Do not pay an IRS Penalty without looking into Penalty Relief

The vast majority of penalties are not abated by the IRS. Why? It could be because people don’t know how to ask for penalty relief or that it may seem too difficult. Here are some reasons why it's worth it.

To encourage compliance, the IRS uses penalties a lot. The IRS is responsible for assessing millions of penalties each year that amount to billions of dollars. The IRS offers several options for those who are eligible to have penalties removed or abated.

For not filing and not paying taxes, the IRS has the most severe penalties

The Internal Revenue Code contains almost 150 penalties. However, there are a few more common penalties that makeup 74%. These are the most popular penalties:

• Penalty for failure to pay penalty - 56% on all penalties if you fail to pay taxes on time
• Failure to File Penalty - 14% of all penalties imposed if you fail to file a return in time
• Failure to Deposit Penalty - 4% of all penalties imposed on businesses that fail to pay their employment taxes on time or incorrectly

Late-filing penalties for S corporations and partnerships are a common nuisance penalty. Taxpayers often contest the estimated tax penalty by making an exception to their tax returns.

Can IRS Forgive Penalties?

The IRS will not remove penalties for these reasons

Request a penalty abatement to reduce the most commonly used penalties.

1. Statutory exception: Proving a specific, authoritative exclusion to the penalty

Statutory exemptions are rare and can be explained to the IRS easily, usually at tax filing. Examples of such exceptions are combat zone relief and disaster relief.

2. IRS error: Documenting the fact that the error resulted from IRS advice

This penalty relief argument is rarely used and is often unsuccessful. The IRS does not routinely provide tax advice in writing. You must document any erroneous IRS advice that you have relied upon. Although the Internal Revenue Manual says that penalty relief is available for errors in oral advice, it is very rare.

3. Reasonable cause is a reason you can't comply with the request based on your facts.

People often argue that they were guided incorrectly by their tax software or tax professionals. This argument falls under Reasonable Cause.

You must show that you used ordinary business care and prudence but were unable to comply to present a reasonable reason for late payment and filing. Also, you must show that your non-compliance wasn't due to willful neglect.

Most people aren't successful in presenting reasonable cause arguments to the IRS, particularly in court. Most penalty abatement decisions never reach court. The IRS makes most administrative decisions.

You must ensure that the IRS considers all facts and circumstances to be successful with reasonable cause determinations. You should appeal any penalty abatement rejection letter that does not address all of your facts and arguments.

4. Administrative waiver: Taking advantage of a provision that facilitates tax administration

Under certain conditions, the IRS may grant administrative relief from a penalty. First-time penalty abatement is the most common administrative waiver.

FTA can be used for failure to file, failure to pay, or failure to deposit penalties in one tax period if you have a clean compliance record for the last three years. FTA can be used to abate penalties on Form 1040 and Form 1120 as well as payroll and pass-through entities.

FTA is the most straightforward option for penalty relief. It is possible to request FTA by calling the number listed on your IRS notice. If applicable, your tax professional can also call the designated tax pro hotline and compliance unit to request FTA for any penal amount.

If certain criteria are met, the first-time penalty abatement (FTA waiver) is an administrative waiver that may be granted by the IRS to taxpayers who fail to file, fail-to-payor fail-to-deposit penalties. This procedure rewards taxpayers who have a clean compliance record. Everyone is entitled to one error.

FTA may be requested by individuals and businesses for failure to file, failure to pay, or failure deposit penalties. FTA does not apply to any other penalties, such as the accuracy penalty, returns with an event-based filing requirement like Forms 706, 709, or information reporting that relies on other filings.

Additional guidance

Refer to IRM20.1.1.3.6, Reasonable Cause Assistant (RCA), and IRM20.1.1.3.3.2.1 First Abate (FTA),.

The following criteria are required for taxpayers to be eligible for FTA waiver:

• Compliance: You must have filed all required returns (or extended the deadline for filing them) and you can't have any outstanding requests for returns from the IRS.

• Payment compliance - Must have paid all taxes due (can be made in installments if they are current).

• Clear penalty history: There have been no previous penalties (except for a possible tax penalty) in the three preceding years.

Please note that IRM 20.1.1.3, Criterion for Relief from Penalties, penal relief under administrative waivers (which includes FTA) must be taken into consideration and applied before reasonable cause.

Phone to request penalty abatement

If the tax practitioner is not being assigned to a particular compliance unit (examination or collection), he or she may call the IRS Practitioner Priority Service line (PPS) at 866.860.4259 and request FTA. To request FTA, the practitioner should contact the unit that is handling the case. To request penalty abatement over the telephone, a tax practitioner will need to have authorization ( Form 2848. Power of Attorney and Declaration of Representative). The IRS representative who answers the call should have the ability to pull up the client's account and determine if FTA criteria have been met. If so, the IRS agent will apply for the waiver. A letter would be sent to the taxpayer indicating that penalties have been removed based on FTA criteria. It is recommended that the taxpayer follow-up with the IRS if the letter does not arrive within 30 days of the date of the call.

Tip Often, calling the IRS to request FTA is the best way to do so. Many penalties can be quickly removed during a phone call. Sometimes, however, the IRS may not be able to reduce the penalty amount over the telephone. To request FTA, the tax practitioner must write to the IRS. It is also advisable to send a letter to IRS to confirm that the IRS has lowered penalties by calling. Include the date, agent's name, and identification number.

Send a letter or mail to request a penalty reduction

A tax practitioner can request FTA for his client by writing to the IRS instead of calling the IRS. All relevant information should be included in the request, including taxpayer name, identification number, and tax year/period. It is important to clearly state that the client meets FTA criteria. Attach transcripts from clients that can prove compliance with filing/payment requirements and a clean history of penalties (Form 2848). All pages sent to IRS must include page numbers, taxpayer's name, and their identification number's last four digits.

Considerations

• FTA is only applicable to one tax year/period. FTA does not apply to requests for penalty relief for multiple tax years/periods. If the FTA criteria are met, penalty relief will only be granted for the first tax year/period. All subsequent tax years/periods are subject to penalty relief based on other provisions such as reasonable cause criteria.

• If the IRS has not assessed the penalty, then a client may file a late return and fail-to-file or failure-to-pay penalties will apply. The taxpayer can attach a penalty request nonassertion to the late-filed returns.

• To request a refund, a client who has already paid the penalty may file Form 833, Claim for Refund, or Request for Abatement.

• Consider appealing to the Appeals if the IRS refuses to grant penalty relief. The appeals may reach a different conclusion based on other factors such as the hazards of litigation.

• Although each case is unique, the CPA (client advocate), cannot request abatement for the client. With a simple telephone call or letter to IRS, clients can save thousands on penalties and rely on their tax professional for assistance.

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IRS Tax Forgiveness Program

What is the IRS Tax Forgiveness program?

The US has only two absolutes: death and taxes. There is no escape from either of these two absolutes, and the future does not look promising. You may qualify for the IRS tax forgiveness program if you are on the wrong side. This program is part of the Offer In Compromise section of the US Tax Code.

The IRS can offer this program to anyone who qualifies. There is no guaranteed acceptance policy. There are many requirements to the OIC program. You must show that you meet all of them. These programs allow taxpayers who owe back taxes to the IRS or owe a debt to them to settle for a lower amount.

IRS Tax Forgiveness Programme

The OIC, or Offer In Compromise, is one way that the IRS came up with to collect tax payments owed to taxpayers. Many believed that the IRS wanted to be more flexible in recovering money owed to them by adding these programs to the tax code.

This program is designed to allow the IRS to maximize its ability to collect the tax money it owes while making it less painful for taxpayers. To be eligible for the IRS Tax Forgiveness program, you must first owe at least $10,000 to the IRS in back taxes. Next, you must prove to IRS that you do not have the funds to repay the money within a reasonable time.

The IRS will examine your assets and income potential to determine if it is possible to collect all back taxes owed. If the IRS determines it is in their best interests to settle for less than they offer, they will accept a compromise.

What can we do to help you?

We are a top firm that provides tax resolution services to clients. This makes us uniquely qualified to help determine if you qualify for an OIC through the IRS Tax Forgiveness Program. We can help determine if your situation is one that an IRS Offer in Compromise might be appropriate for.

We can help you decide if it is worth your time. There is no guarantee that you will be accepted. Although it may seem that the IRS is being more accommodating to taxpayers, their real goal is to collect as much money as possible from you.

The IRS can add a lot to your delinquent back taxes. They also expect you to pay the entire amount unless they make other arrangements. The IRS has a few tax relief options to help you if your taxes are not paying. This article will explain what tax forgiveness is and how you can qualify. It will also discuss the differences between tax exemptions, tax allowances, and tax forgiveness. The IRS has different eligibility requirements.

What can be done to forgive back taxes?

Many myths surround tax forgiveness. You can find programs that will assist you in cases of exceptional circumstances, such as the innocent spouse provisions. These programs are not for everyone. To reduce your owed amount, the IRS fresh start initiative allows you to receive forgiveness credits from your earned income.

What is Tax Forgiveness?

Credits against back taxes are the best way to get tax forgiveness. These credits can help reduce your tax liability. You must ensure that the IRS considers your taxable income and non-taxable income as well as your financial situation and family size.

Compromise or Offer

These numbers will be taken into consideration by the IRS and you may be eligible to file an Offer in Compromise. This is the closest the IRS can offer to tax forgiveness, excluding those exceptional situations. It basically allows you to negotiate with the IRS the amount that you can pay.

How Do You Qualify For IRS Forgiveness?

There are many ways you could get in trouble with your taxes. These relate directly to how the IRS determines what level of forgiveness you should receive. These are the most common tax pitfalls.

• Income on tax forms that are overstated or understated
• Inadequately taking all deductions into consideration
• Bracket creep
• Unexpected income increases without taking steps to reduce tax liability
• Inadequate reporting of income from the side or contractual jobs
• Inadequate reporting of earned money from investments

These tax pitfalls have a common theme: you made more than you paid taxes on. The IRS will generally not forgive you for owing them money unless you ask forgiveness.

How it works

Tax forgiveness doesn't mean that your IRS will eliminate your debt. It's about you disclosing accounting errors and proving extenuating circumstances and then negotiating a settlement. Can a back tax amount ever be forgiven? Many factors can affect the answer.

Income

You should be prepared to reveal all income sources. These figures are used by the IRS to determine your ability to pay taxes. This will be considered if you are unable to pay taxes.

Expenses

This is the second step in determining your ability to pay. There are national standards that govern how much you can deduct from your income to pay for items like transportation, health care, and household goods (like clothing, food, etc.). Local standards are used to calculate living expenses. With sufficient documentation, you can sometimes take into account amounts that are higher than these standards.

The end result

Similar to how your initial income tax is calculated, the IRS takes into consideration your total income, subtracts expense allowances, and calculates your total ability to pay. If your offer in compromise is acceptable, the IRS will generally follow a six-year repayment rule.

Additional eligibility requirements

You may also be eligible for a higher tax forgive or total forgiveness of back taxes if you do not have the following. The easiest way to get total forgiveness is to show that your allowable expenses have reduced your disposable income below the point where payments would be a financial hardship. Sometimes, this can be difficult to do. To get back tax forgiveness, there are a few things you need to do.

Natural Disaster Assistance

The IRS allows taxpayers to itemize their deductions to claim losses for property or businesses that are affected by declared catastrophes. Examples of recent examples include Hurricane Maria, Hurricane Irma, and the recent California wildfires. Tax returns can be used to claim disaster casualties in the same year as the disaster. Payments for declared disasters are made faster.

In most cases, taxpayers living in the affected areas get extensions for when their taxes must be filed. This is usually so that taxpayers have enough time to collect all the casualty information for their forms.

Innocent Spouse

This applies to legally separated couples and divorcees. You can request to have your tax bill waived if you can prove your spouse is responsible for the tax liability.

To avoid being charged with the tax bill, be prepared to provide all documentation requested by the IRS. This is not a forgiveness program. It's more about assigning the responsibility for back taxes to the right person.

Currently not Collectible

There is an option to avoid paying your IRS back taxes if you are truly unable to do so. To be considered Currently Not Collectible, you must have financial circumstances that would make any payment to the IRS a serious financial hardship for your family. The IRS may revisit your case if you are in this temporary situation.

Different tax exclusions, allowances, and forgiveness are available

Tax time is a busy time for terms like forgiveness, exemptions, and allowances. These are all options taxpayers have to lower their tax liability. We have already talked about forgiveness, but what are exemptions, and what makes them different?

Allowances

You've probably seen the W-4 box where you have to choose how many allowances you'll take. You might not understand the calculations involved if you are like most people. Although you've been told that more allowances mean less tax, you may not receive a refund at year-end.

The maximum withholding allowance for the government is $4,050 per exemption. This was as of 2017. This is multiplied by the number you can expect to receive paychecks in a given year. This would mean that if you are paid bi-weekly this amount would be $155.77 per exemption per paycheck. This amount is deducted from your gross pay and the remainder determines how much tax to pay.

Exemptions

Exemptions are one type of deduction that you can claim on your tax return. Your tax return will allow you to exclude dependents and personal exemptions of $4,050 each. This is the same amount as the allowances. This is used to balance your taxable income with the amount you have withheld. This is to ensure that your deductions are reflected in the amount withheld from the taxable calculation so you don't end up owing too much at the end.

Some people claim no allowances because of this. This is basically a way for the IRS to take more taxes than they owe during the year, so when they claim their exemptions from Form 1040, it results in a larger refund.

Forgiveness

Recalculation is where forgiveness fits in all of these numbers. The Offer in Compromise allows you to have the IRS reassess and show additional expenses. This may or may not reduce tax liability. You can correct for sudden increases in your pay such as overtime periods that are not continuous or underreported income with the Offer in Compromise.

State Tax Forgiveness

States offer tax relief based on income standards. These standards can vary from one state to the next. In Pennsylvania, for example, a single person earning less than $6,500 per annum may be eligible to have 100 percent of the state's back taxes forgiven. You can do this by claiming tax credits or exempting them. State taxes take the family size into account, just like federal taxes.

Filing the Required Forms

IRS forms sometimes can feel a little like alphabet soup. Many letters and numbers are scattered around the world, and most people don't even know their purpose. These are the essential forms you need to know, especially if your goal is tax forgiveness. It is not an easy process and can be confusing and overwhelming. Get help from a back tax assistance company if you feel overwhelmed.

Formula 1040

We see the 1040 form every year as our primary tax form. This form is based directly on the Form W-2 that you receive from your employer. The instructions for calculating are provided on the form. This form can cause serious problems if you under or over-report your income. Schedules are additional forms that can be used to report items or tax credits.

Formula W-4

When you are hired, the W-4 form is what you complete. This form is important because it allows you to claim allowances, which can help increase your salary. You should be careful as if you claim more allowances than exemptions on taxes, you could end up owing at year's end.

Booklet Form 656

This booklet is what you will need to complete to apply for the Offer In Compromise. This booklet contains all of the information that you need to complete the application. However, it is worth having a tax attorney review it. You should prepare all documentation for any claims in the application. The booklet includes Form 433 A for individuals and Form 433 B for businesses. Form 656, which is an Offer in Compromise, is also included.

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What are the various types of tax relief available?

There are many ways to get tax relief. There are many options for tax relief.

To see the tax relief options available to you, click on the appropriate option for your situation.

• If you are up-to-date on your tax payments, you can get tax relief
• Get tax relief if your taxes are not up to date

If you are current on your tax payments, you can get tax relief

You may be eligible for tax deductions, tax credits, and tax exclusions if you have already paid your taxes. Depending on the eligibility of each one, these can reduce your taxable income and/or your actual tax bill.

Deductions in taxes

Tax deductions allow you to lower your total taxable income, and thus reduce the tax you owe.

Tax deductions are available for various items.

• The interest you pay on your student loan or mortgage
• Property taxes are paid on your house or other properties
• Sales taxes
• Charitable donations
• Health insurance premiums
• For business or work-related expenses

All taxpayers are eligible for a standard tax deduction. This is a $12,400 deduction for a single filer and $24,800 for married couples filing jointly. These deductions cannot be claimed if you don't have the itemized deductions.

Here's an example showing how the standard deduction works. Let's suppose you earned $60,000 in the past year. You are eligible for the $12,400 deduction if you are a single individual. This reduces your taxable income by $60,000 to $48,000 ($60,000 to $12,000). You'd be in the 22% bracket so your income tax would be almost $2,500 ($13,000 vs. $10,000,560).

Tax credits

Tax credits work in a different way than tax deductions. These credits do not reduce your taxable income. Instead, they lower your actual tax bill -- that is, the total amount you owe to the government for the current year.

You can apply for the dependent credit of $2,000 per person if you have children. The $2,000 would be deducted from your final tax bill. The credit could reduce your annual tax bill by $2,000 if you owe $10,000. This is a significant amount of savings.

Tax credits are available for:

• Being a parent to a child or another dependent
• Adopting a child during that tax year
• Being old or disabled
• School-related expenses
• Childcare costs
• Contributing to a retirement fund
• Solar energy systems: Installing

>> Continue reading: The difference between a tax credit or tax deduction

Tax exclusions

In that they can reduce your taxable income, tax exclusions work in the same way as deductions. Exclusions allow you to exclude a portion of your income from your taxable earnings.

One example of this is company-sponsored health plans. These are often considered a "benefit" and a part of your salary as an employee. However, your employer's costs do not count towards your taxable income. This is one of the most common tax exclusions.

Some other tax exclusions are:

• Certain types of income earned abroad
• Disability payments
• Payments for relief from natural disasters
• Housing subsidies or rent

If you are behind in your tax payments, you can get tax relief

There are options for tax relief if you have not yet paid your taxes, owe back taxes from previous years, or have not yet paid them. You have two options: you can either repay your debts in full over time or settle your debts to pay less. Below are the current options.

Fresh Start Program

A fresh start is an IRS program for taxpayers who are behind on their taxes. You can make an Offer in Compromise to settle your debts for less than what you actually owe. These offers will be accepted by the IRS based on your income, assets, and household expenses.

You have two choices for how you make your payments if you are approved. Either you can pay a lump sum upfront (at least 20%) and then make the balance payment within five months. Or, you can pay one payment along with your offer and make the remainder monthly for the next six to two years.

Acceptance of offers in compromise is generally difficult. The IRS has a pre-qualifier tool that can help you determine if this option may be available in your particular case. Form 656B is required to apply.

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What is the IRS's usual settlement? The Internal Revenue Service (IRS), approves many Offers in Compromise each year with taxpayers about past-due taxes payments. In exchange for a lump sum settlement, the IRS reduces a taxpayer's tax obligation debt.

In 2020, the average Offer in Compromise approved by the IRS was $16,176. How did we reach this amount? The IRS received 17,890 offers in compromise with a total value of $289.4million (resource) in 2020. Divide $289.4 million by 17,890 and voilà! You get an average offer of compromise of $16,176

This number is, naturally, meaningless. It is not a hypothetical standard that the IRS will accept. That is the real question. This article will explain how the IRS determines whether an individual is eligible for the Offer in Compromise program. It will also discuss how it decides what kind of deal it accepts.

What is an offer in compromise?

The Program in Compromise is an IRS tax obligation relief program that reduces the tax obligations of individuals and entrepreneurs. This program is also known as the government tax negotiation program. It can help you save hundreds of dollars if you use it correctly. You pay less than the full amount due (your deal amount). The program is not available to everyone who has a tax obligation financial debt.

The OIC is basically a negotiation between you and IRS. The IRS is just like any other lender. If they can convince you that you cannot pay off your entire financial debt, they will prefer you to pay some money over nothing. Let's suppose you owe $50,000 to the IRS. There is no way you will be able to pay that amount before the 10-year statute of limitations (the time the IRS must collect taxes). There are two options:

1. The 10-year law can be applied to you
2. Pay an OIC

While waiting for the statute to expire might seem appealing, there are a few people who choose not to wait. The IRS can seize all of your possessions including your salary and financial savings. You may also lose your credit rating for many years. It is risky to wait, so a deal in compromise can be a better option. This allows the IRS to assess your collection potential.

Is there any chance that my IRS request for an OIC will be approved?

The IRS received 54,225 compromise offers in 2019 and accepted only 17,890 of them - that's an approximate 33% success rate.

Most tax obligation relief specialists have acceptance rates as high as 90%. Because they can spot better applications and determine if the taxpayer fulfills the requirements, and they also understand that the IRS will likely say yes. Tax lawyers and tax agents are the best tax relief business. They offer a money-back guarantee and affordable rates. A specialist tax obligation relief company will help you save time and money on unnecessary applications.

How does the IRS determine the minimum offer it will accept from a client?

Your OIC calculation is calculated by the IRS using two steps. It's based on your monthly earnings and the value of your possessions. This allows the IRS to estimate your "sensible collection opportunity."

How do you calculate an offer in compromise?

Let's break that formula down into its two main components.

Let's take that formula and break it down into its two main components:

1. Capital
2. Property

Cash Flow

The IRS will first need to determine how much you could pay each month if you prepare a layaway or installation agreement. The internal revenue service will request your pay stubs, current earnings, and loss declarations if you have a small business to calculate this amount.

After that, the IRS may require you to know how much money you have available for living expenses such as utilities, food, and car (non-luxury), payments. The IRS might require you to limit your living expenses to the minimum level it considers "sensible".

To assess your ability to pay, the IRS subtracts your allowable living expenses from your income. This amount, which is your monthly disposable earnings, will be used by the IRS to determine your OIC.

You will need to collect information about your household's monthly average gross earnings as well as real costs. This includes your family members who contribute cash to cover costs.

Property appraisal.

The IRS also estimates your possessions' value. The property includes your house, car, retirement plan, jewelry, and all other belongings of family members. How is your possession valued? The IRS subtracts any home loans or funding you have on each asset and then lowers it by 20%. Let's say you own a $200,000 home, but owe $195,000 for it. For your offer quantity, your residence deserves $4,000 ($ 5,000 x 0.8).

What settlement methods does the IRS accept for offers?

On their website, the IRS offers a variety of payment options for taxpayers. You can pay your offer by money order or check payable to the USA Treasury. Additionally, you can make your payment(s) via the Federal Tax obligation Repayment Service (EFTPS).

What is the success story of Offer in Compromise?

Not all offers in compromise are approved. Only 3 of 10 compromise offers are approved. There are many success stories for taxpayers who want to reduce their tax obligation financial obligation, and take part in the offer-in-compromise program.

Although it can be difficult, there are many success stories of taxpayers who reduce the amount they pay to the IRS after receiving an offer amount.

What is the minimum income required to be considered a low-income entrepreneur who has tax debt?
It is important to know how to pay the IRS if you have past-due tax obligations bills for your company and personal tax returns. It all depends on your service's legal structure.

If your business is a sole proprietorship, one IRS form 656 can be used. If your business is not a sole proprietorship linked to your social security number, a different offer with an application fee and also supply payment is required.

The updated Kind 656 also includes new low-income qualifications standards and directions. You do not need to pay the application fee if you meet the criteria for low-income.

Do you prefer to apply for tax relief by yourself, or should you hire a professional?

You should try to negotiate your tax obligation amount with the IRS directly if the amount you owe is lower than $5,000. While tax obligation relief firms can be beneficial in helping you negotiate a deal amount with the IRS, the expense they incur when managing small tax financial debt customers can exceed the cost savings.

However, if you have a larger tax bill or are concerned about a possible tax audit, it is worth speaking with a tax attorney. To schedule a complimentary examination with a senior tax obligation professional, click here

These services are often well worth the cost for taxpayers who struggle to navigate the IRS settlement process. My tax settlement just suggests tax obligation relief companies that offer affordable fees, repayment options, and tax attorneys.

What is Tax Debt Relief?

The broad concept of tax-debt relief encompasses many options. Each option is designed to bring the IRS and taxpayers in debt the closest possible. (We'll talk about state and local taxing authorities later.)

A payment plan or a settlement of your debts is the most common form of relief. Also known as an offer in compromise, The financial situation of the tax-debtor will determine which one is best.

Who could be eligible for tax-debt relief

• Taxpayers who are behind in their payments and don't have the funds to pay off their debt via personal loan or home equity loan, credit card, investments, etc.
• Private debt collectors employed by the IRS have brought taxpayers in arrears to their attention.
• Individuals who have not filed tax returns in any number of years but have managed to operate below the radar of IRS.
• The IRS has directed the State Department to cancel, revoke, or confiscate passports of taxpayers who are so seriously indebted ($50,000 or more).

The IRS has programs available for taxpayers who are in default. The taxpayer can initiate any of these programs by themselves. To help consumers navigate the rules of the tax agency, there is a tax settlement industry.

Advertisements often feature players with impressive credentials and experience. Pay attention.

Although many tax settlement companies boast a list of ex-IRS agents and other tax experts who are available to help you reduce your owes, the truth is that there is more to it than this. Low-wage customer service representatives are the most common members of tax settlement companies. They have a limited amount of expertise.

A tax settlement company is a company that will:

• Find out why the customer is late or has not filed.
• Get the correct financial information from your customer
• Give a realistic assessment about what the company can accomplish
• The best IRS program available to help troubled taxpayers
• A reasonable flat fee will be charged

IRS Relief Options

The IRS offers several options to delinquent taxpayers, including payment plans, offers of compromise, and filing as not currently collectible.

Installment agreements work in the same way as any other loan. You pay a fixed amount each month for some time (up to six-year) until you have paid your tax bill. An installment agreement does not allow for the accrual or payment of penalties. However, interest is charged as a loan. There will also be processing fees.

You can apply online for an installment agreement if you owe less than $50,000 in taxes, interest, penalties, and combined taxes. Installment agreements have the upside of avoiding liens, levies, and garnishments.

If a taxpayer can show that they cannot pay the entire amount due now or over time, they may be eligible for an offer in compromise (OIC). This is an agreement to settle tax debts for less than the amount owed. The IRS considers many factors such as the ability to pay, income and assets, as well as income and expenses. The IRS will generally accept an offer in compromise if the amount offered is the maximum it can collect within a reasonable time.

All applications must include a 20% deposit and a $186 non-refundable fee.

Accepted offers in compromise may be paid in one of two ways. One is a lump sum or in monthly installments. An OIC should not be your first choice, as the IRS is unlikely to accept them, despite some advertising by tax relief companies suggesting otherwise.

Delinquent taxpayers with little or no income after paying essential expenses such as rent, utilities, groceries, and commuting can be eligible for a deferral. The IRS will stop collecting taxes if it deems them "Currently Not Collectible". This gives the taxpayer some breathing space and allows him or her to be free from the threat of having the IRS breathe down his neck.

There are also downsides. The tax debt will not be paid; it will accrue interest and penalties and the IRS could file a lien on the taxpayer's property (which appears on credit reports). Taxpayers who expect a refund in the future can forget about this; the IRS will apply them to past-due taxes that remain unpaid.

IRS Forgiveness Program

The IRS's Fresh Start Initiative used installment agreements and offers-in-compromise to lure troubled taxpayers into compliance. But the expanded program makes it even easier to apply for installment programs or offer in compromise settlements.

Here are some highlights:

• Offers that are paid off in less than five months will not be considered. The IRS now considers only one year's future income instead of four when assessing the taxpayer's reasonable collection capacity. The IRS considers only two years of future earnings for longer payoffs, six to 24 months (down from five).
• The IRS increased the Allowable Living Costs calculation to include bank fees and credit card payments.

Penalty and Interest Reduction

Although it doesn't often happen, in some rare cases, the IRS might offer penalty abatement to delinquent taxpayers who can demonstrate a hardship. The IRS's First Time Penalty Abatement policy allows it to grant administrative relief to taxpayers who fail to file returns, pay taxes on time or deposit them.

These are the criteria that the agency uses to determine eligibility:

• Either you didn't have to file a previous return, or you don't have penalties for the three prior years in which you have assessed a penalty.
• You have filed all required returns.
• You have either paid or arranged for payment of any tax.

Interest abatement is more restricted and rarely approved.

However, no relief will eliminate the tax billowed. The failure-to-pay penalty continues to accrue until the full amount of your tax has been paid. You don't want to be denied partial relief. It may be better to wait until the full amount of the tax is paid before you apply for the first-time penalty reduction policy.

Other options for debt relief

If you are truly in crisis and if there are several provisions, older income tax debts (at least 3 years) can be discharged through Chapter 7 personal bankruptcy.

The statute of limitations allows you to discharge tax debt. After 10 years, taxes that the IRS attempted to collect but was unable to collect are erased.

Consult a trusted tax debt relief service to avoid extreme measures. They may be able to help you with bank account seizures, liens, wage garnishments, and other issues.

Signs that a Tax-Debt Relief Scam is in Your Face

There are predators, as with every industry, especially when it comes to dealing with panicky, desperate clients.

This is also true for tax debt relief.

Don't fall for the hype. For most tax debtors, getting out of trouble is impossible for pennies per dollar. Next, do your homework. Look beyond the advertisements for impartial-observer ratings of legitimate tax relief businesses. Be aware of when to avoid dealing with bad actors.

These are signs that a tax debt relief company may be trying to scam you:

• It is a sign of a major indicator that the company will demand payment before they do anything.
• Offering a promise of a dramatic reduction in taxes for customers upfront
• You can pledge to reduce or eliminate penalties and interest.
• Failing to ask the client why he is behind the IRS
• Failure to assess your financial history thoroughly (which the IRS will certainly do before it approves any OIC); any company that does not take the lead here likely can't or won't help you.
• You can contact us directly by email or letter.
• Delaying tactics include repeatedly asking for the same documents.
• After waiting months and paying in, you are finally told that your debt relief window is closed or that your OIC application was rejected by the IRS. Often, these companies have done nothing but take your money and keep you on the hook.

Horror stories can add insult to injury. Taxpayers who signed up with a tax relief company and paid thousands of dollars upfront fees complained to the Federal Trade Commission regarding unauthorized charges on their credit cards or withdrawals from their bank account.

Innocent Spouse Relief

The IRS is sympathetic to spouses and former spouses who find themselves in the middle of back taxes. Joint returns can make both spouses liable for any tax owed. However, in some cases, one partner may be exempt from any penalties, interest, or taxes.

The spouse must meet the following criteria to be eligible:

• Filled joint return that incorrectly understates tax liability directly to the spouse
• Must not have known about the error
• Once the IRS has been identified, it must agree to release the innocent spouse from the tax dispute
• Within two years after the IRS begins the collection, the spouse must request relief

State and Local Taxes

It is quite different to fall behind in your state or local taxes. Although many states and local taxing authorities offer similar programs to the IRS for debt settlement, there are important differences. Some states allow waiver of interest but not penalties. Other states allow the reverse. You may get different results.

Contact your state's comptroller for more information. For a complete list of state treasurers, comptrollers and auditors, visit nasact.org

The IRS has many tools they can use to make you pay your tax debt. They have the power to place a lien on your property and garnish your wages. They have the power to seize money from your bank accounts and hold your refund. In some cases, they can even cancel your passport. It can be difficult to get your money back if the IRS or another state agency begins exercising its power over you. The sooner you get rid of the IRS, the better.

Here's how TaxAudit can help you with your tax debt relief.

TaxAudit offers tax debt relief. We work with you to engage the IRS and state agencies to find a way to pay off your debt. It all depends on how much you owe and what your financial situation is.

The IRS will examine your ability to repay the debt. The IRS can settle your debt for less if you have financial hardship. They would prefer to get a little more than nothing in many cases. We can often get the IRS to cooperate with you, even if your ability to pay is very high. We can often remove penalties and stop wage garnishments. We can help you set up a payment plan with IRS.

A professional tax relief company will create a customized tax debt relief plan for you to get the most tax debt relief.

Many solutions exist to tax debt. It can be time-consuming and difficult to find the right solution for you. Top tax professionals have decades of experience in dealing with the IRS. They will find the best solution for you.

Here's how it works:

Step 1: Free Consultation
To request a complimentary consultation, call us. You will not be speaking to a salesperson during your free consultation. Instead, you will be speaking with a licensed tax professional. The tax professional will listen to you and give you a general overview of your tax debt story. You will know if the expert can reduce, or even eliminate, your tax debt by the end of the conversation.

Step 2: Compressive Assessment
TaxAudit is qualified to help you. The next step is a comprehensive assessment of your financial situation. Based on an in-depth assessment of your financial situation, your tax professional will create a realistic plan to combat your tax debt. Before the assessment can begin, your tax professional will request information from you and any documents. The tax professional will then create a plan to help you get the best tax debt relief and share this with you. Your tax professional will then give you a flat-fee quote for the tax company to complete the services described in your action plan. After your assessment is complete, you will receive a customized plan that addresses your tax debt situation as well as a flat fee quote to perform the services recommended in your case.

Step 3 - Resolution
After you accept the tax company’s quote for Tax Debt Relief, your tax professional will begin to work on your case. Your tax professional will prepare all necessary paperwork and submit it to the IRS. Your best interests will be protected during negotiations with the IRS. He or she will keep you informed about the progress of your case from the beginning to the end.

What is the IRS Debt Forgiveness program?

For taxpayers who owe taxes unpaid, the IRS offers many relief options. The circumstances surrounding your unpaid tax debt will determine whether you are eligible for each option. Here are some examples of forgiveness and relief options.

• Installment Agreements allow you to reduce your tax debt by paying in smaller amounts if you're unable to make a full payment. The average repayment period is 72 months. If you owe less than $50,000 in combined taxes, penalties, interest, and tax, this option may be available to you.
• Innocent Spouse Relief allows qualified candidates to avoid penalties stemming from tax fraud or inaccuracies that they did not know about.
• Offer in Compromise (OIC) is a settlement option that allows some taxpayers to pay much less than they owe the IRS.
• Currently not Collectible (CNC). status is basically a "clean slate", program for people who can show they cannot pay back tax debt.

IRS tax debt forgiveness cannot be granted automatically if you meet all the requirements. Fill out the IRS debt forgiveness form.

The IRS will not consider your eligibility for tax relief benefits unless you have filed all of your tax returns. When assessing your eligibility, the IRS will not consider the fact that you filed tax returns late against yourself. If you are still unfiled, it is a good idea to get current.

How does tax debt forgiveness work?

To determine which forgiveness plan is right for you, we will consider your financial situation. These are the steps to an IRS debt forgiveness program:

• Acceptance to the right program after applying
• Consent to keep current with all tax returns going ahead
• Accepting all terms and conditions set forth by the IRS regarding totals due, penalty abatement, and payment terms
• Accepting that the IRS periodically reassesses your financial situation
• Payment plan or a lump-sum payment to pay off full or amended debts

Based on your financial situation, and your tax debt, the IRS will calculate how much you must pay. The first step in determining if you are eligible is to apply.

Who is eligible for IRS tax debt forgiveness? What Do I Need to Qualify for IRS Tax Debt Forgiveness?

Without consulting a tax professional, it can be hard to determine if you are eligible for debt forgiveness. If you haven't paid your entire tax bill because of financial hardship, the IRS may be willing to make an agreement with you. These are the key factors that the IRS considers:

• Tax balances below $50,000
• A single filer income cap of $100,000
• For married couples filing jointly, there is an income limit of $200,000
• Self-employed people will see a 25 percent drop in their net income

Nearly all applicants will be approved to an IRS repayment agreement. Repayment may not be the best choice for you. An Offer in Compromise, or currently noncollectible status may allow you to pay less overall. Both of these options will require you to provide financial information to IRS. You don't want to present any information that could contradict your claim that your tax bill is unpayable.

Is the IRS ever willing to forgive tax debts?

Although it is unlikely that the IRS will ever completely forgive tax debt, accepting into a forgiveness program can help you avoid the costly, credit-wrecking penalty that comes with tax debt. If you can show hardship, your debt may be completely forgiven.

What is the Fresh Start Program with the IRS?

Officials at the IRS recently introduced the Debt Forgiveness Act, making it easier for taxpayers seeking relief. All of the options that we have covered in this article are available through the IRS Fresh Start Program. The program also allows you to have a federal tax lien removed if your request is granted.

Find out if you are eligible for IRS debt forgiveness

The Tax Group Center is the place to go if you have a tax debt hanging over your head. You may be eligible for the Fresh Start Program. You may start by completing unfiled tax returns.

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