August 25, 2020
Tax Resolution Los Angeles, California
Tax Resolution Los Angeles, California
Living in Los Angeles is not cheap! In fact, it’s one of the more expensive tax states in the lower 48. For example, it’s base sales tax rate is 7.25%, which is higher than any other states, and its top marginal income tax rate of 12.3% is the highest state income tax rate in the country.
Additionally, California adds a 1% tax on personal income over $1 million. This is due to the Mental Health Services Act as this additional tax provides funding for mental health programs in the state. So, if you earn income of over $1 million, your tax rate is 13.3%, which is the highest rate in the U.S. Here is a Single Filers tax rate table as an example:
Income Tax Brackets
|
California Taxable Income |
Rate |
|
$0 - $8,809 |
1.00% |
|
$8,809 - $20,883 |
2.00% |
|
$20,883 - $32,960 |
4.00% |
|
$32,960 - $45,753 |
6.00% |
|
$45,753 - $57,824 |
8.00% |
|
$57,824 - $295,373 |
9.30% |
|
$295,373 - $354,445 |
10.30% |
|
$354,445 - $590,742 |
11.30% |
|
$590,742 - $999,999 |
12.30% |
|
$1,000,000+ |
13.30% |
You Can’t Afford to Pay Your Tax Bill
If you are a Los Angeles Resident and filed your tax return, but with a balance due. Or, you filed a return expecting a refund, but forgot your worked for your Uncle in his store and received income which you neglected to report and now have tax due. In either case, there are going to be State and Federal penalties.
In California, the penalty is 5% of the unpaid tax, and 0.5% of the unpaid tax for each month or part of the months it’s unpaid not to exceed 40 months.
The IRS has much the same penalties. The Failure-To-Pay penalty is 0.5% for each month, or part of a month, up to a maximum of 25%, of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full. This percentage increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy property. Additionally, the IRS applies any payments you make to the tax first, then penalty, then to interest.
As you can see, it’s best to plan ahead to make sure you don’t owe either the State or IRS. If you are unsure what to expect next tax year, it’s best to reach out to a reliable tax specialist.
Lastly, an extension of time to file is not an extension of time to pay. Your tax bill must be paid in full on April 15 to avoid any penalties.
You Didn’t File Your Taxes
Life is busy and sometimes we forget to file our taxes. Whatever the reason, you forgot and now you’re late and wondering what’s next when you finally file.
First, mark the tax due date on your calendar. If you are a week out and know you are not going to file, file an extension at the very least. As mentioned above, be sure to pay your tax bill by April 15 and it’s an extension to file, but not to pay!
The IRS charges a Failure-to-File penalty, which is usually 5% of the tax owed for each month, or part of a month that your return is late up to a maximum of 25%. If your return is over 60 days late, there is also a minimum penalty for late filing, which is the lesser of $435 or 100% of the tax owed.
In California, the penalty starts at 5% and maxes out at 25%. This penalty starts from the original due date of your tax return and continues for each month or part of a month the return remains unfiled.
Tax Lien
A tax lien secures the governments interest in your property.
In California, it doesn’t matter how much you owe, they automatically have a statutory lien that attaches to all California real or personal property you own or have rights to. The State will do this if you do not respond to notices or set up a payment arrangement.
The IRS has much the same rules. A federal tax lien will be filed after your balance due posts, you are sent a bill stating how much you owe, and you neglect or refuse to pay the debt.
Once a tax lien is filed, there are options to have the lien withdrawn. In these cases, it’s best to contact a tax resolution specialist to assist you.
Tax Levy
If you received a notice that the IRS or State is going to issue a levy, the time to act was yesterday! At this point, you should really (strongly) consider calling in the professionals as things are going downhill fast!
A levy permits the legal seizure of your property to satisfy a tax debt. No, the IRS or State does not need a warrant to do so.
California has three different types of withholding orders:
- Earnings withholding order (EWOT or EWO)
- Order to withhold (OTW)
- Continuous order to withhold (COTW)
They issue these orders to anyone who owes you money, such as:
- Employers
- Banks or other financial institutions
- Escrows
- Businesses paying other businesses or individuals
- Individual paying for services provided
- Renter (we can intercept a landlord’s rental payments)
An IRS levy is much the same and does the same amount of damage to you and your credit. The IRS could levy property that is yours, but held by someone else, such as:
- Wages
- Retirement accounts
- Dividends
- Bank accounts
- Licenses
- Rental income
- Accounts Receivables
- Cash loan value of your life insurance or commissions
- Seize and sell property that you hold, such as car, boat or house
Arrest
This is a constant fear as everyone has heard horror stories, but it doesn’t have to happen if you don’t allow it to go that far. To avoid this major issue, respond to IRS notices and work out a payment arrangement. Depending on your case, you should not go this alone. Call someone for help, but make sure they are a certified tax resolution specialist as they have the skills in handling Federal and State taxing authorities.
Tax Relief Solutions for Los Angeles
Taxes can be scary, but much less scary when a skilled professional is on your side. It’s time to call one in, so be sure they are knowledgeable in taxes and resolution options. Our staff are Enrolled Agents and Certified Tax Resolution Specialists. They have the knowledge it takes to negotiate your tax debt with the State and Federal tax authorities.
Our initial consultation is free and here we will talk about your case, your concerns and what you want in the end. We are here to listen and will not take your case if we feel you can go it alone, but we’ll be sure you have the knowledge needed.
Once you become a client, we will initiate contact with the IRS and State. We will follow-up on your case and find out how far along in the process you are currently. Has your case been assigned to a Revenue Agent or Officer? Are you in Collections and quick action must be taken to ensure a levy would not be placed?
Once we have the information needed, we will then complete a financial analysis of your current financial situation. We will present you with the information we have found and work together on what resolution options are available for your specific case. Sometimes it may not be exactly what you are hoping for, like not paying anything at all, but it will be a final resolution that will resolve your tax debt and give you a better night sleep without having to worry if you will have money in your bank account tomorrow.
Once you are in a resolution, we are always available to help with questions, where to make payments, due dates, etc. Once you become a client, we stay with you to the very end of your case.
Call us today for a free consultation. 855-829-5877 We look forward to helping you!
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