Taxe debt is complicated. Let’s start by answering the common questions that are asked by taxpayers.
What is Tax Resolution for Tax Debt?
Few are the times that we often find ourselves on the wrong side of the law. Taxes and tax collection also have their own laws. Not abiding by tax laws can land anyone in tax debt. Not paying your taxes in time, failing to declare certain sources of income, or submitting insufficient documentation could attract penalties and interests. Tax resolution options include all attempts to help taxpayers who are in trouble with the IRS help them clear their tax debts through payment plans, Offer in Compromise, or any other alternative that will resolve their tax debts.
Is Owing Taxes a Crime?
Tax laws are always changing. Lack of knowledge is a major contributor to the rising number of people who find themselves in trouble with the IRS. Owing the Internal Revenue Service is certainly not a crime. There is no need for fear or panic. Millions of taxpayers are in debt to the IRS. Millions of Americans are terrified of opening their mail with the fear that IRS agents will drag them to jail. The IRS is not interested in filling the already crowded American correctional system. They are interested in recovering tax debts. Therefore, they offer multiple avenues to help taxpayers cover their tax debts.
Tax Debt Issues
Tax issues arise from failing to pay your taxes or the taxes of your business in time or omitting and withholding certain information from your income declaration forms. Here are some common tax issues.
An IRS tax lien is a legal claim against your New York area property to secure the payment of specific tax debt. Liens use your property (real estate, financial assets, personal property, intellectual property, and more) as collateral. If an individual is a target, personal property is involved, but if a business is a target, liens are imposed against the organization’s property. A tax lien prevents you or the affected business from selling or using the property stated in the lien notice as collateral for loans. A tax lien also serves as an invitation to investors from the public to buy your property at the value of the delinquent amount you owe; should you fail to clear the debt. Tax liens can be imposed by both state and federal tax authorities.
For a lien to be filled, the tax debt must be assessed. After which the IRS sends you or your business a Notice of Federal Lien via certified mail. Tax liens are filed in your local New York county courthouse. At the filing of a federal lien, the record settles in your personal credit report. This will dim your prospects of securing a loan or credit card. The same applies to companies, businesses, and organizations that are in default of tax payments. The major consequences of a tax lien include a tarnished credit score and possible loss of property should a tax levy be imposed against the property. The IRS provides multiple tax resolution channels that allow tax debtors to settle tax debts.
A tax levy is a legal provision to seize property to settle a particular tax debt. Failure to resolve a federal tax lien may attract a tax levy and consequently, loss of property. Tax levies can apply to both individuals and companies. A tax levy can freeze personal or a company’s assets, freeze bank accounts, or garnish wages and income.
Penalties are the consequences of default in payments or neglect of tax laws. Penalties inflate your tax bill making it harder to catch up on your back taxes. Local, state, and federal tax agencies can assess penalties in over 100 possibilities. Knowledge of tax laws is important. In this way, you can learn the new taxable parameters that have been added by the government. Keeping up with tax laws can be hard sometimes. To avoid penalties, it is important that you file your personal or your company’s taxes on time.
Tax Debt Resolution Options
Once you accumulate a tax debt it is important that you settle your debt to avoid loss of property (seizure through tax levies), dented credit score, or worse. Working towards clearing a tax debt is referred to as tax resolution.
Installment agreements are provisions provided by the IRS to help taxpayers settle their tax debts through monthly payment plans. There are up to four different IRS installment agreements;
- Partial payment plan- In case of financial difficulty, the government can allow you to sign up for a monthly installment that will end up paying only, in part, your total tax debt by the expiry of the collection statute.
- Streamline installment agreement- Clear your tax debt in equal monthly installments within 72 months.
- Tiered agreement- For taxpayers who are servicing other non-tax debts, the IRS allows them to start with smaller monthly installments, but once they clear the non-tax debts their monthly installment will increase.
- Full pay agreement- for tax debts that cannot be paid within 72 months. You can negotiate an installment agreement that will ensure you clear your debt within the collection statue period (10 years). This is known as the full pay agreement.
Also known as “The pennies on the dollar settlement.” There are rules and regulations that govern this settlement; for example, for you to qualify for this settlement, your eligibility is determined by a tax equation. This equation can determine the amount that will settle your tax debt. After the settlement, you enter into a tax probation period for five years before you are fully cleared of your debt without risk of it coming back on you.
As a spouse, you may find yourself in trouble when your significant other withholds or fails to declare something while filing returns. Innocent spouse is a tax resolution provision that can grant you relief if filed early enough.
Penalty abatement is the removal of the penalties attached to your tax bill. For you to qualify for penalty abatement, you need to prove that the taxes you owe are not fraudulent or intentional; you need to prove that the circumstances were beyond your control.
Self or Professional Representation for Tax Debt?
You can represent yourself or hire a tax negotiator to represent you as you negotiate for a tax resolution plan. Taxes are complicated. Some cases are simple, others are complex. You can easily apply for a streamlined installment agreement when your tax debt is below $25,000 through an online automated process but to earn an offer in compromise you may need representation.
At True Resolve Tax Professionals, we have helped and represented many clients over the years to successful tax resolution. We have the manpower and experience to tackle your problem, no matter how complex it may be.
Work towards a swift tax resolution, visit our offices in New York for a face-face meeting. Call us for consultation. We know the inner workings of the IRS. We can find the loopholes that will benefit you.
True Resolve Tax, tax resolution for an easier, happy life!