A Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA.
CPAs work mostly in the financial industry as their primary functions relate to auditing and public accounting services. CPAs also have a niche within the income tax preparation industry.
A Tax Lien is a public notice that a taxpayer (a taxpayer can be an individual, business, estate, or trust) has an unpaid tax liability. It is similar to a judgment, and attaches to any property owned by the taxpayer. Before the taxpayer can sell an asset (like a house, business, or a boat, etc.) the settlement agent has a duty to do a search at the local courthouse for any liens against the seller. Then agent then withholds the entire amount of the lien from the sales proceeds and pays lien holder. It shows up on a credit report, and once released stays on the credit report for seven years. Once the liabilities are paid, or an installment agreement is entered into a lien is eligible to be released
A levy is claim against a taxpayer’s assets (cash, cash equivalents, or receivables, etc.) that is sent to a third party (usually a bank, or employer) who holds, or owes money to a taxpayer. It is good only for the day on which the levy is received by the third party. The third party seizes the funds in the account and holds them for 21 days and then they turn the funds over to the lien issuer (IRS, or State, or to apply towards a judgment).
A garnishment is similar to a levy in that it is sent to a third party (usually an employer, or who holds or owes money to a taxpayer). In the case of a wage garnishment the employer withholds the amount of wages owed to the taxpayer except for a basis living amount that is calculated based on the formula established by statue. Unlike a levy, a garnishment stays in place and attaches to wages, or payments due to the taxpayer.
When a taxpayer ignores the notice phase of IRS, or State, correspondences, and does not follow up with a “Revenue Officer” the only option left is for the IRS, or State, to begin seizing the taxpayer’s assets like automobiles, houses, boats, and any other personal property that may be contained within the taxpayer’s house, or driveway. The IRS then auctions the assets (at fire-sale prices) and applies the proceeds towards the taxpayer’s debt.
There are penalties for failure to file, pay and failure to make estimate tax payments. These penalties can be imposed on income, withholding, sales & use tax, quarterly payroll filings, annual payroll filings, estimated tax filings, etc. Each penalty is 5% per month, or any part of a month, up to a total of 25%. Some penalties are eligible for relief (forgiveness) under certain circumstances. It is best to research the Internal Revenue Manual – Penalty Relief Handbook (Part 20).