Monday, June 14, 2010

Questions for the Tax Lady: June 14th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Roni, I know that the federal estate tax is on hiatus this year. However, are there any state tax agencies that will collect an estate tax?

Yes. There are plenty of states that do enforce an estate tax (Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, and Wisconsin). However, the rules and rates vary for each state. If you live in one of the states listed above then I highly recommend speaking with an estate-planning attorney in your state.

Question #2: Will an accepted Offer in Compromise remove a bank levy?

An accepted Offer in Compromise will resolve your back tax liability with the IRS once you paid the amount offered in compromise. Once your back tax liability is resolved, the IRS will not pursue collection activity against you—this includes bank levies. What you need to know is that the Offer in Compromise process is lengthy and because and you only have 21 days to release a bank levy, filing an offer in compromise for the purpose of releasing a bank levy may not be the wisest choice. For more information regarding how to get tax levies released, check out this blog entry on the Tax Relief Blog.

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