For tax year 2022, the IRS put the gross difference between what taxpayers owed and what they paid on time, known as the federal tax gap, at roughly $696 billion. Most of that figure is not fraud. It comes from ordinary returns with math errors, income left off, and balances that went unpaid when money was tight.
In Troy, underreported income drives most of the gap, which is why the IRS and the Michigan Department of Treasury rely on document matching and automated notices to close it. A letter about a mismatch or an unpaid balance can arrive long after a return was filed, and how a taxpayer answers it shapes what happens next.
- The gross tax gap for tax year 2022 was about $696 billion, the amount of true tax liability not paid voluntarily and on time.
- The voluntary compliance rate held at 85%, meaning most tax is paid without any enforcement action.
- Underreporting made up $539 billion of the gap, far more than late payment or non-filing combined.
- The employment tax portion reached $127 billion, a reminder that payroll and withholding draw close scrutiny.
- The estate tax share was about $5 billion, small in total but concentrated among a limited number of larger family partnerships and estates.
Questions to Ask a Tax Attorney Before Hiring in Troy
Hiring the right tax lawyer is easier when you know what to ask. The answers tell you whether an attorney has handled matters like yours and how they plan to approach the agency on your behalf. Bring these questions to a first meeting with any Troy tax attorney.
- Have you handled my type of tax problem before? Audits, back taxes, payroll disputes, and estate returns each call for different steps. Ask whether the attorney regularly works on the issue in your notice, whether that is an income tax balance or a business partnership return under review.
- Who will actually work on my file? Find out whether the attorney you meet will handle the matter or hand it off, and who your day-to-day contact will be.
- How will you deal with the IRS or the state for me? A clear answer here matters, because it keeps you from volunteering information that widens an inquiry.
- What outcomes are realistic? You want candor, not a sales pitch. A lawyer should tell you when a settlement is unlikely.
- Can planning now prevent the next problem? Some clients arrive for one balance and leave with a plan that protects them going forward, from asset protection to cleaner recordkeeping.
- How does my tax issue interact with other debts? If credit cards or a mortgage are also unpaid, ask how a Chapter 13 bankruptcy might treat certain older tax debt.
- Do you handle estate and trust tax matters? Executors and trustees carry filing duties that outlast the person who set them up, so ask whether the firm supports trust administration alongside the return itself.
- What happens if I cannot handle this myself? Illness or travel can interrupt anyone. A durable power of attorney lets a person you trust step in on financial and tax matters without a court process.
Troy, MI Tax Lawyer FAQs
What is a federal tax lien?
A federal tax lien is the government’s legal claim against your property once a tax debt goes unpaid after notice and demand. It attaches to what you own now and what you acquire later, and it often surfaces when you try to sell or refinance. A lien is not the same as a levy, which is https://share.google/I4H2VhoXzi6XwTNWkan actual seizure. Addressing the balance early is the surest way to keep a lien off your record.
Can the IRS take money from my bank account or paycheck?
Yes. Through a levy, the IRS can reach funds in a bank account or a portion of wages, though it generally must send several notices first, including a final notice of intent to levy. You have a window to respond or request a hearing during that process. A Troy tax lawyer can often pause collection while a payment plan or another resolution is arranged.
Who at the IRS will handle my case?
It depends on the stage. Early notices are automated and come from a service center. A larger balance or a field matter may be assigned to a revenue officer, who has authority to file liens and issue levies. Knowing who holds your file changes how you respond, and having an attorney speak for you keeps the exchange focused and on the record.
Do I have to speak with the IRS myself?
No. Once you authorize representation, your tax attorney can handle calls and correspondence for you. Many people say more than they should when an agent calls, and an offhand comment can widen an inquiry. Letting a lawyer manage contact protects you and keeps deadlines from slipping while the matter is worked out.
What is innocent spouse relief?
When a joint return understates tax because of one spouse’s income or errors, the other spouse may ask to be relieved of part or all of the resulting debt. Relief is not automatic, and the request turns on what you knew and whether holding you responsible would be unfair. It is worth reviewing with a tax lawyer before the collection clock pressures a decision.
How do penalties and interest add up?
Penalties attach for filing late, paying late, and underpaying, and interest runs on both the tax and the penalties until the balance is cleared. Left alone, a modest balance can grow well beyond the original figure. Some penalties can be reduced when there is reasonable cause, which is one more reason to act on a notice rather than set it aside.
Will unpaid taxes affect my property or business?
They can. A lien can cloud the title to a home, and unpaid payroll or sales tax can put a business owner personally at risk. Owners who mixed personal and company funds are especially exposed. A Troy tax attorney looks at both sides so a business problem does not quietly become a personal one.
What if the IRS files a return for me?
When you do not file, the IRS can prepare a substitute return using only the income it has on record, without the deductions or credits you would claim. The balance it produces is usually higher than what you actually owe. Filing your own return, even a late one, often lowers the figure and reopens options that a substitute return closes off.
Additional Resources for Troy Tax Cases
These posts from our blog go further on tax and related debt questions.
- 3 Common Tax Issues for Small Businesses
- Tax Exemptions
- Living Trust Tax Benefits
- Understanding the Benefits of Filing Chapter 13
- How Long Does a Chapter 13 Bankruptcy Take to Complete?
Reach Gudeman & Associates, P.C.
If you have received a notice, fallen behind on returns, or watched a balance grow, our Troy tax lawyer can review where you stand and lay out the paths that fit your facts. Contact us to arrange a consultation. We work with individuals and business owners in Troy and throughout Michigan, in person and by video.
