Tax Debt Resolution

Southern California Tax Debt Relief Attorneys

Stop Liens, Levies, and Wage Garnishments

The burden of significant tax debt can seem insurmountable, whether it is owed to the IRS or a state agency. With the high cost of living in Southern California, an unexpected tax liability can quickly lead to a financial crisis. Collection actions, such as bank levies, wage garnishments, and property liens, are more than threats. They are powerful legal tools that tax authorities use to seize income and assets.

Our team of experienced tax professionals offers specialized legal assistance to individuals and businesses facing aggressive tax collection across Southern California. We believe every taxpayer deserves a path to financial stability. Our approach is to halt immediate collection actions and develop a sustainable resolution plan based on your unique financial circumstances and verifiable tax law.

Collection Actions: The Immediate Threat

The government has broad authority to collect the debt when a tax liability is assessed, and payment is past due. Measures often begin with a series of notices and can quickly escalate to enforced collection actions that can severely impact your credit and livelihood.

Federal Collection

The IRS uses powerful enforcement measures. A Notice of Federal Tax Lien is a public claim against all your current and future property. It can severely damage your credit score and your ability to borrow. By issuing a wage levy, the agency can require your employer to withhold a portion of your paycheck and send it directly to the IRS. A bank levy allows the IRS to seize funds from your bank accounts. The Notice of Intent to Levy includes information about your right to request a Collection Due Process (CDP) hearing (Form 12153) within 30 days of the notice.

State Collection

The following three major California agencies are responsible for collecting various state taxes:

  •  Franchise Tax Board (FTB): Collects corporate franchise tax and personal income tax.
  • Employment Development Department (EDD): Collects state payroll taxes, including unemployment and disability insurance.
  • California Department of Tax and Fee Administration (CDTFA): Collects sales and use taxes, and various special taxes and fees.

Each of these agencies has collection powers similar to the IRS, including the authority to do the following:

  • Place state tax liens on real or personal property
  • Issue Earnings Withholding Orders (wage garnishments)
  • Issue Orders to Withhold (bank levies)

It is critical to address each debt with the appropriate agency, as they operate independently. Our experienced tax attorneys have the knowledge and skills to deal with multiple state and federal authorities simultaneously.

Federal Tax Debt Relief Options

Resolving federal tax debt requires meticulous financial disclosure and adherence to the Internal Revenue Code. We focus on applying the appropriate legal and administrative remedies to reduce or restructure your debt. The following are federal tax debt relief options:

Offer in Compromise (OIC)

An Offer in Compromise is a formal proposal to the IRS to settle your tax liability for less than the full amount owed. The IRS typically accepts an OIC when it represents the greatest amount the agency can expect to collect within a reasonable time. This is known as Reasonable Collection Potential (RCP). The IRS considers OIC applications under the following grounds:

  • Doubt as to liability: A genuine dispute exists over the correct amount of tax legally owed.
  • Doubt as to collectability: Your assets and income total less than the tax liability.
  • Effective Tax Administration (ETA): Requiring full payment would create significant financial hardship, or it would be inequitable due to exceptional circumstances, even if you could technically afford to pay.

To qualify, taxpayers must have filed all required tax returns and must not be in open bankruptcy proceedings. The comprehensive application process requires detailed financial statements (Form 433-A or Form 433-B) and typically involves a non-refundable initial payment. Our experienced tax debt relief attorneys prepare the OIC application package to maximize the likelihood of acceptance by presenting a strong legal and financial case.

Installment Agreement (IA)

An installment agreement is a formal arrangement to pay your tax debt over time in monthly installments. This is a suitable option for taxpayers who can afford to pay the entire debt but need time to do so. The IRS accepts various short-term and long-term plans.

In most cases, a properly requested or established Installment Agreement will suspend levy action while the agreement is pending or active, but exceptions exist — timely filing and following the IA’s terms are critical. We assist in structuring the agreement to ensure the monthly payment is financially manageable according to Collection Financial Standards (national and local financial criteria and guidelines established by the IRS).

Currently Not Collectible (CNC) Status

The IRS may agree to temporarily halt collection efforts for taxpayers experiencing temporary financial hardship by placing the account in CNC status. This relief may be granted to taxpayers who can prove they cannot make a tax payment and afford necessary living expenses. Although penalties and interest continue to accrue, the Currently Not Collectible status can provide a crucial window of relief from levies and garnishments until the financial situation improves.

What Are the Collection Standards?

The IRS’s Collection Financial Standards are used in evaluating collection alternatives such as Offer in Compromise applications or installment agreements for taxpayers who cannot pay in full within 72 months. These standards are designed to ensure a reasonable amount is left to the taxpayer for necessary living expenses.

National Standards

These cover the following five necessary expenses that are consistent nationwide:

  • Food, clothing, and miscellaneous: This category covers groceries, clothing, personal care products, and small household supplies.
  • Out-of-pocket healthcare: This includes medical services, prescription drugs, and medical supplies that are not covered by insurance.

The IRS publishes these amounts annually, based on data from the Bureau of Labor Statistics. Generally, a taxpayer will be allowed the full amount of the National Standards for their household size, regardless of the actual expenses, unless the amount is deemed excessive.

Local Standards

These standards cover expenses that can vary significantly, depending on where the taxpayer lives, such as Southern California versus other parts of the country. They include the following:

  • Housing and utilities: This figure includes mortgage payments or rent, property taxes, interest, insurance, and utilities such as gas, water, and electricity. The allowable amount is based on household size and the county where the taxpayer resides.
  • Transportation: This covers ownership costs for taxpayers with car loans or leases and operating costs for gas, maintenance, insurance, and registration.

The IRS typically limits the allowable expense to the actual amount spent or the established local standard, whichever is lower, unless the taxpayer can justify a higher expense.

California State Tax Debt Resolution

Addressing state tax debt is equally important. The California Franchise Tax Board (FTB) and other state tax agencies are known for their assertive collection tactics.

FTB Offer in Compromise

Like the IRS, the FTB offers an Offer in Compromise (OIC) for businesses and individuals who are unable to pay their outstanding, non-disputed, final tax liabilities. The application is evaluated based on the value of your assets and your ability to pay. A key difference from the federal program is that the accepted offer to the FTB must be paid as a lump sum. FTB’s Offer in Compromise rules generally require the accepted offer amount to be paid as a lump sum (FTB guidance states installment payments toward the offered amount are not accepted), and accepted offers typically require ongoing filing and payment compliance for a specified period. Additionally, an approved offer often requires compliance with filing and payment requirements for five years.

FTB Installment Agreement

Provided all previous returns have been filed, the FTB allows payment plans for personal income tax liabilities of $25,000 or less for payment periods of up to 60 months. The term is shorter for business entities: up to 12 months for the same $25,000 liability threshold. Although it may involve a one-time fee, setting up a payment plan can prevent disruptive collection actions.

This $25,000 limit applies only to the streamlined online application process. Our seasoned tax attorneys can negotiate the terms of a payment plan if your balance exceeds the online application threshold or if you are already subject to an earnings withholding order.

Multi-Agency Compromise

A streamlined Multi-Agency Form for Offer in Compromise (Form DE 999CA) is available for taxpayers with debt to the FTB, CDTFA, and/or EDD. Each agency reviews and negotiates the compromise independently. We manage all three agencies throughout the process, ensuring consistent financial data is presented and advocating for the best possible outcome from each authority.

Value of Experienced Legal Counsel

Tax debt resolution is a complex legal specialty that involves the following:

  • Detailed financial disclosure: This entails a complete and accurate presentation of your assets, income, and expenses on complex government forms, such as IRS Form 433-A/B and FTB 4905PIT. Incomplete or inaccurate data can lead to immediate rejection or criminal consequences.
  • In-depth knowledge of Collection Standards: The IRS and FTB use specific national and local standards to determine acceptable living expenses. Knowledge of these standards is essential in formulating a winning OIC proposal.
  • Advocacy and appeals: If an offer is rejected or a collection action is initiated unfairly, you have the right to appeal. Our attorneys provide professional representation throughout the administrative appeal process, arguing your case directly to the IRS Independent Office of Appeals or the FTB Protest and Appeal Section.
  • Contact with tax authorities: We manage all correspondence and direct communication with taxing authorities, transferring the burden from your shoulders to ours. We act as your single point of contact and dedicated legal advocate.

IRS and California Tax Debt Relief

Do you owe back taxes to the IRS or the State of California? Are your delinquent taxes causing major financial difficulties for your family or business? If so, don’t panic. You have many options, and the team at Dallo Law Group can help you settle your tax debt.

If you owe back taxes to the IRS or the State of California, your case typically will be handled by a tax collector whose sole job is to collect the amount of tax the agency claims they are owed. Even if you firmly believe that you do not owe the tax that the IRS or California says that you owe, the tax collector will pursue collections anyway. Unlike other creditors who have to take you to court and get a judgment to levy your accounts, garnish your wages, or seize your accounts, the IRS, Franchise Tax Board (FTB), State Board of Equalization (SBOE), and the Employment Development Department EDD), all have strong levy power which means they can collect against you without court approval.

The biggest mistake some taxpayers make is ignoring letters, notices, and bills from the IRS. While the IRS can and may seize your assets, they cannot do so without allowing you to appeal that levy through a CDP or equivalency hearing. Some of those letters might just be your tickets to stopping collections. If you are starting to receive those nasty letters, call us right away so that we can make sure that your rights against asset seizure and garnishments are protected!

CA Tax Debt Relief Attorneys

If you are tired of owing back taxes to the IRS and are ready for tax debt relief, give us a call to schedule a consultation to discuss how our team can help. In most cases, we can avoid you having to speak or meet with the IRS completely during this process. After reviewing your tax and financial situation in detail, we can determine the best way to settle and resolve your tax debt. In some cases, an Offer in Compromise (OIC)/Tax Debt Settlement will be the best way to resolve your tax debt.

While we cannot guarantee results, our team is virtually UNDEFEATED in this process. (Disclaimer: Please note that results will vary by case.) We have settled some tax debts for pennies on the dollar. Other cases are better suited for a partial or full-pay payment plan, which we have negotiated for hundreds of clients. For taxpayers in really tough financial circumstances, we can negotiate non-collectible status, which means we can force the IRS to stop collections for at least a year, sometimes longer.

Every tax debt relief case is different, so get in touch with us to determine what is best for you. As always, communications with our office are completely confidential and privileged.

Why Choose Us for Tax Debt Relief Representation?

At Dallo Law Group, we are a team of experienced, comprehensive, dedicated, hard-hitting tax debt relief attorneys. Our local insight in Southern California, combined with our thorough knowledge of federal and state tax laws, enables us to formulate the most effective strategies. Do not face the IRS, FTB, CDTFA, or EDD alone. Gain control of your financial future with proven legal assistance. If you are facing tax debt collection actions, call us today at (619) 795-8000.