Back Taxes —
When you fail to pay your taxes by the due date, underreport your taxes, or forget to file a return, your tax liability becomes back taxes. The IRS can demand payment of back taxes with penalties and interest.
Balance Sheet —
Considered the statement of a company’s specific financial position at any given time, including all assets and all debts owed, a balance sheet can be expressed as a basic equation of assets minus liabilities equals present equity.
Bank Levy —
When the IRS levies your bank account; the levy is only for the day the levy is received by the bank. Referred to as “one shot” levies, your bank is required to remove whatever amount is available in your account on that specific day to cover your tax debt. After removing the amount, your bank will sequester the funds for 21 days and then send them to cover your tax bill unless notified otherwise by the IRS. A one shot levy does not affect future deposits made into your bank account unless the IRS issues a second Bank Account Levy.
Bankruptcy —
Under Federal statutes, this legal process provides for rehabilitation of a debtor in the form of a fresh start through the discharge of certain debts or through a debt repayment plan. Creditors cannot contact the debtor during the bankruptcy. They must wait until it is fully discharged.
The three chapters of bankruptcy are as follows:
1)Chapter 7 – Personal bankruptcy. In Title 11 of the United States Code, this chapter of bankruptcy law provides for a full liquidation of non-exempt property to satisfy creditors, and discharges all debts.
2)Chapter 11 – For a business bankruptcy. This chapter of bankruptcy law provides for a partial payment of some debts and the partial discharge of some debts belonging to a business.
3)Chapter 13 — This bankruptcy law provides for partial payment of some debts and partial discharge of some debts for an individual. Called as the Wage Earners Repayment Plan because all creditors must receive a dividend.
Burden of Proof —
A formal legal requirement to provide evidence of the legitimacy of a claim. For tax purposes, the burden of proof to substantiate the claim or deduction rests with the individual whom either was required to sign the return or submitted the actual claim.
Business Entities —
An individual or a group organized for some profitable or charitable purpose, business entities include organizations such as corporations, partnerships, charities, and trusts. Subject to taxation, business entities must file tax returns and account for payroll taxes. Certain business entities are exempt from federal income tax, including non–profits, S–corporations, and partnerships. Business entities may be subject to state income tax, depending on the laws of the state or states where they conduct their business and their central location.
