Ya, that's right.
The IRS is known for completing what they call a "Substitute Return" for tax payers and sending a notice to let you know how much you owe the Department of the Treasury.
The tax client kept saying, "How could they levy my bank account, I never filed the return" It took a lot of explaining before she calmed down.
I helped her to understand that when she worked as an Independent Contractor, the company that she provided services for, filed a 1099.
On this 1099 they reported that they had paid her $26,000 for non-employee services.
I also explained, that more then likely, she had a savings account at the bank where she cashed her checks in amounts over $2,500 (which is reported to the IRS) and the bank had reported "Interest" earned from her savings account, on a 1099 INT, to the IRS.
She admitted that she had a savings account and that she often cashed checks in amounts over $2,500 at one time.
Once she understood that companies, banks, credit unions, financial institutions, mortgage lenders and employees report certain information to the IRS, in order to legally take deductions -- she calmed down considerably and asked what to do next.
In cases like this, when the IRS has completed a "Substitute Return" for you, the only thing you can do, is to file your own tax return or accept what the IRS says is your tax liability..
It is always better to file your own tax return, especially if you received 1099s, because the IRS is NOT aware of all of your legal deduction.
The IRS computer receives the W2, bank interest, mortgage interest and additional information each year and tries to match it with a return.
If the taxpayer has not filed a return, then the computer starts to send the tax payer notices in the mail, telling them that they need to file a previous year tax return.
At some point, an IRS human gets involved and that's when the tax payer's troubles become more serious.
It will be a matter of time before the IRS will garnish your wages or levy your bank accounts.
You usually will have 21 days to respond before the bank sends ALL of your monies from your checking and savings accounts, to the Department of the Treasury.
And your employer payroll department, should give you notice that they have received a wage garnishment order from the IRS.
(If you haven't move you will receive a notice in the mail as well) Filing past due tax returns is a necessary part of life, unfortunately, it only gets worst with the penalties and interest.
The good news is, Installment Agreements are available.
The IRS is known for completing what they call a "Substitute Return" for tax payers and sending a notice to let you know how much you owe the Department of the Treasury.
The tax client kept saying, "How could they levy my bank account, I never filed the return" It took a lot of explaining before she calmed down.
I helped her to understand that when she worked as an Independent Contractor, the company that she provided services for, filed a 1099.
On this 1099 they reported that they had paid her $26,000 for non-employee services.
I also explained, that more then likely, she had a savings account at the bank where she cashed her checks in amounts over $2,500 (which is reported to the IRS) and the bank had reported "Interest" earned from her savings account, on a 1099 INT, to the IRS.
She admitted that she had a savings account and that she often cashed checks in amounts over $2,500 at one time.
Once she understood that companies, banks, credit unions, financial institutions, mortgage lenders and employees report certain information to the IRS, in order to legally take deductions -- she calmed down considerably and asked what to do next.
In cases like this, when the IRS has completed a "Substitute Return" for you, the only thing you can do, is to file your own tax return or accept what the IRS says is your tax liability..
It is always better to file your own tax return, especially if you received 1099s, because the IRS is NOT aware of all of your legal deduction.
The IRS computer receives the W2, bank interest, mortgage interest and additional information each year and tries to match it with a return.
If the taxpayer has not filed a return, then the computer starts to send the tax payer notices in the mail, telling them that they need to file a previous year tax return.
At some point, an IRS human gets involved and that's when the tax payer's troubles become more serious.
It will be a matter of time before the IRS will garnish your wages or levy your bank accounts.
You usually will have 21 days to respond before the bank sends ALL of your monies from your checking and savings accounts, to the Department of the Treasury.
And your employer payroll department, should give you notice that they have received a wage garnishment order from the IRS.
(If you haven't move you will receive a notice in the mail as well) Filing past due tax returns is a necessary part of life, unfortunately, it only gets worst with the penalties and interest.
The good news is, Installment Agreements are available.