The post UNDERSTANDING IRS LEVIES appeared first on .
]]>The Internal Revenue Service each year publishes what it calls its IRS Data Book. Under Table 25, Delinquent Collection Activities, the 2020 edition (the latest available) says that 291,081 tax levies were filed for that year, while the year before (2019) total was 543,604. The difference, noted elsewhere, is that the agency stopped collection activities from March to July 2020 because of the pandemic.
What is a tax levy? It is the seizure of a person’s property to collect what is owed on back taxes. The property includes everything from cash to real property, such as homes and other assets.
Even though half a million people out of a population of 330,000 million seems like a small percentage, if you suddenly find your bank account frozen, your wages garnished, or a levy placed on your personal property, it can be a pretty frightening experience.
If you’re facing tax problems in Toms River, New Jersey, or throughout New Jersey, including Brick Township, Manasquan, Manchester, and Lacey, contact me at the Law Office of David A. Semanchik. I am dedicated to helping individuals, families, and businesses resolve their issues with the IRS and move forward with confidence.
A tax levy is a seizure of property as opposed to a tax lien. In a levy, the IRS takes the property to satisfy one’s tax debt. A lien, in contrast, is a legal claim against the property that can be rescinded once payment is made.
A tax levy, in other words, is a serious action. The IRS can even levy property that is yours but held by others, such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions. The agency can also levy real property held in your name, including a home, car, or boat.
The IRS will levy property only after four requirements have been met:
The IRS sends you a Notice and Demand for Payment for taxes assessed and owed.
You neglect or refuse to pay the assessment.
The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the levy will take place.
The IRS sends you advance notification of Third Party Contact, informing you that the IRS may contact third parties controlling your property about collecting taxes owed.
Note that if the IRS levies your state income tax return, it will issue you a Notice of Levy on Your State Tax Refund and Notice of Your Right to a Hearing only after it has completed the levy.
Of course, the quickest way to stop a levy is to pay what’s owed to the IRS. This may not always be possible, however, given the financial circumstances of the party in jeopardy.
In that case, you can arrange an IRS payment plan or apply for an offer in compromise. An offer in compromise will enable you to pay less than you owe if you qualify, but offers are generally only approved when other means to collect seem likely to fail.
You can also agree to a hearing to appeal the levy. You receive a hearing notice along with the levy notice to avail yourself of that option.
The final option is bankruptcy. Chapter 7 of the bankruptcy code may allow you to discharge some taxes. Income taxes are the best possibility. Payroll taxes or fraud penalties can never be wiped out in bankruptcy. Fraud or willful evasion will also make it impossible to clear your tax debt in bankruptcy.
Other rules apply as well. Your debt must be at least three years old, and you must have filed a tax return for the money owed at least two years before filing bankruptcy. Another factor – the 240-day rule – means that the IRS must have assessed your income tax debt at least 240 days before the bankruptcy petition.
A tax levy can result in severe hardship, and you should avoid it at all costs. Some of the ways to release a tax levy are listed above, but you’re better off seeking the help of an experienced tax and bankruptcy attorney in deciding and implementing the best course of action.
If you’re facing a tax levy or otherwise in hot water with the IRS, contact me immediately at the Law Office of David A. Semanchik. I serve clients in Toms River, New Jersey, and throughout New Jersey, including Brick Township, Manasquan, Manchester, and Lacey. We can help discuss your situation, seek to weigh your options, and help get you started on resolving your tax issues.
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]]>The post QUALIFYING FOR AN OFFER IN COMPROMISE appeared first on .
]]>You have probably seen the ads on TV or heard them on the radio about settling your tax debts for pennies on the dollar. What these ads are referring to is an offer in compromise (OIC) submitted to the Internal Revenue Service (IRS). An offer in compromise may not be for pennies on the dollar, but your proposed settlement of back taxes will be less than what the IRS says you owe.
Will the IRS accept your offer in compromise? That depends on several factors, including whether you have the resources to pay in full in their eyes. Keep in mind that the success rate is usually less than 40 percent, so an offer in compromise is best attempted with the help of an attorney experienced in tax resolution matters.
If you owe the IRS more than you believe you can pay without jeopardizing your daily welfare, contact me at the Law Office of David A. Semanchik. I proudly serve clients in and around Toms River, New Jersey, and throughout the state, including Brick Township, Manasquan, Manchester, and Lacey.
As briefly defined above, an offer in compromise is a settlement the taxpayer proposes to the IRS to resolve back taxes still outstanding. As the IRS states on its website:
“An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. Taxpayers who can fully pay the liabilities through an installment agreement or other means, generally won’t qualify for an OIC in most cases.”
Notice that an OIC, according to the IRS, is not for taxpayers who can fully pay their liabilities. For whom is it available, then? Generally speaking, the IRS will consider an OIC if one of two conditions exist:
The IRS has reason to doubt that it can ever fully collect the tax obligations due. The IRS calls this “doubt as to collectibility.”
You fall under exceptional circumstances, and payment of your full tax liability would cause “economic hardship” or would be “unfair” or “inequitable.”
There is one other ground for an OIC that is rarely used called “doubt as to liability.” This represents the taxpayer’s claim that the tax liability has been assessed incorrectly.
Before everything else, you should consider if you qualify under any of the grounds listed above. Then the IRS has established a formalized process for seeking an offer in compromise.
First, you must file IRS Form 656, Offer in Compromise, along with a nonrefundable application fee of $205, which is waived if your income is below the poverty level. You must also file Form 433-A if you are an individual or Form 433-B if you are applying as a business. Both forms are called a Collection Information Statement. If you believe the tax debt is not yours or does not exist, you can also file Form 656-L.
You must also include your first payment toward fulfilling your proposed offer in compromise along with your application.
Here, you have two options, a lump sum or a 24-month payment plan. If you choose a lump sum, you have five months to complete your payments, so you have to include 20 percent of your proposed settlement with your application. If you choose the payment plan, you must submit the first payment with the application. You can continue to make payments as you await the decision by the IRS.
Completing the form and submitting your fee and the first payment is just the beginning of the OIC process. The IRS will request rafts of documentation from you, including bank records, pay stubs, vehicle registrations, and more. It can be a lengthy process, so do not expect a quick answer.
If, in the long run, the IRS considers your offer too low, it will inform you of the amount it considers acceptable. You can submit a new offer within a month without filing another Form 656. After that, you will have to begin the process over again with a new Form 656.
Submitting a successful offer in compromise is not a do-it-yourself proposition. The IRS will continue to request information and documentation and ask questions that, if not properly answered, can doom your chances of success. You must submit and pursue your OIC with the help of an experienced tax attorney.
Contact me at the Law Office of David A. Semanchik, so together we can evaluate your situation and come up with the best path to pursuing an offer in compromise. I have three decades of experience in these matters, and I proudly serve clients in Toms River, Brick Township, Manasquan, Manchester, Lacey, New Jersey, and throughout the state.
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]]>The post YOU NEED A WILL appeared first on .
]]>To have basic estate documents or not.
This is the story of a millionaire widow named Mary Tutworth (whose name has been changed to protect her identity) who died without a Will about ten years ago. Her husband Mr. Tutworth was a wealthy clothier from New York City. The Tutworths settled in a nice North Jersey suburb. They had no children but Mrs. Tutworth had many relatives in the United States, many of which she was not even aware.
Mr. Tutworth, being the man of the house and man about town, took care of all aspects of the family finances and amassed many millions of dollars in assets including their multimillion dollar home. When Mr. Tutworth died, Mary had no problem living in the manner in which she was accustomed – that is until she become incapacitated. By the time the local Board of Social Services visited her, she was living in deplorable conditions with her dead brother.
Two of Mary’s closest relatives were named co-guardians: Frank from New Hampshire was named guardian of Mary’s assets and Jennifer from New York was named guardian of Mary’s person. In a short while, about four years later, Frank died , leaving Mary’s finances in shambles. Jennifer then took over full guardianship and took the next several years trying to put together Mary’s finances. Before that happened, Mary died without a Last Will and Testament.
In another four months, Jennifer was appointed administrator of the Mary Tutworth estate. In New Jersey, like many states, when someone dies without a Will, every single person that is related to the deceased gets a piece of the estate. The closer you are to the deceased, the bigger part of the pie you receive. What that means is that the personal representative of the estate, here the administrator Jennifer, has the unenviable task of piecing together a family tree from whatever information she can find. In this case, the local New Jersey relatives made themselves known loud and clear. The relatives in other states took years to locate by which time the local relatives hired local counsel to sue the administrator for failing to administer the estate in a timely fashion. Finally, after years of litigation, the estate was settled, not without the expenditure of thousands of dollars in legal fees on both sides. The problems started with the administrator engaging counsel without adequate knowledge and experience in handling an estate of this size. The Federal Estate, New Jersey Estate, New Jersey Inheritance tax returns were either filed late and or erroneously since the correct relationship to the deceased was not initially determined resulting in unnecessary penalties and interest. Taxes were paid by the estate that should have been paid by some beneficiaries since the administrator failed to collect taxes from beneficiaries who received non probate assets. These are only some of the problems the administrator experienced in closing out this intestate estate.
Many if not all of the problems experienced by this administrator could have been avoided if only Mary had executed a Last Will and Testament before she become incapacitated. She could have named the Executor of her choice and left the estate to the persons she so desired, thereby making it simple to ascertain immediately who the beneficiaries were and their relationship to the decedent. Given the size of the estate, she could have been creative and perhaps conveyed part of the estate during or after her life to a trust to be administered for the benefit of her chosen charity or other beneficiary.
If you don’t have a Last Will and Testament, then let your New Year’s Resolution be to execute one. While you are at it, why not also execute a Durable Power of Attorney so that someone you trust handles your affairs should become incapacitated and finally, a Living Will wherein you name someone to act as your health care representative to make health care decisions when you cannot. Have a blessed Holiday, Christmas season and Happy New Year knowing you have taken care of these essential estate documents.
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]]>The post NEW JERSEY NOW REQUIRES ALL FORECLOSURE CONSULTANTS TO BE LICENSED appeared first on .
]]>Even though the American economy has begun showing slight signs of improvement, many people are still feeling the effects of our recent recession and are faced with losing their homes. For example, RealtyTrac reports that one in 3,092 housing units in New Jersey received a foreclosure filing in November 2011, and roughly 38,000 properties were in some stage of the foreclosure process.
As a result, more and more Americans have turned to bankruptcy to help them get through tough financial times and jumpstart themselves towards recovery. However, individuals and their families have tried other means of protecting their homes as well. The Star-Ledger reports that foreclosure consultants have been very busy lately offering services such as raising a homeowner’s credit rating or changing the terms of an existing mortgage.
Unfortunately, many of these services have turned out to be scams and have left homeowners worse off than before. Although there are some very legitimate foreclosure service firms in New Jersey, including qualified attorneys, far too many homeowners were left high and dry after tendering large upfront fees.
Governor Chris Christie signed the Foreclosure Rescue Fraud Prevention Act on December 20, 2011. This new legislation now requires all foreclosure consultants to be licensed by the state Department of Banking and Insurance. Additionally, consultants are now prohibited from collecting any fees until they complete the terms of the agreement and obtain relief for the homeowner.
Finally, consultants face large fines when they violate the new law. A first offense results in a $10,000 fine, with a $20,000 for each successive offense. The fines are collected from a newly-mandated bond that consultants must post with the state before they are allowed to conduct any business.
The changes made by New Jersey lawmakers received acclaim from consumers, their advocates, and the banking industry. Homeowners can now feel more confident undertaking foreclosure advice and can accurately verify registration with the DBI.
Please note, however, that loan remodification is not appropriate for everyone. Speak with an experienced attorney for an analysis of your financial situation, to discuss your options, and to develop a plan for your unique situation.
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]]>The post MAXIMIZE INSURANCE RECOVERY FOR PROPERTY DAMAGE CLAIMS ARISING FROM SUPERSTORM SANDY appeared first on .
]]>I am sorry for your loss as a result of Superstorm Sandy that hit the New Jersey coast on October 29, 2012. The disaster is widespread. Many of you do not even know the size of your loss since you were not even permitted to return home long enough to assess the damage. In my forty years of living on the Jersey shore, I have never experienced anything like this event and I can feel how the community is mourning the loss. Even so, there is a strong resolve to “restore the shore”. Things will get better, slowly but surely.
A big part of your recovery will come from the money your insurance carrier will pay you for your loss. In order to maximize recovery from Superstorm Sandy, though, there many things to keep in mind. Please consider the following list of issues, though this list is not exhaustive:
Most policies require you to provide notice of your loss in a timely manner as specified in your policy. Failure to provide notice in the manner required may affect your ability to recover money for your loss. It is not enough to telephone the carrier of your loss or rely on your insurance broker to do so. You should make your claim in writing and retain a copy of your notice for future reference. Also, be sure to make your claim within the time required by your policy. If you do not know the extent of your loss, your claim should be very broad to cover any possible loss you can think of.
You should carefully read every page of your policies including all endorsements. No policy is “off the shelf” meaning no two policies are the same and require a complete review
In reviewing your policy, you should determine what kind of loss it covers, such as water damage, mold, exterior damage, interior damage, contents loss, plumbing, electrical and other mechanicals, debris removal, etc. When your insurance adjuster “offers” you a settlement, does it take into account all possible areas of recovery?
If you own a business affected by the storm, does your policy provide business interruption coverage? Is coverage provided for damage as a result of flooding? Can you make a claim if your business is affected because your suppliers are affected by the storm (referred to as contingent business interruption)?
There are limits to the amount of money the insurance carrier will pay for your loss. There may also be sub-limits in your policy. For example, you may have $1,000,000.00 of coverage for a loss but a sub-limit of $250,000.00 loss related to flood damage.
Do you have multiple insurance policies that may come into play? Be sure to consider all the policies of insurance available.
Look at the deductibles that apply. Different deductibles apply to depend upon whether the loss arises from a hurricane, tropical storm, or superstorm.
Your policy may require you to file a sworn affidavit for your proof of loss. Be careful to list all of your losses. If all your losses are unknown at this time, you should say so and call the proof of loss an “interim” proof of loss. Make sure your proof of loss is filed timely.
Consider asking your insurance carrier for an advance of money if you need to get through the beginning stages of your restoration.
Keep track of all your expenses. Document everything with pictures. The best documentation of loss is receipts for the items lost. Keep all of your receipts for items replaced.
You have an obligation to protect people and property. If you have access to your property, you should take those steps necessary to avoid further losses by securing the property in any reasonable way. If in doubt, talk to the carrier but document everything.
Be sure to cooperate with your carrier. Failure to cooperate might result in no coverage for your loss.
Never take no for an answer from your carrier.
The best way to turn a no into a yes when you are not getting what you want from your carrier is to have an attorney help you in this process. I am willing to provide you with a “no fee” review of your insurance policy. I can help you put together your written proof of loss if required. I can help you with issues that arise and ultimately negotiate a favorable settlement of your claim.
Please also consider who will be helping in your restoration efforts, particularly, what contractor you will be using. Get recommendations and check their references. Make sure all contractors are licensed and have suitable insurance policies in effect. You should get copies of these policies for reference. Also, make sure you have a good contract that addresses all the work to be done by the contractor. I highly recommend a review of all contracts by an attorney. I can help you with the contract review.
You should contact my office today to schedule a no-fee review of your insurance policies and help you on your way to recovery.
Please do not consider any of this information as my legal advice to you. We do not yet have an attorney-client relationship. All items listed on this website are for informational and marketing purposes only.
Seaside Heights, Seaside Park, Ortley Beach, Lavalette, Normandy Beach, Mantoloking, Brick, Toms River, Point Pleasant Beach, Long Beach Island, Holgate, North Beach
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]]>The post ADVANTAGES OF CREATING A LIVING TRUST IN NEW JERSEY appeared first on .
]]>New Jersey residents may wonder if designing a living trust is worth the cost and effort. New Jersey estate planning normally involves the creation of a will. A will may or may not create a trust at the time of death.
People usually create a revocable trust, also called a living trust, in order to avoid probate. The probate process involves determining if a will is properly executed and appointing an executor to act on behalf of the estate. A living trust is created during the lifetime of the beneficiary, as opposed to after death under the terms of a will.
The process of creating a trust involves appointing a trustee to hold legal title to the property for the beneficiary of the trust. Individuals may be their own trustees.
There are several advantages to creating a living trust. The main benefit is the time and expense saved from avoiding the probate process.
Privacy is another significant benefit of a living trust; a will becomes a public record when it goes through the probate process. A living trust is not filed with the court, so the contents are shared only with beneficiaries.
Additionally, New Jersey-based assets such as bank accounts, stock in New Jersey corporations, and real property in New Jersey are subject to state estate and inheritance tax liens if owned individually.
After death, these assets cannot be transferred until tax waivers to release the liens are obtained from the New Jersey Transfer Inheritance Tax Branch. Obtaining these waivers may take over a year. Putting the assets in a living trust means the liens are not imposed upon death.
A living trust is also an advantage if the property is owned in multiple states. Typically, probate proceedings are required in each state where the deceased owned property. However, probate in these instances can be avoided by transferring the title to the property into the living trust.
Finally, living trusts provide a distinct advantage if the grantor becomes incapacitated. The trustee is normally allowed to manage the assets transferred to the trust before the incapacity.
With the help of an estate planning attorney, creating a living trust in New Jersey is a simple and efficient process. To create a living trust:
Craft the trust document that names the trustee and specifies who inherits trust property.
Sign the document in the presence of a notary public.
Transfer property into the name of the trustee.
A living trust is a valuable gift to leave loved ones after death. An experienced New Jersey estate planning attorney can help to structure a trust appropriately, determine whom to appoint as a trustee, and assist with the establishment of the trust.
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]]>The post MEDICAL EXPENSES OFTEN LEAD TO BANKRUPTCY appeared first on .
]]>A number of New Jersey residents struggling in this tough economy have chosen bankruptcy as a way to deal with financial problems. Bankruptcy filers might be stereotyped as irresponsible overspenders, but many people who turn to personal bankruptcy are the victims of bad luck in the form of an expensive illness. According to the Centers for Disease Control and Prevention, in 2011 one in five American families faced problematic medical bills they could not readily pay.
Excessive medical bills are even more likely for women. A report from the Commonwealth Fund states that 26 percent of American women had trouble paying medical bills in 2009 and 2010. In other parts of the world, the problem was far less acute; for example, only four percent of German women reported that medical bills were a problem. However, health care reform in the United States is likely to improve the American numbers, according to the Commonwealth Fund.
The Commonwealth report also noted that women are charged more than men for the same policies, use more health care, and have lower incomes. The report concluded that the number of women with inadequate or no insurance in the U.S. totals 35 million.
The consequences for an individual who is not covered by health insurance can be financially devastating if serious illness strikes. Like many Americans who take risks to further their careers, one young woman featured in an article by NBC News opted for an insurance plan that covered only catastrophic events after she left a job to become self-employed. At age 31, she was diagnosed with breast cancer.
During treatment, she was compelled to pay $1,000 upfront for the costs of surgery and ended up being responsible for $70,000 in total medical costs. This young woman did not opt for bankruptcy but instead has been paying off the debt slowly, still owing $10,000 eight years after her illness.
Too often people in similar situations overlook debt renegotiation or bankruptcy as options to their financial distress. Depending on the circumstances, personal bankruptcy may help an individual with significant medical debt through the complete or partial discharge of a debt or through an approved repayment plan. Bankruptcy is not a permanent black mark that ruins a person’s credit forever. Usually, a bankruptcy filer can obtain a secured credit card soon after filing, with a chance for a regular credit account as soon as six months to a year afterward.
Each individual’s financial stress is different, and bankruptcy may be the best choice. Consulting with an experienced bankruptcy attorney will help an individual decide whether filing for bankruptcy is appropriate.
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]]>The post INTEREST FREE MORTGAGE FOR FIVE YEARS MIGHT BE POSSIBLE FOR HOMEOWNERS appeared first on .
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]]>The post HOW CAN BANKRUPTCY AFFECT MY CREDIT SCORE? appeared first on .
]]>When you accumulate so much debt that it becomes unmanageable, bankruptcy is a viable option to help you get control of your finances. But often times, bankruptcy is a concept that instills fear and shame in people. You might worry about how it will affect your financial standing in the years to come.
One of those fears relates to how bankruptcy will tank your credit score. However, while it’s important to note that your credit will take a hit, the effects of bankruptcy don’t last forever.
Whether you file Chapter 7 or Chapter 13, your credit score will likely drop significantly once you file. The reason people think bankruptcy lasts forever is because bankruptcy stays on your record for years, which means your credit score will remain affected over the course of that time. Chapter 7 is likely to remain on your record for up to 10 years. Chapter 13 can remain up to seven years.
It can be difficult to navigate life after filing for bankruptcy. You’ll likely have to make significant changes in your spending and saving habits. Not only that, though, having a low credit score will make it more challenging for you to apply for loans and other money-lending services. You may even have difficultly renting an apartment, finding a phone plan and sometimes even getting a job.
However, just because your credit score takes a hit does not mean your life is over. In fact, the negative impacts that bankruptcy can have on your credit score usually lighten within the first few years of filing, especially when you practice smart credit habits. This includes opening a new line of credit, staying on top of your new credit card payments and keeping your spending to a minimum.
When you file for bankruptcy, it can be stressful and scary. It is a process that requires patience and smart strategizing. And while you’ll certainly need to make sacrifices in order to embark on a fresh financial start, doing so can help you begin to successfully rebuild your credit score and get back on your feet.
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]]>The post IS AN OFFER IN COMPROMISE RIGHT FOR YOUR SITUATION? appeared first on .
]]>Owing federal taxes does not mean someone failed. In fact, it’s fairly common. In 2018, more than 14 million Americans were in just that situation. But when it’s you standing in that valley, looking at the terrain you’ll have to climb in order to satisfy the IRS, the situation can feel overwhelming.
Fortunately, there are potential solutions to get you back on track. One of these options is known as an Offer in Compromise.
An Offer in Compromise is one of the tools the IRS offers to help taxpayers settle federal tax debts. It is, as the name implies, a compromise. You pay back a portion of what is owed and the IRS considers the matter settled. This can be done in the form of a lump sum payment, or via smaller, regular installments.
To secure an Offer in Compromise, you must fill out and submit a few different forms explaining your financial situation, along with an application fee and initial payment. The IRS will consider your offer and, if the agency accepts, you can continue on under these new terms. In addition, it will prevent any further actions such as wage garnishment.
However, the IRS does not accept in Offer in Compromise from just anyone.
The Offer in Compromise tool is not a free pass for those who owe taxes to simply pay less. The IRS will scrutinize your application and review the totality of your situation, including:
Your ability to pay the owed taxes
Your income and expenses
Your assets
Generally, the IRS only accepts an Offer in Compromise if it believes the proposed amount is the most it can expect to get. The agency must be convinced you can not possibly pay the full amount, or that doing so would create financial hardship.
This is not a guarantee. While an Offer in Compromise might be a perfect solution for some, others may need to consider one of the alternative tax resolution strategies. Working with a knowledgeable firm to determine the right path is often the optimal first step.
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