1. Carefully read your notice. There may be a number on the notice. Complete the notice response form (if there is one if not, just follow the instructions).
  2. If the information is wrong, contact the person or business reporting it and ask them to correct it and provide the IRS with the updated information.
Question: How Soon After You’re in Collections With the IRS Will They Garnish Your Wages?

Answer: If you go into the IRS collections process for delinquent taxes, you will be notified and offered payment arrangements before the agency garnishes your wages. The IRS does not have to get a judgment, like other creditors do, to start garnishing. However, they try to work with you before taking that drastic step. You’ll receive at least two notices, one itemizing the amount you owe with a deadline for full payment and a final notice letting you know the IRS plans to garnish your wages. You have 30 days to respond to the final notice and work out other payment arrangements.

Question: I owe the IRS about $9300.00, and I just heard about the Fresh Start program. What is it?

Answer: The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from the Fresh Start program.

If you owe less than $10,000, generally, the IRS will not file a lien notice. When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien.

When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien.

Some taxpayers may qualify to have their lien notice withdrawn if they are paying their tax debt through a Direct Debit installment agreement.

If a taxpayer defaults on the Direct Debit Installment Agreement, the IRS may file a new Notice of Federal Tax Lien and resume collection actions.

Question: What Do I Do If I Owe the IRSTaxes But Don’t Have the Money to Pay?

Answer: First, don’t panic! Second, don’t delay in filing your tax return! You should always file your return on time to minimize your tax penalties. Even if you can pay nothing, you should file on time to avoid a greater tax penalty.

Then, try to figure out how much of your tax debt you can actually afford to pay now. You should always pay as much as you can in order to minimize penalties because your penalties will be based on the amount you still owe to the IRS.

Question: What do I do if I receive a tax lien notice in the mail?

Answer: If you receive a Notice of Federal Tax Lien in the mail, do not throw it away. This letter is the IRS’s way of letting you know that they mean business.

When the IRS files a federal tax lien against you, they lay claim to all of your assets. If, for instance, you want to sell or refinance your home, you won’t be able to do it until you pay your back taxes. If you continue to refuse to settle your tax debt, the IRS can seize any property you have—your home, your car, your business, etc. This process is known as levying.

In addition, the IRS will notify creditors of your tax lien. The lien will appear on your credit report and can lower your chances of getting a loan or mortgage. The lien—and tax debt—will follow you, even if you file bankruptcy.

Question: I have a huge tax amount owing. The IRS is harassing me, and I need help. I got a quote from another company at a much lower price. Why should I go with you?

Answer: If someone quoted you a much lower fee, think about this: Do you think an experienced tax resolution CPA, EA, or attorney worth their “salt” would work for peanuts? – Especially given the fact that IRS Representation is a highly valued skill set.

You usually get what you pay for. This is your financial life we’re talking about here, and the stakes are very high. If you needed heart surgery, would you shop around for the least expensive surgeon, or would you get the very best you can find? The same holds true for dealing with the Internal Revenue Service. IRS problems have a way of ruining all aspects of your life, your marriage, relationships with your children and family members, your employment, ability to buy a house, a car, money for retirement, or even having a bank account. You want the best possible person for the job, not the cheapest.

Your IRS debt doubles every 6-8 years due to the daily compounding effect of interest and penalties. The IRS also has at least 10 years to collect from you. Handing this off to the lowest bidder in town is probably not a wise decision. You’ll have peace of mind and sleep better at night knowing that we’re working hard on your case to not only protect you from asset and income seizures but also to get you the lowest possible settlement allowed by law!

Question: What do I do if I receive a tax lien notice in the mail?

Answer: If you receive a Notice of Federal Tax Lien in the mail, do not throw it away. This letter is the IRS’s way of letting you know that they mean business.

When the IRS files a federal tax lien against you, they lay claim to all of your assets. If, for instance, you want to sell or refinance your home, you won’t be able to do it until you pay your back taxes. If you continue to refuse to settle your tax debt, the IRS can seize any property you have—your home, your car, your business, etc. This process is known as levying.

In addition, the IRS will notify creditors of your tax lien. The lien will appear on your credit report and can lower your chances of getting a loan or mortgage. The lien—and tax debt—will follow you, even if you file bankruptcy.

Question: I am expecting a big refund for 2018, but I owe the IRS money for prior years and do not have a payment plan. Will I get my refund?

Answer: No, the IRS will automatically apply any refund due to you against the taxes you owe. This policy is under the Federal Offset Program. You can read all about it in my new book, “Now What? The IRS is Taking Everything I own. Help!“ Available on Amazon

However, that is still not going to solve your problem of owing taxes from past years. Having an EA & CTRS, like yours truly, negotiate with the IRS and set up a properly structured payment plan for you assures you the best outcome. The IRS will continue to take refunds, but with proper planning, it can be minimized.

Question: I owe several years of back taxes but do not have the money to pay the IRS. I want to get them off my back and heard of something called an Offer in Compromise. What is it, and how can it help me??

Answer: An Offer in Compromise is the IRS’ tax resolution debt settlement program. It’s a program for taxpayers who owe the IRS more money than they can afford to pay. It’s the IRS’s version of a “fresh start” when it comes to tax debt. If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt. However, it isn’t always easy to gain approval due to its strict criteria.

The IRS considers your income, assets, expenses, ability to pay, and whether paying the full amount would cause financial hardship. It’s important to remember that the IRS wants its money and will only accept an Offer in Compromise if it thinks it wouldn’t receive any money otherwise.

Your odds for acceptance increase significantly when you have an experienced negotiator dealing with the IRS, like a CTRS or an EA.

A certified tax resolution specialist (CTRS) is a tax expert who helps clients deal with tax issues and represents them before the Internal Revenue Service (IRS).

An Enrolled Agent (or EA) is a tax advisor who is a federally authorized tax practitioner empowered by the U.S. Department of the Treasury. Enrolled agents represent taxpayers before the Internal Revenue Service (IRS) for tax issues, including audits, collections, and appeals.

The Enrolled Agent status is the highest credential awarded by the IRS. The EA credential is recognized across all 50 U.S. states. Attorneys and certified public accountants (CPAs) are licensed on a state-by-state basis and are also empowered by the Department of the Treasury to represent taxpayers before the IRS.