Don’t Allow an IRS Levy to Ruin Your Holiday

Meet the M&M Financial Team

Meet the M&M Financial Team

Many IRS Collection employees take time off during the Holidays which can pose challenges for those delinquent taxpayers that have received a levy just before the Holiday hiatus. If your Revenue Officer is out of the office for two weeks and you’re trying to get a bank levy released before the 21 day hold expires, you could be out of luck due to an empty IRS office.

The IRS has an unwritten rule about enforced collection activities during the Holidays. Most IRS Collection employees will not send out bank account levies, A/R levies, wage garnishments or other seizures during the last two weeks of the year. That doesn’t mean you’re absolutely safe from it, but delinquent taxpayer’s won’t wake up to a zero balance in their bank account on Christmas Eve.

Here are a few common questions about levies, garnishments and seizures.

Do I Have a Levy or a Lien?

A lot of people mix up the words lien and levy. A tax lien is a legal claim to an asset as security for a back tax debt. It simply records a claim to the property. A levy is a seizure of an asset to satisfy a back tax debt. It actually takes the property to pay the back tax owed to the IRS. A garnishment is a continuous levy on wages, salaries and other income to pay back tax owed to the IRS. Continue reading

Employers and IRC 6721, IRS Civil Penalty for Failure to File Correct Information Returns, a 941-W2 Discrepancy

Click to learn more.

Click to learn more.

Are you a business owner? Have you filed your W2/W3 forms completely and correctly each year with the Social Security Administration (SSA)?

This is an important question to ask yourself. If you haven’t filed your W2/W3 forms, your business may be looking at a hefty Civil Penalty. We’ve had clients with Civil Penalties over the $1 Million mark. Sounds ridiculous, but it’s true.

The IRS shares information with the SSA. It takes them a few years to do it, so right now the IRS is probably looking at 2011 W2/W3 forms. The Service will compare a business’s 941’s with the W2/W3 forms for a given year. The totals reported on the W3 should match the totals of the four 941 forms when added together. When there is a discrepancy, one of two things happens. The IRS looks to assess additional tax to the business. Or, the IRS looks to assess a Civil Penalty to the business.

If the W2/W3 totals are more than the 941 totals, the IRS will likely look to assess additional tax to the business.

If the 941 totals are more than the W2/W3 totals, the IRS will likely took to assess a Civil Penalty to the business under Internal Revenue Code (IRC) section 6721. If there is a slight discrepancy, the Civil Penalty may not be too high. Where most businesses with this issue get into big trouble is when they don’t file the W2/W3 forms at all or the SSA isn’t able to process them because they’ve been submitted in the wrong format.

Before issuing the additional tax assessment or Civil Penalty to a business, the IRS will make attempts by mail to get updated and accurate information from the business taxpayer. I can’t stress enough, the importance of opening your mail from the IRS. If proper documentation is not provided by the IRS deadline given in the IRS notice sent via US Mail, the additional tax or Civil Penalty will be assessed.

M&M has successfully requested the abatement of IRC 6721 Civil Penalties for many clients. We’re confident we can so the same for you and your business. If your business has received a Civil Penalty assessment for a 941-W2/W3 discrepancy, contact M&M. Even if you don’t hire us to request the abatement of your business Civil Penalty, you’ll learn quite a bit about the process. Call us at 866-487-5624 to speak with an M&M Tax Advisor.