by Renee Lawson | Sep 10, 2024 | Tax Preparation, Tax Resolution
If you’ve ever tried reaching the IRS by phone, you’re familiar with the seemingly endless wait times and multiple transfers that often lead to frustration. Now, imagine trying to negotiate your tax debt under these conditions—without a clear understanding of your options.
The process can feel like an uphill battle, making it even more challenging to resolve your tax issues. That’s why it’s so important to be informed about all of the different ways in which you can negotiate with the IRS.
In this article, we’ll break down the most common methods for settling tax debts and offer guidance on how to navigate this complex process more effectively (and with the right help).
IRS Negotiation Options
1. Installment Agreements
An installment agreement allows you to pay your tax debt in manageable monthly payments rather than in one lump sum. This option is suitable if you can’t pay your tax bill in full but can afford to make regular payments.
- How It Works: You propose a monthly payment amount that fits your budget, and the IRS will review your financial situation to determine if it’s acceptable. If approved, you’ll enter into a formal agreement and make monthly payments until your debt is fully paid off.
- Pros: This option prevents the IRS from taking collection actions such as garnishing wages or levying bank accounts.
- Cons: Interest and penalties continue to accrue on the unpaid balance, which can increase the total amount you owe over time.
2. Offer in Compromise (OIC)
An Offer in Compromise is an agreement between you and the IRS that allows you to settle your tax debt for less than the full amount owed. It’s designed for people who can’t pay their debt in full and can demonstrate they’ve been through financial hardship.
- How It Works: You submit a proposal to the IRS outlining how much you can afford to pay and why you believe this amount should be accepted as a full settlement. The IRS will then review your documentation and financial situation to determine if your offer is reasonable.
- Pros: If accepted, you’ll pay less than what you owe, and the debt will be resolved. This option can significantly reduce your tax liability.
- Cons: The process can be lengthy and complicated, and not all offers are accepted. Additionally, you’ll need to meet strict eligibility requirements, and there’s a hefty non-refundable application fee.
3. Currently Not Collectible (CNC) Status
If you’re experiencing severe financial hardship and can’t make any payments toward your tax debt, you might qualify for Currently Not Collectible status. This status temporarily halts IRS collection actions.
- How It Works: You provide documentation to the IRS showing that you’re unable to pay your debt due to financial difficulties. The IRS will review your situation and may place your account in CNC status, which means they won’t pursue collection actions against you while you’re unable to pay.
- Pros: This option provides temporary relief from IRS collection actions, such as wage garnishments and bank levies.
- Cons: Interest and penalties will still continue to accrue, and the IRS may keep a close watch on your financial situation to determine if your status should be continued or changed.
4. Penalty Abatement
If you’ve been hit with penalties for late payments or non-filing, you might be able to request a penalty abatement. This means you can ask the IRS to reduce or remove your penalties based on reasonable cause.
- How It Works: You must demonstrate to the IRS that your failure to pay or file on time was due to circumstances beyond your control, such as a serious illness or natural disaster. If the IRS finds your reasons valid, they may reduce or eliminate the penalties.
- Pros: Reducing or removing penalties can lower your overall tax liability.
- Cons: You’ll still be responsible for paying the original tax debt and any accrued interest.
Tips for Successfully Negotiating with the IRS
- Gather Your Financial Information: Before negotiating with the IRS, make sure you have a crystal-clear understanding of your financial situation, including documentation to back up your income, expenses, and all of your assets. This will help you present a realistic proposal.
- Be Honest and Accurate: Provide accurate information to the IRS to avoid complications. Misrepresenting yourself or the facts can lead to delays, rejections, or even additional penalties.
- Consider Professional Help: Tax relief professionals like the ones at Action Tax Relief are a valuable resource and can assist you in negotiating with the IRS. They have experience in handling tax debt and can help walk you through every step of the complicated process.
- Stay in Communication: If you’ve entered into an agreement with the IRS, keep up with your payment schedule and communicate if you encounter any issues. Maintaining a positive relationship with the IRS can only help prevent further complications.
- Review Your Options Regularly: Your financial situation may change over time, so it’s important to keep up to date with your tax relief options and adjust your strategy as needed.
If you’re struggling with tax debt and need help negotiating with the IRS, reach out to Action Tax Relief. We will assess your situation, help you choose the best resolution option, and work on your behalf to achieve the best possible outcome.
Remember, addressing tax debt sooner rather than later can help you avoid additional penalties and interest and provide you with a clearer path to financial stability. If you’re ready to explore your options for settling tax debts with the IRS, contact our team today for a free, no-obligation consultation 937-268-2737.
by Renee Lawson | Aug 19, 2024 | Tax Preparation, Tax Resolution
Looming tax debt can be overwhelming and intimidating. Not only does it continue to grow over time the longer it goes unpaid, but it can also feel like a constant uphill battle.
At times, you may wonder what options you have to finally tackle the growing debt, but figuring out if you qualify for tax relief can feel like a maze.
Tax relief can help ease the burden if you’re struggling with unpaid taxes, but not everyone qualifies. Here’s a simple guide to help you understand if you might be eligible for tax relief and how to get the help you need.
What Is Tax Relief? (aka Tax Resolution)
Tax relief is designed to ease the burden of tax debt. Essentially, it helps people manage or reduce their tax obligations when they’re facing financial hardship.
How to Determine If You Qualify
1. Assess Your Total Tax Debt
Start by looking at how much you owe. Depending on what you owe will determine your most favorable option.
If your tax debt is under a certain amount, you might be eligible for a payment plan, which allows you to pay off your debt in monthly installments that are manageable for you.
If you owe more or are experiencing severe financial trouble, you might consider an offer in compromise, which lets you settle your debt for less than what you owe.
Knowing the total amount of your debt will be an important step in the process and will help in deciding your best relief option.
2. Examine Your Financial Situation
To even qualify for tax relief, you are required to demonstrate that you’re having financial difficulties. You will need to look at your current finances – income, expenses, and current assets.
Many people find themselves struggling to make ends meet, so if you cannot cover both your living expenses and tax debt, you may be eligible for relief.
Work on gathering important documents like pay stubs, bank statements, and bills to clearly show your financial situation, especially if you are struggling.
3. Ensure Your Tax Filings Are Up-to-Date
Most tax relief options require that you have filed all your past and current tax returns, which means you need to be current with all your tax filings.
If you’ve missed any returns, get them filed as soon as possible, and make sure you’re keeping up with any new tax bills to avoid making your situation worse.
4. Explain Your Reason for Penalties
If you’re seeking penalty relief, you need to explain why you didn’t pay your taxes on time.
Some common valid reasons might include illness, natural disasters, or other significant hard times that you can prove. Have all of your evidence ready along with detailed explanations for your specific situation. It may help to strengthen your case.
5. Review Your Tax History
Your history with the IRS can influence your eligibility for tax relief. If you’ve had ongoing issues or shown deliberate avoidance, it might affect your options.
A tax relief professional like the ones at Action Tax Relief will help review your history and determine how it impacts your chances of qualifying for relief.
6. Understand Different Relief Options
As mentioned earlier, when faced with a large amount of tax debt, there are various relief options potentially available, each with specific rules:
- Payment Plans: These are ideal if you can’t pay everything at once but can manage monthly payments.
- Offers in Compromise: This option is better if you can’t pay what you owe and face severe financial hardship.
- Penalty Relief: Available if you have a reasonable cause for not paying on time.
Understanding these options and their rules may help you choose the right path for your situation.
Determining if you qualify for tax relief can be a complicated process, but with the right information and support, you can navigate this process more easily and find the help you need.
If you’re feeling overwhelmed by the options available to you or are facing financial difficulties, don’t hesitate to reach out for assistance.
The team at Action Tax Relief is here to help you understand your options and find the best solution for your needs. Contact us today to get started 937-268-2737!
by Renee Lawson | Aug 14, 2024 | Tax Preparation, Tax Resolution
Filing tax returns is a legal obligation for anyone and everyone earning an income above a certain amount in the United States.
But life can sometimes throw you curveballs, and filing taxes ends up being on the bottom of your to do list. Out of sight, out of mind, right?
Unfortunately, the IRS does not turn a cheek, and the potential ramifications for not filing your taxes can result in major consequences like penalties, interest charges, and even potential legal problems.
For anyone with unfiled tax returns, pay close attention to all of the steps listed in this article.
Understanding Unfiled Tax Returns
Unfiled tax returns refer to the tax forms that individuals are required to submit to the IRS but have not filed for one or more tax years.
Regardless of the reason, it’s important to not let too much time lapse. It’s always best to address your unfiled tax returns as soon as possible to avoid escalating any potential penalties and legal consequences.
Potential Penalties for Non-Filing
The IRS may impose some significant penalties and consequences for not filing your tax returns. Here are some of the more common penalties that they issue:
- Failure-to-File Penalty: This penalty accrues at a rate of 5% of the unpaid taxes per month, up to a maximum of 25% of the unpaid tax amount. It will apply to the net amount that is due after accounting for any payments and credits.
- Failure-to-Pay Penalty: If taxes are owed but not paid by the filing deadline, a failure-to-pay penalty gets applied. This penalty accrues at 0.5% of the unpaid tax amount per month, also capped at 25%.
- Interest Charges: In addition to penalties, interest accrues on the unpaid tax balance. The interest rate is determined quarterly and compounded daily, reflecting the cost of borrowing as set by the IRS.
- Legal Action: Continuously complying with filing requirements may result in legal action, including IRS collection efforts, levies on wages and bank accounts. In addition, you could also be facing a $10,000 fine, and a year in prison, for every unfiled income tax return, as it’s considered a misdemeanor in the U.S. for not filing a legally due tax return.
Steps to Take for Filing Overdue Tax Returns
While this information may seem alarming or overwhelming, don’t allow it to paralyze you from moving forward. It is crucial to take action.
You want to take care of your unfiled tax returns as soon as possible because the amount you owe will just continue to grow.
Start taking action with these steps:
Step 1: Gather Necessary Information
- Income Documents: Collect all W-2s, 1099s, and any other income statements for each tax year.
- Expense Records: Gather any and all receipts and documentation for deductions, credits, and expenses claimed.
- Previous Tax Returns: Obtain copies of previously filed tax returns, if available.
Step 2: Prepare and Submit Delinquent Tax Returns
- Download Forms: Access the necessary IRS forms for each tax year requiring filing.
- Complete Forms: Fill out the appropriate tax forms accurately, reflecting income, deductions, and credits for each year.
- Submit Returns: Mail completed tax returns to the IRS for each applicable tax year. Consider sending them via certified mail to track delivery.
Step 3: Address Tax Payment Options
- Payment Plans: If taxes are owed but cannot be paid in full, consider applying for a payment plan (installment agreement) with the IRS.
- Offers in Compromise: In cases of significant financial hardship, explore the option of settling tax debts for less than the full amount owed through an Offer in Compromise.
- Penalty Abatement: Request abatement of penalties if reasonable cause can be demonstrated for the failure to file or pay taxes.
How Tax Relief Professionals Can Help
Don’t think that this has to be done all on one’s own! Tax relief professionals like the ones at Action Tax Relief are a tremendous resource and may even help reduce the total amount owed.
Their expertise goes a long way. Here are just a few of the things that tax relief professionals can assist with:
- Compliance Guidance: Ensure accurate completion and timely submission of delinquent tax returns.
- Negotiation Skills: Negotiate with the IRS on behalf of the taxpayer to secure favorable payment terms or settlement agreements.
- Penalty Relief: Advocate for penalty abatement based on reasonable cause or first-time abatement criteria.
- Financial Analysis: Conduct a financial analysis to determine the most suitable tax resolution strategy, such as installment agreements or Offers in Compromise.
Addressing unfiled tax returns is vital for anyone seeking to regain compliance with IRS requirements.
Luckily, resources are available to you. Tax relief professionals play a crucial role in facilitating compliance, minimizing penalties, and securing favorable tax resolutions.
Contact the tax relief professionals at Action Tax Relief today at 937-268-2737 to discuss your options.
by Renee Lawson | Jul 22, 2024 | Tax Preparation, Tax Resolution
In times of economic hardship, navigating tax obligations can make financial stress so much worse. Sometimes it may be due to being out of work, unexpected medical expenses, or other financial setbacks, and individuals may find it challenging to meet their tax liabilities.
The good news is that tax relief options exist to alleviate the burden during such difficult economic times. Understanding these options and how they can provide relief is crucial for maintaining financial stability and compliance with IRS regulations.
Understanding Economic Hardship and Tax Obligations
Economic hardship can arise from various circumstances, such as unemployment, reduced income, medical emergencies, natural disasters, or other unforeseen economic circumstances.
Despite facing financial challenges, the IRS still expects their payments to be made in full and on time. Failure to follow through can lead to penalties, interest charges, and other consequences that will only exacerbate financial difficulties.
Common Tax Relief Options Available
When facing economic hardship, there are several avenues for seeking relief from taxes owed. These options are designed to provide flexibility and assistance based on the needs of each situation:
1. Payment Plans (Installment Agreements)
Payment plans, or installment agreements, allow taxpayers to pay their tax debt over time in manageable monthly installments. This is a great option for individuals who cannot pay their full tax bill immediately but are able to pay small chunks at a time in regular payments.
Payment plans can prevent IRS collection actions such as liens or levies, providing relief while maintaining compliance with tax obligations.
2. Hardship Extensions
Hardship extensions provide additional time to pay taxes without penalties. This option is beneficial for individuals facing temporary financial difficulties that prevent them from meeting their tax deadlines.
To qualify for a hardship extension, you must demonstrate unexpected circumstances or significant financial hardship.
These hardship extensions offer breathing room for taxpayers to stabilize their finances and avoid immediate penalties for late payment.
3. Offers in Compromise (OIC)
An Offer in Compromise is a settlement agreement between the taxpayer and the IRS that allows the taxpayer to settle their tax debt for less than the full amount owed. This is a suitable option for individuals experiencing severe financial hardship or those with little ability to pay their tax debt in full.
Taxpayers must show that they are unable to pay the full tax liability through financial disclosures, and then the IRS will do a thorough review to determine if the taxpayer can pay and what the appropriate settlement amount may be.
Offers in Compromise provide a path to resolve tax liabilities while potentially reducing the overall debt burden, which offers significant relief to people that are struggling financially.
Applying for Tax Relief: Steps to Take
Applying for tax relief options requires careful preparation and adherence to IRS guidelines. It’s best to work with a tax relief professional like the ones at Action Tax Relief so that they can help guide and support you through this process.
Here’s what the process typically looks like:
Step 1: Assess Financial Situation
Evaluate income, expenses, assets, and liabilities to determine the extent of financial hardship.
Gather supporting documentation, such as bank statements, pay stubs, and tax records, to substantiate financial status.
Step 2: Choose the Appropriate Relief Option
Consider the specifics of each relief option (payment plans, hardship extensions, Offers in Compromise) and determine which aligns best with your financial circumstances.
Consult with a tax relief professional for guidance on eligibility, application requirements, and expected outcomes.
Step 3: Prepare and Submit Application
Complete necessary forms accurately, providing comprehensive financial information as required.
Submit the application to the IRS with all supporting documentation, ensuring compliance with submission deadlines and guidelines.
Step 4: Monitor Application Progress
Stay informed about the status of your application through IRS communications or updates from your tax relief professional.
Respond promptly to any requests for additional information or documentation from the IRS.
Benefits of Seeking Professional Assistance
The steps above may seem simple and easy, but they are far from it. The entire process can be overwhelming if trying to handle it on your own…
Seeking assistance from a tax relief professional offers several advantages:
- Expertise: Tax relief professionals possess specialized knowledge of IRS regulations and procedures, optimizing chances for successful relief applications.
- Negotiation Skills: Professionals can negotiate on behalf of taxpayers to secure favorable payment terms or settlement agreements.
- Peace of Mind: Professional representation alleviates stress and uncertainty and will ensure compliance and maximize the available relief options…
By proactively exploring the options in this article and seeking professional guidance when needed, individuals can have peace of mind knowing their financial obligations are being managed responsibly even during economic hardships.
Contact the tax relief professionals at Action Tax Relief today at 937-268-2737 to discuss your options.
by Renee Lawson | Jul 8, 2024 | Tax Preparation, Tax Resolution
The amount of stress you face when you owe a significant amount of money to the IRS can feel insurmountable. Penalties and interest keep adding on to the debt, and it can feel like there’s often no way out.
Oftentimes, people will consider bankruptcy as their only option to get back on their feet, but they overlook an option that many times proves to be more advantageous and strategic, which is hiring a tax relief professional.
Let’s explore five compelling reasons why opting for tax relief services may be preferable to filing for bankruptcy.
1. Tailored Tax Solutions
Tax relief professionals are specialized when it comes to navigating the complexities of tax laws and IRS procedures. They provide personalized strategies tailored to your specific financial situation.
Unlike bankruptcy, which is a broad legal process that impacts all debts that are owed, tax relief professionals focus specifically on resolving tax-related issues.
They will take the time to assess your tax liabilities, handle all of the negotiations with the IRS on your behalf and develop comprehensive plans to help you reduce or settle your tax debts in the most effective manner.
2. Avoiding Permanent Financial Consequences
Bankruptcy can have long-term financial repercussions, including damaging your credit score and limiting future financial opportunities. It remains on your credit report for several years, and can impact your ability to secure loans, mortgages, or even certain job opportunities.
In contrast, working with a tax relief professional simply aims to resolve your tax debts without the severe and lasting consequences of bankruptcy. They are there to help protect your financial standing and work towards maintaining your financial health in the long term.
3. Preservation of Assets
Filing for bankruptcy often involves liquidating assets or following a court-mandated repayment plan. This process can result in the loss of valuable assets such as homes, vehicles, or personal possessions.
Tax relief professionals prioritize protecting your assets while negotiating with the IRS to settle tax debts through manageable repayment plans or other arrangements. They are advocates for you and the solutions that allow you to retain ownership of your essential assets, and in turn preserving your financial stability and peace of mind.
4. Expert Negotiation Skills
Navigating IRS negotiations requires in-depth knowledge of tax laws and procedural intricacies. Tax relief professionals possess extensive experience in dealing with the IRS, and they understand all the nuances of tax debt resolution and negotiation techniques.
They will leverage their expertise to achieve favorable outcomes for you and minimize the penalties or interest charges associated with any unpaid taxes.
5. Comprehensive Financial Guidance
Beyond resolving tax debts, tax relief professionals offer more holistic guidance. They assess your overall financial situation, providing insights into tax planning strategies, budgeting, and future financial management.
It’s a proactive approach that helps you avoid future tax problems and establish more sound financial practices that will help you maintain compliance with tax laws.
From personalized tax solutions and asset protection to expert negotiation skills and comprehensive financial guidance, tax relief professionals will work diligently to help resolve your tax issues effectively.
They will prioritize your financial well-being and aim to achieve a sustainable debt relief plan all while safeguarding your financial future.
If you owe $10,000 or more in back taxes and are facing a decision of whether to file for bankruptcy or pay your tax debt, contact the professionals at Action Tax Relief today at 937-268-2737 for a free, no-obligation consultation. We are happy to answer any questions that will help you make the right decision for you.
