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Tax Resolution

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Tax Resolution Firm

Paying your taxes can be pretty complicated for a lot of Americans and it can be easy to end up owing the IRS a lot of money. Once you start to fall behind on your taxes, the fees and interest will make the repayment even more difficult and you could end up facing even more severe consequences.

Fortunately, the IRS has a vested interest in helping you to pay your taxes and has created a few programs designed to help taxpayers that fall behind. It’s possible that you are eligible for one of these services that can save you both time and money.

Although you may be able to navigate these programs by yourself, it might be a good idea to consult with a tax resolution firm. There are tons of reputable law firms that focus specifically on taxes and helping their clients deal with the IRS. These tax resolution experts can help you to navigate these programs and get out of tax problems more quickly and cheaper than going at it alone.

What Are The Different Types Of Tax Problems?

The first step will need to be understanding your exact problem with the IRS. There are quite a few different common issues faced by American taxpayers and the possible solutions will depend on the nature of your problem. The most common tax-related issues include:

What Are The Options For Resolving Tax Problems?

Even though your tax situation might seem bleak, you have several options available to resolve it. You are most likely eligible for at least one of the programs offered by the IRS.

If you are struggling to repay your taxes then it might be best to consult with a tax professional for advice. Regardless of the type of tax problem you have, they will be able to go over your specific situation and determine the best path forward.

These are a few of the programs offered by the IRS that can potentially help you to pay your tax liabilities:

Installment Agreement

One of the easiest programs to be eligible for is an installment agreement. These agreements are designed to be paid monthly over a specific period of time. There will most likely be fees and interest added to your total outstanding amount. The new total will then be divided evenly by the number of months agreed upon. There are two different categories of agreements: short-term and long-term.

  • Short-term installment agreements are set to be repaid within six months. The maximum total tax liability allowed to enter this program is $100,000 after interest and penalties have been factored in. There are no fees or charges included in applying for this program.
  • Long-term installment agreements are set to be repaid after six months. They will usually have a maximum length of 72 months. The maximum total tax liability allowed to enter this program is $50,000 after interest and penalties have been factored in. Depending on the exact method that you are paying, there will be fees in order to apply for this program. These fees are non-refundable and range from $31 to $225.

Offer In Compromise

Making an Offer in Compromise is an attempt to negotiate with the IRS and lower your overall tax obligations. These agreements operate as a type of tax settlement program that benefits both sides. The IRS would much rather receive some money as opposed to nothing and so they will often review applications and accept less than the total amount owed.

However, these offers will require evidence that you are experiencing economic hardship as a result of your tax problem. The IRS will require access to your financial information in order to determine a reasonable settlement amount.

It’s not impossible for the IRS to accept an Offer in Compromise, but it’s also not very likely. In 2017, the IRS received around 62,000 offers and only accepted about 25,000 of them. That’s a success rate just above 40 percent, but that’s one of the highest acceptance rates in recent years.

There are a few important things to mention when considering making an Offer in Compromise:

  • There will be a non-refundable $205 dollar fee to apply.
  • You will need to have filed all of your tax returns in previous years.
  • The IRS is still free to place liens on your assets until the tax is repaid.
  • You are not eligible if you are currently in an open bankruptcy proceeding.
  • The IRS will suspend any current collection actions if you are accepted.
  • You must pay at least 20 percent of the total offer if you’re paying in five or fewer installments or your first monthly installment if paying in six or more.
  • You have 30 days to file an appeal if the IRS rejects your initial offer.

Currently Not Collectible

This program is by far the most difficult to enter into on this list, but it can be very beneficial if you are eligible. If you are unable to make payments on your tax bills because you are struggling to cover your living expenses, you might be eligible for a Currently Not Collectible status. The purpose of the program is to provide temporary relief for taxpayers in severe economic hardships.

Once accepted, all collection attempts and payments will be paused until the economic situation of the taxpayer has improved. In order to receive this status, you will need to provide proof that you can not afford to pay your tax bills and monthly expenses on your current income.

It’s important to note that if you are granted this status, it will not forgive the tax liability or reduce it in any way. You will still be obligated to pay off the total balance eventually. The IRS will review your case often in order to determine when you can reasonably resume payments.

What Happens If You Don’t Fix Your Tax Problems?

You should start taking steps to resolve any of your potential tax issues as soon as you can. The IRS can and will apply extra fees, fines, and interest to any amount of money that you owe. Paying an extra amount of money is just the beginning of the potential consequences of having owed taxes. In addition to charging you these various financial penalties, you might also experience:

The Takeaway

It can be very challenging to get out of tax bills with the IRS. The total amount can range in the thousands of dollars and a running interest rate and extra fees can push that amount even higher. Fortunately, there are plenty of programs offered by the IRS that are designed to help you repay your back taxes.

If you ignore the problem or aren’t taking serious steps to resolve issues, you might be subjected to severe consequences. The IRS can legally seize your tax refund, property, assets, and wages. It’s even possible that you could end up serving time in prison.

By talking with a licensed tax resolution specialist at Coast One Tax Group today, you can greatly improve your situation. These pros will review your tax situation and figure out a plan to help you resolve your tax problem and get a fresh start financially.

SOURCES

Why it’s so hard to file and pay US taxes

Back Taxes

Understanding a Federal Tax Lien

Audit Definition: What Is a Financial Audit?

Levy

Under Reporting Definition – Accounting.

You can’t run or hide. If you have past unfiled tax returns, here’s what to do.

Tax Relief: How to Get Rid of Your Back Taxes

Payment Plans Installment Agreements

IRS Offer in Compromise: What to Know.

Offer in Compromise

5.16.1 Currently Not Collectible

What Happens If You Don’t File or Pay Taxes in 2021?