The deadline of April 17, 2012 to file your tax return or request an extension has come and gone. Now What?

Interest and penalties add to the total amount you owe, so the sooner you file, even if you can’t pay all or some of the taxes due, the less you will owe. The IRS will deny a request for an extension that is filed after midnight on April 17. However, you should still file your tax return, even if it’s late.

Penalties and interest will usually be added to any tax you owe. The late filing penalty is normally 5 percent per month, or part of a month, based on the unpaid balance, up to a maximum of 25 percent. If the tax return is more than 60 days late, the minimum penalty is $135 or the balance due, whichever is less.

A late payment penalty, normally one-half of one percent per month, may also apply, along with interest, currently at the rate of 3 percent per year, compounded daily.

 Taxpayers who are struggling to pay their taxes may get some relief from the IRS’s expansion of its “Fresh Start” initiative, a program started back in 2008. The new Fresh Start provisions provide penalty relief to the unemployed and make installment agreements on taxes owed available to more people.

Normally, a failure-to-pay penalty of one-half of one percent per month, up to a 25% maximum, is charged for overdue taxes. The “Fresh Start Penalty Relief” initiative gives eligible taxpayers a six-month extension to fully pay 2011 taxes – that is, until October 15, 2012, before the penalty begins to apply. Interest of 3% will still be assessed starting from April 17, 2012.

The penalty relief is available to workers who have been unemployed at least 30 consecutive days during 2011 or 2012 and to self-employed individuals who experienced a 25% or larger reduction in business income in 2011 due to the economy. Income limits apply: the relief is not available to singles with adjusted gross income over $100,000 or to couples with income over $200,000. Also, taxes due cannot exceed $50,000.

The Fresh Start program also adds another streamlined installment agreement program of $50,000 with an increased maximum term of six years.

For details or assistance, contact Gartzman Law Firm Toll-Free: 1-866-945-5447 or Atlanta Tax Attorney Office Local Phone: 770-939-7710

I recently answered another question about back taxes on Lawyers.com and I recommend you review it to learn what you need to do if you receive a letter from the IRS.

Question: “Would I owe taxes to the IRS if someone in Chamblee, GA prepared my 2008 taxes and now the IRS is stating that I owe them back taxes, interest & fees?”

Answer: 1. Unfortunately, even if a licensed tax preparer prepared your tax return, you may still be required to pay your tax liability if the IRS correctly determines you owe the liability. As the taxpayer, it is your responsibility to submit an accurate tax return, this means even if you didn’t prepare the return and know about the mistake, you are still on the hook for the tax liability. Before you pay the tax the IRS claims you owe, you may want to have a CPA or tax attorney review the returns to determine if the IRS is correct in their assessment.

2. As a general rule, tax preparers could be liable for incorrect returns if it was negligent or intentional. I would speak to a civil litigation attorney for more information.

I recently answered questions about back taxes on Lawyers.com and I recommend you review it to learn what you need to do in order to file 8 years of back taxes:

Question: What kind of lawyer do I need to file 8 years of back taxes? My wages have been garnished for the state taxes but I still need to file, is that correct?

Answer: a. If you need to file back taxes for any number of years, it would be best to contact an attorney who is skilled in both tax preparation and tax resolution. If the Internal Revenue Service does not show record of a return on file, they will often file a return for you. This information may be sent to your home state. This often leads to tax liabilities that are much higher than if you filed for yourself. This process does not give the taxpayer all of the deduction he or she would normally be entitled and the filing status is probably wrong. An experienced attorney in tax preparation and resolution can assist you in determining which tax years need to filed, filing those tax returns, and ensuring the returns are filed at the appropriate location within the confines of the Internal Revenue Service and the state. Additionally, if the Internal Revenue Service has filed a return for you, and in turn the state also, and there are balances; then an experienced tax attorney can assist you in handling collection enforcement, such as wage garnishments, liens, and levies in order to assist you in working towards a beneficial resolution.

b. In many instances, it is necessary to file both state and Federal tax returns. Some states have a program that can help reduce or eliminate penalties for filing late and paying late. Once penalties and interest are tacked on to the liability, the balances can become quickly unmanageable. An experienced tax attorney, can assist you with pursuing a resolution that could help you substantially reduce the balance owed. A tax attorney, can help determine which form of resolution such as a payment agreement, penalty waiver, or settlement agreement is more appropriate.

Question: My wages have been garnished from the state, but I still need to file. Is that correct?

Answer: Yes. Some states receive wage and income information from the Internal Revenue Service which they use to file tax returns on your behalf. Often these returns result in higher tax liabilities because you are not afforded the maximum deduction you would be entitled, if you filed the returns yourself. Once these substitute returns are filed by the state, the state will begin collection enforcement such as liens, levies and wage garnishments. In many instances, the state will not be willing to work with the taxpayer in resolving the liability until these returns are filed. In fact, filing these returns could result in lower balances or in some cases, no balances at all.

Since October 15th falls on a Saturday in 2011, this year’s deadline is Monday, October 17th.

Atlanta tax attorneys and the best IRS tax relief firms in Georgia are reminding clients that if they filed an IRS Form 4868 for a tax extension last spring, the deadline to file a return is coming soon. The extension deadline is normally on October 15th, but because the 15th falls on a Saturday in 2011, this year’s deadline is Monday, October 17th.

Filing a tax extension Form 4868 by the April tax deadline (usually the 15th) allows a taxpayer or an Atlanta tax lawyer more time to gather together the necessary paperwork in order to file an accurate tax return. It does not give more time to pay the taxes that are due. Those must be paid in full by the April deadline, even if you have to make an educated guess as to the amount. The good news, as the best Atlanta tax attorneys will tell you, is if you paid at least 90% of what was due on time in April, the remaining money you owe will not be assessed a late penalty. If your newly completed return indicates that you overpaid, you will receive a refund. Interest accrues on any balance due as of April 15th. If you underpaid by more than 10%, you will be assessed penalties on the unpaid taxes.

If you have any questions about the approaching tax extension deadline and what it means for you, or need help with your unpaid taxes, please call your Atlanta tax lawyer or the staff at The Gartzman Law Firm at 770-939-7710.

If the IRS is tired of you not returning their calls and letters, or if they have not heard from an Atlanta tax attorney like The Gartzman Law Firm that represents you, they might try getting your attention with a tax lien. This financial headache is a claim on your property (house, car, business, etc.) that the IRS uses as security until your back tax debt is paid to their satisfaction. You cannot sell or transfer your property while a tax lien is in place.

In addition, the tax lien is filed with the county clerk and becomes a matter of public record, public knowledge and goes on your credit report. This black mark makes it very difficult if not impossible to qualify for a personal loan. You cannot borrow to pay off the debt, send your kid to college or make any large financial moves to help dig yourself out of your hole. You need help with your unpaid taxes. Without the help of Atlanta’s best tax lawyer, you’re dead in the water.

Or so the IRS would like you to think. They will most likely not tell you about your appeal process. After all, they know all the rules and hold all the cards. What do you have?

Atlanta’s best tax attorney! A run-of-the-mill tax lawyer may not have the experience to know that there are certain rules and stipulations associated with a Collection Appeal, but with the help of The Gartzman Law Firm, you can file one that might be the answer to your prayers. An IRS Appeals Officer will review your case, which your tax attorney has carefully crafted to defend your position, and rule on your case in five days. If you are successful, your tax lien may be released.

This is a slippery slope, and should not be navigated without the experienced guidance of an Atlanta tax attorney. We want you to be successful. It can mean the difference between financial life and death.

You’ve been meaning to take care of that little back tax problem. You have every intention of getting to it ASAP. You hope that you’ll be able to file an amended return and they’ll never even notice. But when you flip through the mail, your eyes light upon an ominous-looking envelope, and you realize that the Internal Revenue Service has gotten to you first.

As tempting as it may be to run and scream and stick your head in the sand, none of those options will get rid of the IRS. You’re in over your head and the situation has gone from bad to worse. Now you need to make sure that your next steps don’t lead you to prison. There are a few crucial things you must do.

• Find an advocate. Understand something. The IRS’s “help line” is not there to help you. They are there to help the IRS squeeze as much money out of the taxpayers as possible. They do not have your best interests at heart, and they are not on your side. You need to hire someone like a tax attorney who is loyal to you, has an intimate working knowledge of today’s tax code and how the IRS operates behind the scenes, and who has a history of taking on the IRS and winning. If you were accused of a crime, would you go to court without an attorney? Of course not. Neither should you risk your entire financial future without legal advice.

• Stop the threats. Once you have hired a tax lawyer, you never have to communicate with the IRS again. That’s right, no more teeth-rattling phone conversations or responding to missives in the mail. Your tax attorney becomes your mouthpiece, and a much more effective one than you could ever be. (You’d be amazed at how many people accidentally incriminate themselves to “that nice lady who called from the IRS”.) Your tax lawyer may also be able to call a temporary halt to the IRS’s threats of liens or levies. Hiring a legal representative gives you and your tax attorney breathing room to get your case together and launch a much more effective defense than you ever could on your own.

• Negotiate away fees and penalties. The IRS has hundreds of fees and penalties they can slap you with. These extras can bulldoze a medium-sized molehill of a back tax problem into an unrecognizable mountain of debt. Once the IRS realizes that they are playing hardball with a professional tax attorney, they may be more likely to eliminate these add-ons as part of the negotiation process, and to cut the bill down to something that more closely resembles the original debt.

• File an appeal. Did you know that you can appeal a levy or lien that has already been placed against you? Do you know how to do this effectively? Your tax lawyer does. He or she can file with the IRS Appeal Division. Certain types of appeals are required to be ruled on within five working days.

• Negotiate a payment plan. Once your tax attorney and the IRS have whittled down the amount you owe, you need to decide how to pay it. If you can pay in a lump sum, the government will pressure you to do so. If you have no major assets, but are gainfully employed, they are more likely to agree to a payment plan. They will even deduct the money from your checking account so you don’t have to endure the trauma of writing and sending a check every month. Thoughtful IRS. The downside of a payment plan is that if you break the agreement, they will go back to square one and come after you again.

• Consider an Offer in Compromise settlement. You may be able to negotiate your debt with an Offer in Compromise. For example, the IRS might clear your $20,000 debt if you pay them a $5,000 lump sum. This is another way in which your tax lawyer is worth his weight in gold. There are limited opportunities to come up with the right number that the IRS will accept. Working with a tax attorney is the best chance you have at crafting a successful Offer in Compromise.

• Be designated Currently Not Collectible. If you are destitute, or if you are chronically ill or otherwise not able to work nor pay taxes, it is possible to get classified by the IRS as Currently Not Collectible. Now, should you ever win the lottery or your income increases significantly. The IRS will come after you with both guns blazing. But if your tax lawyer can prove that you have no assets and no foreseeable hope of acquiring any, they might put your name in Currently Not Collectible status. This could be temporary or permanent depending on your situation over time.

Getting nailed for not paying your back taxes is a serious offense, and can potentially ruin your finances, business, career and credit rating. Fortunately, there is help available. Take a deep breath and acknowledge that this is not a battle you are likely to win without professional guidance. Pick up the phone and call a reputable tax attorney who can help lead you out of the dark and scary back tax forest and into the light of sleeping through the night again.

About Jeffrey S. Gartzman, Atlanta Tax Attorney and Certified Public Accountant
Jeffrey S. Gartzman is an accomplished Atlanta tax attorney and CPA who has been practicing tax law in Atlanta for nearly 30 years. He will help you resolve IRS and state tax problems, find tax relief and settle tax debt. Jeffrey S. Gartzman is a former IRS Taxpayer Education Program instructor. He is also an accredited Personal Financial Specialist with the American Institute of CPAs.

Some celebrities think they are immune from the IRS, but as countless high profile tax cheats have learned, the IRS will find you. Fortunately, for the rest of us, we can learn how Hollywood’s biggest tax cheaters could have avoided jail time (or a big IRS tax bill) if they’d had the help of Atlanta’s best tax attorney.  Here are some important lessons you can learn:

•    Marc Anthony’s tax evasion problems were four years of unfiled tax returns. With the help of some of the best tax lawyers money could buy, he convinced the IRS that he trusted his financial team to file the returns for him. Anthony escaped jail time, but still had to pay $2.5 million in back taxes.

•    Joe Francis claimed more than $20 million in phony tax deductions. If you suspect that you might be guilty of tax evasion, you might consider filing an amended return, but consult with an Atlanta tax attorney first so your amended return isn’t seen as an admission of guilt of tax evasion charges.

•    Richard Hatch argued that he wasn’t guilty of tax evasion because he believed that CBS had paid the taxes on his million-dollar Survivor win. If someone tells you that you don’t have to pay taxes on income, get a second opinion from a tax lawyer in Georgia.

•    Paul Hogan felt that once he became an American citizen and paid taxes to the IRS, he shouldn’t have to pay taxes on the same income to the Australia Taxation Office. The ATO took a dim view of this and the result has been a long string of court battles and nasty headlines. If you are an ex-pat or have dual citizenship, get advice from a tax attorney who is qualified to handle your international affairs.

•    Sophia Loren ended up doing 17 days in a Naples jail for her husband Carlo Ponti’s unpaid taxes. If you file a joint return, your neck is on the line. If your spouse hasn’t been faithful with their taxes, take your returns to Atlanta’s top tax lawyer for a tax evasion consultation.

•    Pete Rose and Darryl Strawberry forgot to include the income from autograph and memorabilia shows on their tax returns. Strawberry paid $450,000 in back taxes, while Rose paid $366,000 and went to prison for five months. If you’ve forgotten some income, consult a tax lawyer on how to amend your IRS return without going to jail for tax evasion.

•    Wesley Snipes didn’t file tax returns as a political statement and was sentenced to three years of jail time and millions in back taxes and penalties. You may have heartfelt political or religious feelings, but put those thoughts in your Christmas letter or blog, not on your tax forms. If your political enthusiasm has run away with your common sense, contact a tax attorney before the IRS contacts you.

There are countless other examples of celebrities intentionally or accidentally cheating Uncle Sam. If you feel your situation has anything in common with one of these celebrity tax cheaters, call Atlanta’s best tax lawyer today to get your financial life back in order.  If you don’t, the IRS will.

“He can run, but he can’t hide,” said legendary boxer Joe Louis. Louis was talking about a sports opponent, but he could have been referring to his battle with the Internal Revenue Service. Louis knew all about having tax troubles. He made the mistake of not hiring a top flight tax lawyer. He trusted the wrong people to handle his finances and spent most of his adult life being hunted by the IRS.

If the IRS thinks you owe them back taxes, they have a number of unsavory tactics that they will use to intimidate you into compliance. Without the defense of a first class tax attorney, they will flood you with collection calls and letters, empty your bank and retirement accounts (including those of anyone else that your name is on), attach tax liens and levies, shut down your business, hound you in person at your home or office or even send you to prison.

If you are in a back tax debt situation and need help getting out of it, it is critically important to be proactive and get the professional help of the best tax attorney in Atlanta. You may think you can’t afford to pay for this kind of help, but you can’t afford not to. The US tax code and tax regulations are the same size as a set of encyclopedias. Have you memorized it? Your tax lawyer has, and he or she is going to put every last line of it to your defense.

It is always better to be proactive and approach the IRS before they start taking punitive action against you. If you know Uncle Sam might be gunning for you, now or in the future, you want to get your ducks in order ASAP. Atlanta’s best tax attorney will get you the tax relief you need to minimize the damage. They may be able to negotiate away some or all of the hundreds of penalties the IRS loves to heap on back tax victims who are already struggling to pay the original debt.

Wouldn’t it feel good to be able to sleep through the night again, or be able to pick up the ringing phone in front of other people? Atlanta’s tax attorneys are the best chance you have of getting your financial house back in order. Call a tax lawyer today at (770) 939-7710 and reclaim your life.

No one in business relishes a tax lien. They stick to your credit rating like a slug on slime until you pay off your company’s back taxes. However a smart Atlanta tax attorney will strongly encourage you to take out almost any other kind of loan in order to pay your business taxes and avoid the hidden downside of a tax lien.

A perfect financial storm has coalesced, making a business tax lien even worse news than it was before. In today’s conservative economy, businesses are struggling to meet their tax obligations, the IRS is cracking down on collections and banks are tightening their lending criteria. Thus, businesses that in the past have depended on banks or credit unions for bridge loans are increasingly locked out of any kind of traditional financial institution if they have a back tax lien. Atlanta back tax lawyers are busier than ever.

According to the IRS’s in-house national taxpayer advocate, the number of business back tax liens has skyrocketed 500% over the last decade to 1.1 million a year. Atlanta tax attorneys agree that in addition to cutting off a formerly easy source of emergency funding, the proliferation of business back tax liens makes it harder for a business on the rocks to increase cash flow by bringing in new cash-rich partners.

So many companies were tanking under the new limitations that last winter, the IRS took the unusual step of loosening some lien-filing policies. Too little too late, decry many Atlanta tax lawyers. Making settlements more accessible and modifying liens will take a struggling business only so far. Once you’re in the IRS’s back tax sights, you’re in trouble.

If you are having trouble keeping up with your business taxes, call an Atlanta back tax attorney today to devise a plan for your unique situation.