Tax Relief

Tax debt, whether to the IRS or state tax agencies, can lead to aggressive collection policies. That’s the bad news. The good news is that it doesn’t have to. There are many avenues you can travel down in a search for tax relief. The wrong one is to pretend that your tax liability is not there. Whether or not it is justified, it is there. You have received a Notice that there are questions about your tax account and the IRS or state tax agency needs answers. The first thing to learn about tax relief is that you need to be proactive and work towards a satisfactory solution to tax delinquency and liability.

Dealing with the IRS can seem nerve-wracking and overwhelming if you find yourself behind on your taxes and heading into tax collections. You’ve heard the horror stories of wage garnishment, bank levies, penalties, and interest on unpaid taxes. You want to wake up and realize it was simply a bad dream – but it is real and you need to face it as quickly as possible.There are tax relief options for those taxpayers who have unfiled tax returns, face an audit, or owe a tax liability that allows them to resolve outstanding issues. Tax relief from collections can take the form of a payment plan, a hardship agreement or by working out a compromise with the IRS that will bring the taxpayer into compliance with the IRS or other tax agency.

There are many options taxpayers can work on to resolve outstanding tax liabilities. Many times, the resolution is a combination of various options working together. If the taxpayer is able, the most common solution is to set up an installment agreement that will allow you to pay off your tax bill over an extended period of time. The IRS will usually accept reasonable payment plans. The best plan is a reasonable payment that the taxpayer knows can be paid each month. You will want to take care of this as soon as possible as well as the IRS. What the IRS does not want is for you to make the payments unreasonable, based on income and expenses, so that you are constantly having to “re-adjust” the amount of the payments to comply with the installment agreement.Individuals with balances over $25,000 are required to use direct debit. Businesses with a balance over $10,000 are also required to use direct debit. The IRS does not want to be chasing the taxpayer for late checks or insufficient funds. They want you to provide a solid installment agreement that will be successful.

The taxpayer may be able to pay the balance in full but needs some time to get the funds together. In this case, you may request a one-time extension of up to 120 days from the IRS to stay out of collections. The IRS may charge a penalty of one-half (0.5%) percent per month on the unpaid tax debt. This allows the taxpayer to complete the task(s) that will provide the funds for the tax delinquency.

An Offer in Compromise is an option for those taxpayers who are experiencing extreme financial hardship and are unable to pay their tax debt in full. It is also for the taxpayers who, if the tax debt was able to be paid in full, then that would cause extreme financial hardship. The IRS may allow you to resolve your tax liability for less than you owe. If the tax debt includes interest and penalties, the IRS can offer a penalty abatement or penalty adjustment that either eliminates the penalty or reduces it. In some cases, past penalties and interest that have been paid may be refunded to make an Offer in Compromise work. To work out the details of an Offer in Compromise, you will need an honest assessment of your income and expenses, any assets you may have, and the ability to pay.

Taxpayers, over the past few years, have been subjected to a variety of disaster situations that have led to an assortment of tax relief initiatives for the taxpayer. Hurricanes, floods, wildfires, pandemics, and other unforeseen natural disasters are qualifications for special tax relief as part of the government’s response. Casualty losses might be claimed on federal income tax returns.

Tax relief is available to those seeking satisfactory solutions.