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We prepare most type of tax returns:

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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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What is a tax lien? Form 668(Y) CPA accountant explains the Federal Tax Lien Process

CPA Wilmington NC discusses Form 668(Y), Federal Tax Lien

While it’s better to act early, there may still be time to avoid a federal tax lien. (910) 399-2705.

CPA accountants get calls after a potential client receives the infamous Notice of Federal Tax Lien, IRS Form 688(Y). I’ll share a few tips about how a tax lien CPA handles this entire process – from tax lien prevention all the way through to federal tax lien withdrawal. My best advice? Avoid a federal tax lien when possible.

So what is a tax lien?

  • Federal tax liens establish an IRS claim to your property as collateral against your tax debt. Of course, your state has their own version of tax liens.  Check out your state’s specific laws here with this handy IRS guide.
  • The IRS then has first “dibs” on some of your assets.
  • Form 668(Y) becomes a public record and the tax lien appears on your credit report, dropping your FICO credit up to 200 points.
  • Potential employers pass you by.
  • The federal tax lien stays on your credit report for years, even after you’ve completely paid it off.

Hi, I’m Gary Bode, a CPA with a virtual office to serve you, or your company, regardless of location. While we generally advocate self-sufficiency, once the IRS issues Form 668(Y), you probably need professional CPA help.

What is a tax levy?

The tax lien established by Form 668(Y) puts a hold on the form’s listed assets, up to the amount on the lien. A tax levy means the IRS or State seizes your assets and sells them to satisfy the back taxes due.

What is a tax lien release?

The IRS or State formally acknowledges you’ve paid off the tax lien.

What is a federal tax lien withdrawal?

The IRS tax lien stays on your record for years, even though you’ve paid it! You must ask them to withdraw the tax lien. Here’s one of our past posts on how to get the federal tax lien withdrawn early using Form 12277.

Back Taxes – Sometimes Taxpayers are due a Refund!

A tax lien, in my opinion as a CPA, is the last attempt of the IRS to gain your attention, generally about taxes due from un-filed returns. Incredibly, once we prepare the back tax returns, a taxpayer refund often exists. Why? On un-filed back tax returns the IRS calculates the taxes due from the revenue information they’ve collected. But they don’t factor in things like legitimate deductions and tax credits. Here’s an earlier post on back tax resolution.

IRS Tax Lien Release – How a Tax Lien CPA approaches Form 668(Y)

The IRS recently relaxed its tax lien policies. But Form 668(Y) explicitly says that the IRS has lost patience with you. Common steps we take include:

  • Avoiding the federal tax lien. Sometimes this involves preparing a few back tax returns.
  • Requesting a delay on the Levy process. Generally the IRS recognizes a CPA needs time to help you satisfy them.
  • Obtaining power of attorney for us to talk to the IRS about you – usually through both Form 2848 and Form 8821.
  • Carefully listening to your side of the dispute. We’re your advocate!
  • Gaining a complete understanding of the IRS’ position.
  • Checking the IRS figures. They’re not always correct.
  • Preparing un-filed back tax returns. This usually lowers  amount due the IRS.
  • Understanding your current financial condition. CPAs generally help manage cash flow during the federal tax lien process.
  • Filing Form 12277.  Here’s our past post on Form 12277, Application for Withdrawal of Filed Form 668(Y).
  • Obtaining a retainer. In these cases we get paid in advance. After all, there is no more powerful creditor than the IRS. Except maybe the local loan shark.

“My main concern is avoiding a tax levy and then getting the tax lien withdrawn from your credit report.” 
– Gary Bode, Form 668(Y) CPA and federal tax lien accountant

Common Techniques for Tax Lien Release:

  • Checking that the IRS followed their own rules. If not, the lien must be released.
  • Preparing back tax returns to cut your liability.
  • Preparing Form 656, Offer in Compromise. This is the infamous “pennies on the dollar” technique as seen on late night television. An Offer in Compromise, when appropriate, is a powerful tool. Here’s our past post on Form 656, Offer in Compromise and the related Form 433-B.
  • Entering into an Installment Agreement via IRS Form 9465. Here’s one of our past posts on Form 9465 and Installment Agreements. You may not even have to pay off the entire amount to have the tax lien released! Or, sometimes, not even provide an IRS collection statement.
  • Paying off Form 668(Y) in full. A good trick that requires careful financial planning.
  • Allowing the IRS to levy the assets.
  • Asserting that withdrawal of the lien will speed collecting the tax.
  • Asserting that withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the IRS.

IRS Information on Form 668(Y)

  • Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from a Federal Lien.
  • IRS Publication 784, Application for Subordination of Federal Tax Lien.
  • Publication 1450, Request for Release of Federal Tax Lien.
  • The IRS website provides a nice over view of Form 688(Y) and associated issues.

If you need a CPA advocate for your back tax or tax lein issue, please feel free to call us for a free, initial consultation at (910) 399-2705.

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4 comments to What is a tax lien? Form 668(Y) CPA accountant explains the Federal Tax Lien Process

  • George

    There is one thing that all these financial buzzards always leave off their websites in regards to Federal Tax Liens. If your tax debt has not been collected, and no Offer in Compromise has ever been agreed to or pursued, or if you have not entered into any Installment Agreement, and the 10 year rule has expired, the IRS can not collect that tax, and must release any Federal Tax Lien.
    For Rule 6502 (5.1.19.1) states that the IRS has 10 years to collect that debt, and if not collected, can no longer pursue a tax debt which has become unenforceable.

    Nowhere in these articles do they mention that Rule, or inform tax debtors who may have 6 months left to be free, that they have that option. These guys just want your money to represent you and hand you and your money over to a Corporation, not a government agency!

  • aiko okuyama

    Dear Mr. Bode,
    I have 3 back-tax liens which I am trying to get them discharged
    by asking to accept offer-in-compromise. My real problems is:
    my cpa filed my taxes very late: l995, 2001, 2003 were all filed in 2008 and I don’t see any payment voucher, so I don’t know if I paid
    any or not. So, the amt. of penalty & interest are huge, but I can’t
    even think right . I guess I must believe what IRS says, right?

    • Well Aiko I would use Form 4506T and request a record of account. Then I would use the prequalifier tool on the IRS site. Remember if you’re not eligible now you can do tax positioning to sometime qualify, given enough time. If your CPA isn’t interested I’m happy to help.

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