Have questions about IRS notices, back taxes, tax audits, payment plans, business formation, or tax planning? We’ve compiled answers to some of the most common questions we receive from individuals and business owners. If you don’t see your question below, contact Petry Advisory for personalized guidance.

 

IRS Notices

What should I do if I receive an IRS notice?

Do not ignore an IRS notice, even if you believe it was sent in error. Review the notice carefully, note any deadlines, and gather relevant tax records. Many IRS issues can be resolved more easily when addressed promptly, and early action often prevents penalties and collection activity from escalating.

Can Petry Advisory communicate with the IRS on my behalf?

Yes. With the proper authorization forms in place, our team can communicate directly with the IRS regarding your account. This allows us to help explain your options, respond to IRS inquiries, and work toward a resolution on your behalf.

How long do I have to respond to an IRS notice?

Response deadlines vary depending on the type of notice received. Many IRS notices contain specific response dates, and failing to meet those deadlines can result in additional penalties or loss of appeal rights. It is generally best to review notices immediately upon receipt.

What happens if I ignore an IRS notice?

Ignoring IRS notices rarely makes the problem disappear. In many cases, penalties and interest continue to accrue, and the IRS may eventually take collection actions such as tax liens, bank levies, or wage garnishments.

What if the IRS notice contains incorrect information?

Mistakes can happen. If you believe an IRS notice is incorrect, compare it with your tax records and supporting documents. Responding quickly and providing accurate information may help resolve the issue before it becomes more complicated.

Back Taxes

What happens if I owe back taxes?

When taxes remain unpaid, the IRS may assess penalties and interest that continue to grow over time. If the balance remains unresolved, collection actions such as liens, levies, or wage garnishments may eventually occur.

Can the IRS garnish my wages?

Yes. Under certain circumstances, the IRS may issue a wage levy that requires your employer to send a portion of your paycheck directly to the government. However, taxpayers often have options available before a garnishment begins.

Can the IRS take money from my bank account?

Yes. The IRS can levy a bank account after following required collection procedures. Taking action early may provide opportunities to avoid or stop a bank levy before funds are seized.

What if I cannot afford to pay my tax debt?

Many taxpayers face financial hardship at some point. Depending on your circumstances, options may include payment plans, hardship status, penalty relief, or settlement programs designed to help resolve tax debt.

How long does the IRS have to collect back taxes?

In many cases, the IRS has ten years from the date a tax liability is assessed to collect the debt. However, certain events may extend this collection period, making it important to review your specific situation.

IRS Payment Plans

Can I make monthly payments to the IRS?

Yes. Many taxpayers qualify for installment agreements that allow tax debt to be paid over time through manageable monthly payments. The specific terms depend on the amount owed and financial circumstances.

How do IRS installment agreements work?

An installment agreement allows taxpayers to make monthly payments toward an outstanding balance rather than paying in full immediately. Interest and some penalties may continue until the debt is completely satisfied.

What happens if I miss an IRS payment?

Missing a payment may place your agreement in default. If that happens, the IRS could resume collection activity, so it is important to address missed payments as quickly as possible.

How long do IRS payment plans last?

The length of an installment agreement depends on factors such as the balance owed and the payment amount approved by the IRS. Some agreements last only a few months, while others may extend for several years.

Can I pay off an IRS payment plan early?

Yes. Taxpayers can generally make additional payments or pay off the balance at any time. Paying early may reduce the amount of interest that accrues over the life of the agreement.

Offer in Compromise

What is an Offer in Compromise?

An Offer in Compromise is a program that may allow qualifying taxpayers to settle tax debt for less than the full amount owed. The IRS evaluates financial circumstances before deciding whether to accept a settlement offer.

Who qualifies for an Offer in Compromise?

Eligibility depends on income, expenses, assets, and overall ability to pay. The IRS reviews a taxpayer’s financial situation to determine whether collecting the full balance is realistic.

How long does the Offer in Compromise process take?

The review process often takes several months and may require additional documentation. Processing times vary based on the complexity of the case and IRS workload.

Does an Offer in Compromise erase all tax debt?

Not necessarily. The amount forgiven depends on the terms approved by the IRS. Each case is unique and requires a detailed financial analysis.

Can I apply for an Offer in Compromise myself?

Yes, but the process can be complicated. Many taxpayers seek professional assistance to help ensure that applications are complete, accurate, and supported by the necessary documentation.

IRS Audits

What triggers an IRS audit?

Audits may occur for many reasons, including reporting discrepancies, unusually high deductions, missing income, or random selection. No single factor automatically guarantees an audit.

Can I have representation during an IRS audit?

Yes. Taxpayers have the right to professional representation during an audit. Many people choose to work with a qualified tax professional to help navigate the process.

What records should I keep in case of an audit?

Maintain copies of tax returns, receipts, bank statements, income records, and documents supporting deductions or credits. Good recordkeeping can make an audit much easier to manage.

Does an audit mean I did something wrong?

No. Many audits are routine examinations intended to verify information reported on a return. An audit does not automatically mean that fraud or wrongdoing occurred.

How long does an IRS audit take?

The length of an audit depends on its complexity and the information requested. Some audits may be resolved quickly, while others can take several months.

Tax Liens & Levies

What is the difference between a tax lien and a tax levy?

A tax lien is the government’s legal claim against your property due to unpaid taxes. A levy is the actual seizure of assets such as wages, bank accounts, or property.

Can the IRS put a lien on my home?

Yes. If taxes remain unpaid, the IRS may file a federal tax lien that attaches to property and other assets. This can affect financing, refinancing, and certain financial transactions.

How can I remove an IRS tax lien?

A tax lien may be released after the debt is paid, settled, or otherwise resolved. In some situations, taxpayers may qualify for lien withdrawal or other relief options.

Can the IRS seize my home?

While property seizures are relatively uncommon, the IRS does have authority to seize certain assets in serious cases. Most taxpayers have opportunities to resolve their tax issues before property seizure becomes a concern.

Can the IRS take my car?

Under certain circumstances, the IRS may seize vehicles and other assets to satisfy unpaid tax debt. Taking action early often helps prevent collection efforts from reaching that stage.

Can the IRS freeze my bank account?

Yes. The IRS may issue a bank levy that freezes available funds in an account. Financial institutions typically hold the funds for a short period before sending them to the IRS, which may provide taxpayers with a limited opportunity to resolve the issue.

How much money can the IRS take from my bank account?

The IRS may take up to the amount of tax debt owed, limited by the funds available when the levy is received. The exact amount depends on your balance and outstanding liability.

Can an IRS levy be stopped?

In many situations, yes. Depending on your circumstances, options such as installment agreements, hardship status, or appeals may help stop or release a levy.

IRS Collections

What is Currently Not Collectible status?

Currently Not Collectible (CNC) status is a hardship designation that may temporarily suspend IRS collection efforts. It is generally available to taxpayers who cannot afford to make payments without causing significant financial hardship.

Does CNC status eliminate tax debt?

No. The tax debt remains owed, and interest may continue to accrue. CNC status simply pauses active collection efforts while the taxpayer remains in financial hardship.

Can interest continue during CNC status?

Yes. Although collection actions may be suspended, interest and certain penalties generally continue to accumulate on the outstanding balance.

What is the IRS 10-year rule?

The IRS generally has ten years from the date a tax liability is assessed to collect the debt. However, various events can extend this collection period.

Can the IRS collect after ten years?

In some situations, yes. Bankruptcy proceedings, appeals, Offer in Compromise applications, and other events may extend the IRS collection statute.

What happens if I move and owe the IRS?

Moving does not eliminate tax debt. The IRS can continue collection efforts regardless of where you live within the United States.

Can the IRS take my tax refund?

Yes. The IRS may apply future federal tax refunds toward unpaid tax debt until the balance is resolved.

Can the IRS take Social Security benefits?

Under certain circumstances, the IRS may levy a portion of Social Security benefits to satisfy outstanding tax obligations.

Tax Returns

What happens if I do not file my tax return?

Failure to file may result in penalties, interest, and IRS enforcement actions. Unfiled returns can also prevent taxpayers from qualifying for certain resolution programs.

Can I still file old tax returns?

Yes. Filing delinquent returns is often an important first step toward resolving tax issues and becoming compliant with IRS requirements.

What is a Substitute for Return?

A Substitute for Return (SFR) is a tax return prepared by the IRS when a taxpayer fails to file. These returns often result in higher tax liabilities because many deductions and credits are not included.

Can I get a refund if I file late?

Possibly. However, refunds are generally subject to filing deadlines, and waiting too long may result in losing the ability to claim a refund.

How many years of tax returns should I keep?

Many taxpayers retain records for at least three to seven years. Certain situations may justify keeping records for a longer period.

What if I forgot income on my tax return?

If income was omitted, an amended return may be appropriate. Correcting mistakes promptly can help reduce future complications.

Can I file taxes if I lost my W-2?

Yes. Alternative records and IRS transcripts may help reconstruct income information when original documents are unavailable.

Do I need to file if I made very little money?

Filing requirements depend on income, filing status, age, and other factors. Some taxpayers may still benefit from filing even if they are not required to do so.

Tax Preparation

What documents should I bring to my tax appointment?

Bring income statements, prior tax returns, business records, investment information, expense documentation, and any IRS correspondence you have received.

Can I amend a tax return?

Yes. Taxpayers may file amended returns to correct certain mistakes or update information reported on a previously filed return.

How long does it take to process an amended return?

Processing times vary depending on IRS workload and the complexity of the changes being made.

Can tax preparation errors be corrected?

Yes. Many errors can be corrected through amended returns or other IRS procedures.

What if I receive a corrected tax form?

A corrected form may require reviewing your return and possibly filing an amendment if the changes affect your tax liability.

Can I file taxes electronically?

Most taxpayers can file electronically, which is often faster and more efficient than paper filing.

What should I do if my return is rejected?

Review the rejection notice carefully and correct any identified errors before resubmitting the return.

Business Formation

Should I form an LLC or an S Corporation?

The answer depends on liability concerns, tax goals, business income, and future plans. Professional guidance can help determine the best structure for your situation.

What are the tax advantages of an S Corporation?

In some situations, S Corporations may reduce self-employment taxes while still providing liability protection and operational flexibility.

When should I form a business entity?

Many entrepreneurs benefit from establishing an entity early to address liability, tax, and operational concerns before growth occurs.

Do I need an EIN for my business?

Many businesses require an Employer Identification Number (EIN), especially if they hire employees or operate through certain legal entities.

How do I choose the right business structure?

The best structure depends on your industry, goals, tax considerations, ownership structure, and future growth plans.

Can I change my business structure later?

In many situations, businesses can change entity types as they grow and evolve. However, tax consequences should be evaluated beforehand.

What is the difference between a sole proprietorship and an LLC?

A sole proprietorship offers simplicity, while an LLC may provide liability protection and additional flexibility for business owners.

Should I separate business and personal finances?

Yes. Maintaining separate accounts and records can improve organization, simplify tax preparation, and strengthen liability protection.

Small Business Taxes

What is the Texas Franchise Tax?

The Texas Franchise Tax is a state tax imposed on many business entities operating in Texas. Even businesses that owe no tax may still be required to file annual reports to remain compliant with state requirements.

Who must file a Texas Franchise Tax return?

Many LLCs, corporations, partnerships, and other entities operating in Texas must file annual franchise tax reports. Filing requirements depend on the entity type and business activity.

What happens if I miss a franchise tax deadline?

Missing a filing deadline may result in penalties, interest, and administrative consequences. In severe cases, a business may lose its good standing with the state.

Can I deduct business meals?

Certain business meal expenses may qualify as deductible business expenses when they meet IRS requirements. Proper documentation should always be maintained.

Can I deduct my home office?

Some taxpayers may qualify for a home office deduction if they use a portion of their home regularly and exclusively for business purposes.

Can I write off my vehicle for business use?

Business-related vehicle expenses may qualify for deductions. The deduction available depends on how the vehicle is used and the records maintained.

What is reasonable compensation for an S Corporation owner?

Reasonable compensation varies based on industry standards, duties performed, experience, and the overall financial condition of the business. The IRS expects S Corporation owners actively working in the business to receive appropriate compensation.

What records should my business keep?

Businesses should maintain receipts, bank statements, payroll records, invoices, contracts, and supporting documentation for all income and expenses.

Tax Planning

Why is tax planning important?

Tax planning helps individuals and businesses make informed financial decisions throughout the year rather than scrambling during tax season. Proactive planning may reduce surprises and uncover legitimate tax-saving opportunities.

Can tax planning reduce future tax liability?

In many situations, yes. Proper planning can help taxpayers take advantage of deductions, credits, retirement contributions, and business strategies that reduce taxes legally.

When should I start tax planning?

Tax planning is most effective when performed year-round. Waiting until tax season often limits the number of strategies available.

Is tax planning only for wealthy individuals?

No. Tax planning can benefit taxpayers at many income levels by helping them better understand deductions, credits, and financial decisions.

Can tax planning help small business owners?

Absolutely. Business owners often have additional planning opportunities related to entity structure, retirement plans, compensation, and expense management.

Retirement Planning

Are retirement contributions tax deductible?

Certain retirement accounts may allow tax-deductible contributions depending on income levels, participation in employer plans, and IRS eligibility requirements.

What is the difference between a Traditional IRA and a Roth IRA?

Traditional IRAs may provide tax deductions today, while Roth IRAs generally allow qualified withdrawals to be tax-free in retirement.

Can retirement planning reduce taxes?

Yes. Strategic retirement contributions can lower taxable income while helping taxpayers build long-term financial security.

Should business owners have retirement plans?

Many business owners benefit from retirement plans because they may create tax advantages while helping owners and employees save for the future.

What retirement plan is best for self-employed individuals?

The ideal plan depends on income, business structure, and financial goals. Several retirement options exist for self-employed taxpayers.

Real Estate & Investments

Are capital gains taxable?

Yes. Capital gains are generally subject to federal taxation when assets are sold for a profit.

What is the capital gains tax rate?

Rates vary depending on income level, filing status, and whether the gain is classified as short-term or long-term.

Can I avoid capital gains tax when selling my home?

Some homeowners may qualify for exclusions that reduce or eliminate taxable gains when certain requirements are met.

Are rental properties taxed differently?

Yes. Rental property owners may have access to deductions and tax rules that differ from those applying to personal residences.

What is depreciation?

Depreciation allows taxpayers to deduct portions of the cost of qualifying business or investment assets over time.

Are stock market gains taxable?

In most cases, profits from the sale of stocks and investments are taxable and should be reported appropriately.

Can investment losses reduce taxes?

Investment losses may help offset certain gains and potentially reduce overall tax liability under IRS rules.

Cybersecurity & Tax Scams

How can I tell if an IRS message is a scam?

The IRS generally initiates contact through mailed notices rather than unexpected phone calls, emails, or text messages. Requests for immediate payment or threats are common scam indicators.

Are AI-powered tax scams becoming more common?

Yes. Artificial intelligence allows scammers to create highly convincing emails, voice messages, and fraudulent websites designed to steal personal information.

Will the IRS contact me by email or text message?

The IRS does not typically initiate contact through email, text messages, or social media to request personal or financial information.

What information should I never provide to an unsolicited caller?

Never provide Social Security numbers, banking information, passwords, tax return information, or credit card details to an unsolicited caller.

What are common warning signs of a tax scam?

Threats, urgent payment demands, requests for gift cards, suspicious links, poor grammar, and requests for confidential information are common red flags.

Can scammers file a tax return using my identity?

Unfortunately, yes. Identity thieves sometimes use stolen personal information to file fraudulent tax returns and claim refunds.

What should I do if I receive a suspicious IRS-related email?

Do not click links or download attachments. Verify the legitimacy of the communication independently before taking any action.

How can businesses protect themselves from cyber fraud?

Businesses should implement employee training, strong passwords, multi-factor authentication, secure backups, and internal verification procedures.

Can tax scams target small businesses?

Yes. Small businesses are frequent targets because scammers often believe they have weaker cybersecurity protections.

What should I do if I believe my identity has been stolen?

Act quickly by monitoring accounts, notifying financial institutions, and seeking professional guidance to limit potential damage.

Working With Petry Advisory

Do you work with clients outside Texas?

Yes. Depending on the matter involved, we assist taxpayers and businesses located throughout the United States.

Do you offer virtual consultations?

Yes. Many consultations can be conducted remotely by phone or video conference, making assistance more convenient for clients.

How much does an initial consultation cost?

Consultation fees vary depending on the complexity of the matter. Contact our office directly for current consultation information.

What documents should I bring to my consultation?

Helpful documents may include tax returns, IRS notices, financial records, business documents, and any relevant correspondence.

How do I get started with Petry Advisory?

Simply contact our office by phone or through our website to schedule a consultation and discuss your situation.

Do you help with IRS audits?

Yes. We assist taxpayers facing IRS audits and help them understand their rights, obligations, and options.

Can you represent me before the IRS?

Yes. With proper authorization, we can communicate directly with the IRS regarding eligible matters.

Do you help business owners?

Yes. We work with entrepreneurs, startups, and established businesses on tax planning, compliance, and resolution matters.

Houston Tax Questions

Do you help Houston taxpayers with IRS problems?

Yes. We regularly assist individuals and businesses throughout Houston with tax notices, audits, tax debt, and other IRS matters.

Do you help Houston small business owners?

Yes. Houston business owners often seek assistance with tax planning, compliance, entity selection, and IRS issues.

Can you help with payroll tax issues?

Yes. Payroll tax matters can become serious quickly and often require immediate attention.

Do you help self-employed individuals?

Yes. We work with freelancers, contractors, consultants, and other self-employed taxpayers throughout Texas.

Can you help stop IRS wage garnishments?

Depending on the situation, taxpayers may have options available to stop or resolve wage garnishments and other collection actions.

Do you help with IRS bank levies?

Yes. We help taxpayers understand available options when facing bank levies and other collection efforts.

Do you assist with Texas Franchise Tax compliance?

Yes. We assist Texas businesses with franchise tax filings, reporting requirements, and compliance issues.

What tax services does Petry Advisory provide?

Our services include tax preparation, tax planning, IRS representation, audits, tax resolution, business consulting, and related tax matters.

Why choose Petry Advisory?

Our team focuses on helping individuals and businesses navigate complex tax issues while providing practical solutions tailored to their unique circumstances.

How can I schedule an appointment?

You can contact our office directly by phone or through our website to schedule a consultation with a member of our team.