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.
by Renee Lawson | Jun 24, 2024 | Tax Preparation, Tax Resolution
Imagine checking your mail or email to find a notice from the IRS stating that you owe money. Whether the amount is small or substantial, it can likely trigger some immediate concern or even anxiety.
The bill might catch you off guard, or it could result from a tax return adjustment where the IRS found discrepancies from what you reported on your income or deductions when you filed your taxes.
Rest assured, help is available. The key to managing this situation effectively simply lies in understanding all the steps you need to take next. Handling it properly can prevent additional penalties, interest, and potential legal issues.
By following a clear and informed approach, you can navigate this challenge with confidence and reduce the stress that comes with it. Let’s walk through each step to ensure you address the tax bill as efficiently as possible to help make the process as smooth as possible.
Note: If the IRS is claiming you owe $10,000 or more, contact the experts at Action Tax Relief immediately for a consultation www.actiontaxrelief.com
Step 1: Don’t Panic, But Don’t Ignore It
Opening a letter from the IRS to let you know you owe money can be alarming, but it’s crucial not to panic. Ignoring the bill isn’t going to make it go away and could just lead to more severe consequences, such as increased penalties, interest, and potential legal action.
Stay calm and read the notice very carefully to understand why you owe the money and exactly how much is due.
Step 2: Verify the Details
Before you take any action, verify that the bill is accurate. The IRS can make mistakes, and so can taxpayers. Compare the IRS notice with your tax return and all of your supporting documents.
Be vigilant to look for discrepancies or potential errors. If you believe there’s a mistake, you’ll need to gather any and all evidence you possibly can to back up your claim.
Step 3: Understand Your Payment Options
The IRS provides several payment options to help taxpayers settle their bills:
- Pay in Full: If possible, paying the full amount by the due date will stop any further interest or penalties from accruing.
- Installment Agreement: If you can’t pay the full amount at once, you can apply for an installment agreement, which would allow you to make monthly payments.
- Offer in Compromise: In cases of significant financial hardship, you may qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed.
- Temporary Delay: If paying the bill would prevent you from covering basic living expenses, you can request a temporary delay of the collection process.
Step 4: Communicate with the IRS
If you have questions or need to discuss payment options, don’t hesitate to contact the IRS. The notice you received will include a contact number. Be prepared with your tax information and any relevant documents when you call.
Having clear communication with the IRS can help you better understand your situation and help find a resolution that works for you.
However, it’s not always easy to get in touch with the IRS, which is another reason why having experts like the ones at Action Tax Relief on your side is beneficial. We take care of the communication for you.
Step 5: Respond Promptly
Timely action is crucial. The IRS sets deadlines for payment and responses to notices. Missing these deadlines can result in additional penalties and interest, which is just adding to the tax bill owed.
Make sure you’re aware of the dates and respond when indicated in the notice. Whether you’re paying the bill, disputing the amount, or requesting a payment plan, get in touch with the IRS on time.
Step 6: Keep Detailed Records
Throughout the process, you must keep meticulous records of all communications with the IRS, payments made, and any documents sent or received. These records will be your backup in the event there are any disputes or if you need to reference them in the future.
Receiving a tax bill from the IRS doesn’t have to be a nightmare. By staying calm, verifying the details, understanding your payment options, and communicating effectively with the IRS, you can navigate this challenge more easily.
If you’ve received a tax bill from the IRS and owe $10,000 or more, contact the tax resolution experts at Action Tax Relief at 937-268-2737.
We’re here to help you understand your options and make the process as easy as possible. Reach out today for a free, no-obligation consultation and take the first step towards resolving your tax debt with confidence.
by Renee Lawson | Jun 21, 2024 | Tax Resolution
Facing an IRS audit can be an extremely nerve-wracking experience. The questions, concerns, and overwhelming “what-if” thoughts can easily take over.
However, understanding the actual audit process and knowing how to prepare can help alleviate much of the stress associated with it.
Rest assured, this article will identify why someone may be audited, what exactly is involved in an IRS audit, and the possible steps to take to be fully prepared.
Why Am I Being Audited?
The IRS may initiate an audit for various reasons. Here are some common triggers for audits:
- Finding discrepancies in tax returns
- Having high income levels
- Claiming unusual or excessive deductions
- Being self-employed
- Finding inconsistencies compared to third-party reports
- Having a history of previous audits
- Being selected randomly
Receiving an audit notice doesn’t always indicate wrongdoing, but it’s essential to respond promptly and to cooperate fully with the IRS to address any concerns so that the audit can be resolved as efficiently as possible.
What Does The IRS Audit Process Look Like?
What is an IRS audit, anyway? In a nutshell, it’s an examination of an individual’s or business’ financial information and records to make sure that they are in compliance with tax laws and regulations.
Typically, there are three main types of IRS audits: correspondence audits, office audits, and field audits. Correspondence audits are usually conducted through the mail, while office audits and field audits involve in-person meetings with IRS agents.
During an audit, the IRS will request certain documents and records related to your tax return such as income statements, expense receipts, bank statements, etc.
They may also ask for additional documentation to support the deductions, credits, or other tax-related items that you claimed on your return.
How Can I Prepare For An IRS Audit?
Being prepared for an IRS audit is a key step to ensuring a smooth and successful process. Here are some steps you can take to make sure you are fully prepared:
- Organize Your Financial Records
Gather all relevant financial records. This will include income statements, expense receipts, bank statements, and any other documentation that could be related to your tax return. Organize your documents in a clear and simple manner so that it is easy to provide them to the IRS when requested.
Go through your tax return with a fine tooth comb to ensure that all information is accurate and complete. Double-check for any errors or discrepancies that may raise red flags during the audit process. If you identify any mistakes, consider filing an amended return to correct them before the audit begins.
The IRS audit process can be overwhelming, and it’s important to know that you have certain rights during the audit. Consulting with a Tax Resolution Professional like the ones at Action Tax Relief can help you manage the process and communicate with the IRS. Having knowledgeable representation can prove to be invaluable when it comes to protecting your interests throughout the entire process.
- Respond Promptly to IRS Requests
If the IRS requests additional information or documentation during the audit, respond promptly and provide the requested materials in a quick and timely manner. If you fail to comply with IRS requests, it can result in delays or further scrutiny, so it’s essential to be proactive and cooperative throughout the audit process.
- Stay Calm and Cooperative
It is no secret that undergoing an IRS audit can be a stressful time, but it’s important to remain calm, cooperative, and professional at all times. Avoid making confrontational or defensive statements, and instead focus on providing accurate and relevant information to the IRS. Having a positive attitude and demeanor throughout the process can help facilitate a more amicable audit experience.
Facing an IRS audit may seem daunting and come as quite a shock, but with the right preparation and support, you can navigate the process with confidence. Remember to stay proactive, cooperative, and informed throughout the audit process.
If you find yourself facing an IRS audit, reach out to Action Tax Relief at 937-268-2737 to help guide you. We can help alleviate any stress and uncertainty that may come up during the process and give you peace of mind.
