Tax Season Has Begun - Don't Let the IRS Take Your Professional License

IRS take my professional license

Nearly all licensed professionals in the State of California are subject to losing their licenses to practice their professions (as well as their drivers licenses) if they are included in California’s list of the top 500 largest tax delinquents.

Assembly Bill 1424, the Delinquent Taxpayer Accountability Act, is aimed at the state’s biggest tax debtors. This power given to the California Franchise Tax Board (FTB) and the Board of Equalization (BOE) allows them place delinquent taxpayers on either of their certified lists of the top 500 tax delinquents owing over $100,000. In addition to yanking drivers’ licenses and professional licenses, such as the license to practice medicine, the bill also gives California officials permission to work with other states and the IRS to find debtors who have shifted their money into out-of-state bank accounts.

Any licensee who is on the California top debtors list will face denial or suspension of their professional license when they reapply for them. Once it has been determined that an applicant or a licensee is on a certified list, the applicant or licensee has 90 days from the issuance of a preliminary notice of suspension to either satisfy all outstanding tax obligations or enter into a payment installment program with the FTB or BOE. Any such person who fails to come into compliance will have his/her license denied or suspended until the licensing board, commission, department or other agency, receives a release from the FTB or BOE.

There is always the potential that the California legislature could expand the scope of the Delinquent Taxpayer Accountability Act to include debtors below the $100k limit. Don’t risk losing your license and endangering your livelihood. Pay any outstanding balances on your state taxes immediately.

If you have been denied your California professional license by a licensing authority or had your license suspended, you should contact the Law Offices of Lucy McAllister immediately. We can work with you to reapply for your license and successfully obtain the documentation you need to reinstate your professional credentials so that you can continue to practice your profession.

 
Owing back taxes to the IRS or any State Department or Department of Revenue can result in a plethora of unwanted penalties. Those who avoid paying and owe large amounts may even have their personal property, including their homes, boats, cars, SUVs, and even their bank accounts seized in order to pay those debts. State Department of Revenue may go one step further.

Thankfully, there are some options available to you before things get to this point.

Falling Behind on Your Taxes

There are many reasons why people fall behind on their taxes. For example, someone who freelances for a living or is considered an independent contractor by their employer may not be putting away a portion of their income to pay taxes or may fail to make quarterly tax payments. There are also people and businesses who simply do not have the money they owe to the IRS, and rather than agree to a proactive payment plan, they simply avoid their letters until an IRS agent appears at their door.

The IRS does not look kindly upon those who fail to pay their taxes, regardless of the reason, situation, or extenuating circumstances. They will send out a series of letters informing you of what you owe, giving you ample chances to appeal the amounts owed, and providing the opportunity to have your taxes audited to identify if any mistakes were made. Actively communicating with the IRS is the best way to avoid having the IRS take the next steps and begin collection efforts.

Three Actions California Can Take to Collect Your Unpaid Taxes

Money owed to IRS or to the state of California should not be taken lightly. The repercussions of not paying the bills delivered by the California Franchise Tax Board can be significant and could include the suspension of your professional license. Here are three actions the state of California can take if you fail to pay what you owe.

1. Fees, Penalties and Loss of Benefits

Initial repercussions you may face if you fail to pay your taxes include fees, penalties, and even the cancellation of benefits you rely upon. IRS can levy penalties on individuals who fail to file their taxes on time can be liable to pay up to 25% more on their taxes as a result. Along with penalties and fees, IRS can withdraw benefits from people who are unable to pay their taxes on time.

2. Properties Seizure and Liens

A tax lien has the potential to harm both your personal and business finances, as well as damage your credit.

A lien is recorded in California after a demand for payment goes unanswered. The government will issue a notice of collection to you 30 days before the lien is issued, which gives you one final month to deliver on your debt. If you fail to pay in that time, the lien will give the government the first legal claim to your property. That means they can effectively seize anything you own to pay off your tax debt. If you have an LLC or incorporated business, the government will only be able to file a lien on your business property. However, a lien can prevent you from getting a business loan, refinancing your house, and selling business assets. 

3. License Suspension

Another method IRS can use to penalize you for failing to resolve your tax debt with the state of California is to suspend your professional and occupational licenses. For instance, if you owe more than $100,000 in taxes, interest or penalties, and you have not set up a collection strategy, your license is susceptible to suspension. Realtors, dentists, attorneys, chiropractors, barbers, architects, and other professionals may not be able to have their professional licenses renewed in the state of California, meaning that they cannot continue to do business or make an income in their fields. Once you arrange for a payment plan with the IRS or pay off your debt entirely, you can petition them to return your professional license.

The IRS will do everything that it can in order to collect on the back taxes that you owe.

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Any such person who fails to come into compliance by one of these two options will have his/her license denied or suspended until the licensing board, commission, department or other agency, receives a release from state tax authorities.

The failure to pay taxes or file a tax return on time in California is a crime. If you have questions about losing your license due to unpaid tax debt, Attorney Lucy McAllister can answer your questions, discuss your rights, and provide actionable options. Please contact us online or at (877) 280-9944 today to schedule a confidential consultation to see how we can help you.

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