The Tax Problem Story - The Causes of Tax Problems
Although the causes of tax problems vary widely, they all have one thing in common: they are preventable. No matter the situation or whether the cause of the tax problem rests with an individual or business, taxes done properly will prevent future tax problems. The IRS states that most errors that cause tax problems are mistakes, such as misspellings, mathematical errors or the entering incorrect information.
For the Individual (including self-employed and sole proprietors):
INCOME TAX
Some possible outcomes resulting from causes of tax problems (if you have filed your income tax return):
- Income tax problems are the result of not paying your income tax to the IRS on time. You must pay individual income taxes every year. If you do not pay your income taxes in full or make a partial payment, you owe back taxes to the IRS.
- The IRS can start the collection process against you if you do not make your income tax payments on time and/or if you do not make arrangements for installment payments within a reasonable amount of time. It may weeks, months and even years in some cases before you are contacted by the tax authorities to resolve these back tax issues. Meanwhile, interest and penalties are accruing.
- Since interest on any unpaid tax amount and penalties of different kinds accrue on the account from the time taxes due are delinquent, regardless of when you were contacted by the authorities, your total tax bill can grow to be a very large sum of money. This can be overwhelming and place your personal assets in jeopardy of being seized for payment of these tax amounts.
Some possible outcomes resulting from causes of tax problems (if you have not filed your income tax return):
- Tax authorities will contact you to remind you that you had not filed your taxes. If you do not take any action, such as filing your taxes, paying your taxes and/or agreeing to an installment plan, the IRS will assess taxes against you. Assessments are not very favorable and will result in increasing your tax liability.
Tax Returns filed, yet
Taxes are still due
Tax Returns not filed, and
Taxes are assessed
Collections Activities
Notices issued
Bank levies filed
Wage garnishments enacted
Liens filed
and more actions may follow
Bank levies filed
Wage garnishments enacted
Liens filed
and more actions may follow
For Businesses, including sole proprietorships and self-employed:
INCOME TAX
Some possible outcomes resulting from causes of tax problems (if you have filed your income tax return):
- Income tax problems are the result of not paying your income tax to the IRS on time. You must pay income taxes for your business every year. If you do not pay your income taxes in full or make a partial payment, you owe back taxes to the IRS.
- The IRS can start the collection process against you if you do not make your income tax payments on time and/or if you do not make arrangements for installment payments within a reasonable amount of time. It may weeks, months and even years in some cases before you are contacted by the tax authorities to resolve these back tax issues. Meanwhile, interest and penalties are accruing.
- Since interest on any unpaid tax amount and penalties of different kinds accrue on the account from the time taxes due are delinquent, regardless of when you were contacted by the authorities, your total tax bill can grow to be a very large sum of money. This can be overwhelming and place your personal assets in jeopardy of being seized for payment of these tax amounts.
Some possible outcomes resulting from causes of tax problems (if you have not filed your income tax return):
- Tax authorities will contact you to remind you that you had not filed your taxes. If you do not take any action, such as filing your taxes, paying your taxes and/or agreeing to an installment plan, the IRS will assess taxes against you. Assessments are not very favorable and will result in increasing your tax liability.
Tax Returns filed, yet
Taxes are still due
Tax Returns not filed, and
Taxes are assessed
Collections Activities
Notices issued
Bank levies filed
Wage garnishments enacted
Liens filed
and more actions may follow
Bank levies filed
Wage garnishments enacted
Liens filed
and more actions may follow
Unemployment/ Payroll
- What is unemployment tax?
1
Employers pay employees their wages for work done.
2
Employers withhold a part of the wages from their employees and pay this amount to the IRS and the state (if applicable). This is the employee’s portion of the tax.
3
Employers pay taxes to the IRS and the state based upon the wages of their employees. This is the employer’s portion of the tax.
4
All amounts (employee and employer portions) are collected by the employer and deposited with the IRS and the state at regular intervals.
How does the unemployment tax problem start?
Failure to collect or deposit
- Employees’ portion collected by employer and employer’s portion
- Employees’ portion and employer’s portion not deposited with the IRS by the employer
Failure to correct
- Employers notified to pay taxes by the IRS
- Employers are unable to or unwilling to pay taxes
Collection begins
Trust fund penalty assessed and multiple collections actions are taken
Contact us as soon as you can
Our consultation is FREE. The sooner you contact us, the sooner we can get to work for you.