Your Complete Guide to Tax Help in Colorado: Frequently Asked Questions

Professional Tax Representation Services by Mike Habib, EA

About Our Tax Representation Services

Mike Habib’s expertise spans individual and business tax issues, with particular strength in resolving complex tax controversies. His firm specializes in helping taxpayers navigate the most challenging IRS situations, from simple unfiled returns to complex business payroll tax problems. With years of experience handling cases throughout Colorado’s major metropolitan areas, Mike Habib understands both federal tax law and the unique challenges facing Colorado taxpayers.

In the Colorado Springs metropolitan area, we assist taxpayers in Colorado Springs, Fountain, Security-Widefield, Cimarron Hills, and Monument. Our Northern Colorado services cover Fort Collins, Greeley, Loveland, Windsor, Evans, and Johnstown. We also serve clients in Pueblo and the surrounding Pueblo County communities.

Additionally, we provide representation services to taxpayers in smaller Colorado communities including Grand Junction, Durango, Aspen, Vail, Steamboat Springs, Breckenridge, Glenwood Springs, Montrose, Sterling, Fort Morgan, and numerous other cities and towns throughout the state. No matter where you’re located in Colorado, our firm can provide the professional tax representation you need.

Many of our clients are small business owners who face both personal and business tax challenges simultaneously. We understand how these issues interconnect and can develop comprehensive strategies that address all aspects of your tax situation. Whether you’re a sole proprietor, partnership, corporation, or LLC, we have the expertise to help resolve your tax problems efficiently and effectively.

If you are ready to resolve your tax matter, contact us at 1-877-788-2937, or ONLINE.

IRS Liens: Understanding and Resolution

Once filed, a federal tax lien becomes a public record that can severely impact your credit score and financial reputation. The lien attaches to all your property, including real estate, personal property, and business assets. It also attaches to property you acquire after the lien filing. This means you cannot sell, refinance, or transfer property without addressing the lien.

The lien affects your ability to obtain credit, as it appears on your credit report and signals to lenders that the federal government has a priority claim on your assets. Many taxpayers discover they cannot qualify for mortgages, business loans, or even credit cards once a federal tax lien is filed.

For taxpayers who cannot pay in full, we can help negotiate installment agreements or other payment arrangements. Once you establish a payment plan and make consistent payments, you may qualify for lien withdrawal, which not only releases the lien but also removes it from your credit report as if it never existed.

Other options include lien subordination, which allows other creditors to move ahead of the IRS in priority, facilitating refinancing or property sales. Lien discharge can remove the lien from specific property, while certificate of nonattachment can establish that the lien doesn’t apply to particular assets.

In cases where the lien was filed in error or the taxpayer has paid the debt but the lien wasn’t properly released, we can file for immediate lien release. Each situation requires careful analysis to determine the best approach for lien resolution.

One option is requesting a certificate of discharge, which removes the lien from the specific property being sold. This typically requires showing that the sale is in the government’s best interest, such as when the proceeds will be used to pay down the tax debt. Another approach is lien subordination, where the IRS agrees to let other creditors (like mortgage holders) maintain priority, making the property more marketable.

In some cases, we can negotiate for the IRS to accept less than the full amount owed from the sale proceeds, particularly if the property value is less than the total debt. The key is engaging with the IRS before listing the property to establish clear procedures for handling the sale proceeds and lien resolution.

IRS Levies and Garnishments: Protection and Resolution

IRS levies can target various types of assets including bank accounts, wages, Social Security benefits, retirement accounts, real estate, vehicles, and business assets. Bank levies are particularly disruptive as they can freeze your accounts immediately, leaving you unable to pay bills or access funds for daily expenses.

Wage garnishments continue until the debt is paid or other arrangements are made, taking a significant portion of each paycheck. The IRS can garnish wages, salaries, commissions, and other income, leaving taxpayers with minimal amounts for basic living expenses.

For example, a single person with no dependents earning $1,000 per week might have $700 or more garnished by the IRS, leaving only $300 for living expenses. Married taxpayers filing jointly with children have somewhat better protection, but the amounts left for living expenses are still often inadequate for basic needs.

The IRS uses standardized tables that don’t account for actual living expenses, mortgage payments, or other financial obligations. This is why it’s crucial to address wage garnishments quickly through payment arrangements, hardship status, or other resolution strategies.

Bank levies are particularly problematic because they can affect automatic payments, cause checks to bounce, and create cascading financial problems. Many taxpayers don’t realize a levy is coming until they try to access their account and find it frozen.

The 21-day hold period is your opportunity to contact the IRS and potentially reverse the levy. Options include setting up payment arrangements, demonstrating economic hardship, or challenging the levy if proper procedures weren’t followed. However, time is critical, as the funds will be sent to the IRS once the hold period expires.

If you’re facing immediate financial hardship due to a levy, you can request levy release on economic hardship grounds. This requires demonstrating that the levy prevents you from meeting basic living expenses. We can help document your financial situation and present a compelling case for levy release.

For ongoing protection, establishing a payment arrangement is typically the most effective strategy. Once you’re in compliance with a payment plan, the IRS generally won’t initiate new levies. Other options include appealing the underlying tax assessment, requesting innocent spouse relief if applicable, or exploring bankruptcy protection in extreme cases.

If you are ready to resolve your tax matter, contact us at 1-877-788-2937, or ONLINE.

Unfiled Tax Returns: Compliance and Resolution

The failure-to-file penalty is 5% of unpaid taxes for each month or part of a month that your return is late, up to 25% of unpaid taxes. This penalty is in addition to the failure-to-pay penalty and interest charges. For returns more than 60 days late, there’s also a minimum penalty.

Beyond financial penalties, unfiled returns can prevent you from claiming refunds, obtaining loans, or resolving other tax issues. The IRS may also pursue criminal charges for willful failure to file, though this typically occurs only in cases involving substantial income and intentional evasion.

For missing documents, we can request transcripts from the IRS showing reported income and withholding. We also help reconstruct records using bank statements, credit card records, and other available documentation to maximize legitimate deductions and credits.

The filing process involves preparing accurate returns that take advantage of all available deductions and credits, potentially reducing the tax owed significantly compared to IRS substitute returns. We file the returns in the proper sequence and monitor the IRS processing to ensure everything is handled correctly.

Once the returns are filed and processed, we can address any remaining tax debt through payment arrangements or other resolution strategies. Many taxpayers are surprised to find they owe less than expected or may even be entitled to refunds after filing proper returns.

The key distinction is between “willful” failure to file and simple non-compliance. If you simply failed to file due to procrastination, fear, or being overwhelmed by the process, criminal prosecution is unlikely. However, if you deliberately attempted to evade taxes or engaged in fraudulent behavior, criminal charges become more likely.

The best protection against criminal exposure is voluntary compliance – filing the missing returns and addressing any tax debt through proper channels. The IRS generally views voluntary compliance favorably and focuses criminal enforcement on the most egregious cases involving deliberate fraud or evasion.

Payment arrangements include installment agreements that allow you to pay the debt over time, currently not collectible status if you’re experiencing financial hardship, or offers in compromise if you qualify to settle for less than the full amount owed. Each option has specific requirements and procedures that must be followed carefully.

The key is addressing the situation proactively rather than continuing to avoid it. The longer you wait, the more penalties and interest accumulate, making the problem worse. Even if you can’t pay immediately, filing the returns and establishing a payment arrangement demonstrates good faith and can prevent more aggressive collection actions.

Unpaid Back Tax Debt: Resolution Strategies

Installment agreements allow you to pay your debt over time through monthly payments. These can be streamlined agreements for smaller debts or more complex arrangements for larger amounts. The IRS considers your income, expenses, and ability to pay when structuring these agreements.

Currently Not Collectible (CNC) status is available if you’re experiencing genuine financial hardship. This temporarily stops collection actions while you get back on your feet financially. However, penalties and interest continue to accrue, and the IRS reviews your financial situation periodically.

Offers in Compromise allow you to settle your debt for less than the full amount owed if you meet strict criteria. The IRS considers your ability to pay, income, expenses, and asset equity when evaluating these offers. While heavily advertised by some firms, offers in compromise are actually accepted in a small percentage of cases.

The IRS evaluates offers based on three criteria: doubt as to liability (you don’t actually owe the tax), doubt as to collectibility (you can’t pay the full amount), and effective tax administration (paying would create undue hardship). Most accepted offers fall under doubt as to collectibility.

The IRS calculates your reasonable collection potential (RCP) by analyzing your assets, income, and allowable expenses. They consider what you could pay in a lump sum plus what you could pay monthly over the remaining collection period. Your offer must generally equal or exceed this calculation.

Qualifying for an offer requires meeting strict criteria including being current on all filing and payment requirements, not being in an open bankruptcy proceeding, and having a legitimate reason why you can’t pay the full amount. The process involves extensive financial disclosure and documentation, and the IRS acceptance rate is relatively low.

To qualify for CNC status, you must demonstrate that paying your tax debt would prevent you from meeting basic living expenses for necessities like housing, food, transportation, and medical care. The IRS uses national and local standards to determine allowable living expenses and compares these to your income.

While in CNC status, you’re not required to make payments, but penalties and interest continue to accrue. The IRS periodically reviews your financial situation to determine if your circumstances have improved enough to resume collection activities. The debt doesn’t disappear, but collection is suspended until your financial situation improves.

CNC status can provide breathing room to get back on your feet financially, but it’s not a permanent solution. We often use CNC status as a strategic tool while developing longer-term resolution strategies or waiting for the collection statute of limitations to expire.

Understanding the CSED is crucial for developing tax resolution strategies. In some cases, it may be more advantageous to delay resolution if the collection period is nearing expiration. However, the IRS can extend the collection period through various actions, including installment agreements, offers in compromise, and collection due process appeals.

Certain actions automatically suspend the ten-year period, including filing for bankruptcy, submitting an offer in compromise, or requesting a collection due process hearing. The suspension period, plus additional time, is added to the original ten-year limit.

We carefully analyze the collection statute expiration date for each client’s situation to determine the best resolution strategy. Sometimes aggressive collection defense is appropriate, while other times voluntary compliance and payment arrangements serve the taxpayer’s interests better.

IRS Audits: Defense and Representation

The first step is determining the type of audit. Correspondence audits are handled through mail and typically focus on specific items like unreported income or questionable deductions. Office audits require you to visit an IRS office, while field audits involve an IRS agent coming to your home or business.

Never ignore an audit notice, as failure to respond can result in the IRS making changes to your return without your input, typically resulting in additional taxes, penalties, and interest. Contact a qualified tax professional immediately to discuss your options and develop an audit defense strategy.

Professional representation is particularly valuable because enrolled agents, CPAs, and attorneys can represent you before the IRS without your presence in most cases. This can reduce stress and ensure your rights are protected throughout the audit process.

You have the right to understand why the IRS is examining your return and what they need from you. The IRS must explain their findings and give you an opportunity to respond to any proposed changes. You also have the right to appeal any audit findings you disagree with.

Privacy rights are also important – the IRS can only examine and question you about the tax matters specified in the audit notice. You have the right to know why they’re asking for specific information and how they plan to use it.

If you can’t resolve the audit at the initial level, you have the right to appeal to the IRS Appeals Office, which provides an independent review of your case. If you still disagree after appeals, you can take your case to Tax Court.

Organization is crucial – present your documentation in a clear, logical manner that makes it easy for the auditor to review. We often create summary schedules that tie individual receipts to the amounts reported on your return, making the audit process more efficient.

It’s also important to provide only what’s requested and avoid volunteering additional information that might raise new questions. Answer questions directly and honestly, but don’t elaborate beyond what’s necessary. Remember that anything you say can potentially expand the scope of the audit.

Professional representation during audit preparation helps ensure you’re presenting your case effectively and protecting your rights throughout the process. We can also help identify potential issues before they become problems and develop strategies to minimize any additional tax liability.

If you can’t resolve the disagreement at the audit level, you can request a meeting with the auditor’s supervisor or ask for your case to be forwarded to the IRS Appeals Office. The Appeals Office provides an independent review of your case and has authority to settle disputes based on the hazards of litigation.

Appeals conferences are generally informal meetings where you can present your case and negotiate a resolution. Appeals officers consider the strength of your position and the government’s position when evaluating potential settlements. Many cases are resolved at the appeals level without going to court.

If you still disagree after appeals, you can petition the U.S. Tax Court, which provides an independent judicial review of your case. Tax Court allows you to have your case heard by a judge without first paying the disputed tax, though there are strict time limits for filing petitions.

If you are ready to resolve your tax matter, contact us at 1-877-788-2937, or ONLINE.

Employment Tax Issues for Business Owners

The IRS takes employment tax violations very seriously because these taxes belong to the employees, not the business. When businesses fail to remit these taxes, they’re essentially using money that belongs to their workers and the government to fund business operations.

Employment tax problems can result in severe consequences including business closure, asset seizure, and personal liability for business owners and other responsible parties. The IRS has broad powers to collect employment taxes and often pursues collection more aggressively than other types of tax debt.

The Trust Fund Recovery Penalty (TFRP) allows the IRS to hold individuals personally liable for unpaid employment taxes, even if the business is a corporation or LLC. This penalty can be assessed against anyone who had the authority to collect, account for, and pay over the taxes, including owners, officers, and bookkeepers.

“Responsible person” status is determined by several factors including authority to sign checks, make financial decisions, hire and fire employees, and determine which creditors to pay. Multiple people can be deemed responsible, and the IRS can collect the full amount from any one of them.

“Willful” conduct doesn’t require intent to defraud – it simply means voluntary, conscious, and intentional acts. Paying other creditors while leaving employment taxes unpaid is typically considered willful conduct, even if done to keep the business operating.

To avoid TFRP liability, businesses must prioritize employment tax payments above other obligations. If cash flow problems arise, it’s better to address them immediately rather than borrowing from employment taxes to meet other expenses. Setting up payment arrangements with the IRS can also help avoid penalty assessments.

If you’re currently operating payroll, you must get current on ongoing employment tax deposits while addressing the back taxes. The IRS typically won’t work with businesses that continue to fall behind on current obligations. This might require adjusting your business operations or cash flow management.

For back employment taxes, options include installment agreements, offers in compromise (though these are rare for employment taxes), or currently not collectible status in extreme hardship cases. The specific resolution strategy depends on your business’s financial situation and ability to pay.

It’s crucial to address employment tax problems before the IRS begins enforcement actions. Once the IRS starts pursuing collection, your options become more limited, and you may face business closure, asset seizure, or personal liability assessments.

The IRS views employment tax violations as particularly serious because these are trust fund taxes that belong to employees and the government. They often pursue collection more aggressively than other types of business tax debt and may take enforcement actions more quickly.

Before shutting down a business, the IRS typically tries other collection methods including levying bank accounts, seizing receivables, and assessing the Trust Fund Recovery Penalty against responsible individuals. However, if these methods don’t resolve the debt, business closure becomes a real possibility.

The best protection against business closure is addressing employment tax problems proactively. Even if you can’t pay the full amount immediately, establishing communication with the IRS and setting up payment arrangements demonstrates good faith and may prevent the most severe collection actions.

Getting Started with Tax Resolution

If you’re facing IRS collection actions like levies, garnishments, or liens, professional representation becomes crucial. These situations require quick action and knowledge of IRS procedures to protect your assets and resolve the underlying tax problems.

Audit representation is another area where professional help is valuable. Having an enrolled agent represent you can reduce stress, protect your rights, and often achieve better outcomes than self-representation.

If you’re overwhelmed by the complexity of your tax situation or intimidated by dealing with the IRS, professional representation can provide peace of mind and ensure your case is handled properly. The cost of representation is often offset by better outcomes and reduced stress.

We’ll also discuss our fee structure and what services are included in your representation. Our goal is to provide clear, honest advice about your situation and develop a strategy that addresses your specific needs and financial circumstances.

The consultation is an opportunity for you to ask questions and understand what’s involved in resolving your tax problems. We’ll explain the process, timeline, and what we’ll need from you to move forward effectively.

Most importantly, we’ll help you understand that tax problems, while serious, are solvable. With proper representation and strategy, most taxpayers can resolve their IRS issues and move forward with confidence.

We typically offer several fee arrangements including flat fees for specific services, hourly rates for ongoing work, and hybrid arrangements that combine elements of both. We’ll discuss fee options during your initial consultation and provide clear estimates based on your specific situation.

Many clients find that professional representation saves money in the long run through better resolution outcomes, reduced penalties and interest, and avoiding costly mistakes. The peace of mind and time savings are additional benefits that many clients value highly.

We believe in transparent fee arrangements and will explain all costs upfront. There are no hidden fees or surprise charges – you’ll know exactly what to expect before we begin work on your case.

IRS processing times also affect the timeline. Some IRS departments are faster than others, and seasonal workload variations can impact how quickly your case is processed. We monitor your case throughout the process and keep you informed of any developments or delays.

While we work to resolve your case as quickly as possible, we also ensure that we’re achieving the best possible outcome for your situation. Sometimes patience is required to achieve optimal results, and we’ll advise you when it’s worth waiting versus accepting a quicker but less favorable resolution.

The key is getting started as soon as possible. Tax problems don’t improve with time, and early intervention often leads to better outcomes and shorter resolution timelines.

Contact Information and Next Steps

Don’t let tax problems continue to grow – penalties and interest accumulate daily, and the IRS has powerful collection tools at their disposal. The sooner you address your tax issues, the more options you’ll have and the better your outcome is likely to be.

We understand that facing tax problems can be stressful and overwhelming, but you don’t have to handle them alone. With proper professional representation, most tax issues can be resolved successfully, allowing you to move forward with confidence and peace of mind.

Contact Mike Habib, EA today to begin resolving your Colorado tax problems. Whether you’re dealing with unfiled returns, unpaid tax debt, IRS collection actions, audits, or business tax issues, we have the expertise and experience to help you achieve the best possible outcome for your situation.

Remember, tax problems are solvable, and taking action today is the first step toward financial freedom and peace of mind. Don’t wait – contact our office now to schedule your consultation and begin the process of resolving your tax issues once and for all.

If you are ready to resolve your tax matter, contact us at 1-877-788-2937, or ONLINE.

Mike Habib, EA provides professional tax representation services throughout Colorado including Denver, Colorado Springs, Aurora, Fort Collins, Lakewood, Thornton, Westminster, Arvada, Centennial, Boulder, Greeley, Pueblo, Loveland, Broomfield, Grand Junction, and surrounding communities. Contact our office today to discuss your tax resolution needs.