Back Taxes Debt Help
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Debt Solutions – Back taxes help
The IRS (Internal Revenue Service) has the backing of the Federal government. While they have an extensive method of collecting outstanding tax debts, they can also be extremely patient. If you are going through financial challenges, the IRS can wait till your financial position improves to collect its debt. But of course, the longer time you take to pay up, the more your debt increases. While you can always represent yourself in front of the IRS, many people prefer to seek professional help. This is to minimize contact with IRS agents and maximize their winning chances. To most people, being in debt to the Internal Revenue Service is intimidating. This is because the IRS has the authority to seize assets, garnish a tax debtor’s wages and place a lien on a property to collect the monies owed. However, all of these can be prevented with proper and effective communication with them about your financial situation.
The IRS is flexible and open to working with taxpayers, and due to this, there are several options which they can avail you with to enable you resolve your debt issues.
Why get professional help?
The reality of having back taxes to pay can be daunting, whether it is personal unpaid taxes or as a result of payroll error, you must get your tax returns filed. For many people, they only notice this when there’s a levy on their bank balance, paycheck, or both. Some others get a correspondence from an IRS auditor or the State detailing how much in dollars they owe alongside penalties and interests for past tax returns. Faced with all of these, people get overwhelmed and fail to act, further compounding their problems.
If you are experiencing back taxes, it is crucial that you act as quickly as possible because the consequences can be monumental. Make sure you consult professional help to ensure your back taxes are sorted correctly and you do not accrue further penalties, or be forced to pay more than you owe. What are the available back taxes help options?
- Installment Agreement: In an Installment Agreement, the IRS negotiates a tax relief installment payment with you which allows you to pay your debts in affordable chucks over a given period rather than a large one-off payment. This can be within a space of four months to ten years depending on how much you owe in taxes. There are six types of IRS installment agreement.
- Guaranteed Installment Agreement: this is for individual taxpayers, not businesses. It is referred to as “guaranteed” agreement because, under certain circumstances, it must be approved under the law. To be eligible for this type of installment, you cannot declare bankruptcy, have an Offer in Compromise, or an ongoing Installment Agreement. Your back taxes should be $10,000 or less, and you need to provide proof that you cannot pay this back tax by lump sum, and you have an ability to pay the installment within three years.
- Streamlined Installment Agreement: this installment agreement is great for businesses who owe $25,000 or less, and individuals who owe $50,000 or less. To be eligible for this, you must file your tax returns, have the ability to clear your monthly payments within six years, and haven’t been into any installment agreement in the last five years.
- Non-Streamlined Installment agreement: this option is best for those who have more than $50,000 in debts and need to pay it off for more than five years. This agreement is usually negotiated with the IRS on a case-by-case basis.
- Fresh start installment agreement: this option increased the threshold for streamlined installment agreements. Here your back taxes payment is streamlined if you owe up to $50,000 and can pay within six years. Very little financial documentation is required of you. If you did not qualify for any installment agreement, this option is great for you.
- Partial installment Agreement: if you are having difficulty paying your tax debt in full, you have no assets, and you are ready to show your inability to pay in full or over time.
- Direct debit installment agreement: this is an agreement where your monthly payment is taken directly from your account. Here the IRS will need your bank routing number, checking account number and written authorization of payment.
To choose the right Installment agreement plan for your back taxes, ensure you work with a professional, so that you can get personalized advice according to your situation on the best relief program for your debt issues.
Currently Not Collectible
Some people who owe the IRS have no way of remitting what they owe. These set of people can apply for Currently Not Collectible (CNC) status. This is a special status designed by the IRS to accommodate those who can’t afford any form of pay towards their tax debt. Achieving or getting this tax relief program is difficult as you have to prove that you are going through a significant financial problem that constrains your ability to pay your debts to the IRS. Once there’s an improvement in your financial standing, this status changes. It is only temporary.
If you choose this debt settlement route, you would typically have no assets, either as a result of declaring bankruptcy or inability to accumulate any. When the IRS accepts your application for Currently Not Collectible, you will be sent a statement every year stating how much you owe. It is not a bill. It is only an updated financial report which the IRS must send to you. Depending on the circumstances, you might never have to pay your tax debt.
Introduced 12 years ago, the penalty abatement allows a first-time tax defaulter to request abatement. The taxpayer must be able to show a three-year clean tax history. What this means is that the taxpayer must either have an installment plan in place, currently on the taxes in question, or write a check for due taxes with the abatement request. The three-year compliance requirements apply only to the type of tax that relates to the penalty. For instance, income tax and payroll taxes are two different types of tax. When you apply for Penalty Abatement, it can take up to 90 days or more to get a response from the IRS. Be consistent and patient.
Offer in Compromise
For those who genuinely need it, this offer can be a lifesaver. If you are in debt with the IRS and you have done everything within your power to pay off with no luck, you can consider making the IRS an “Offer in Compromise” to settle your debts. Generally, the IRS is usually reluctant to accept an offer in compromise, but they will be flexible if this is their best shot of getting a substantial amount of the debt owed within a reasonable time. What does the IRS consider?
- The income of the taxpayer.
- The ability of the taxpayer to pay.
- The taxpayer’s obligations and expenses.
- The value of the taxpayer’s assets.
The taxpayer must not be in an open bankruptcy proceeding.
How it works
Before opting for a debt relief program, weigh in the pros and cons of all available debt relief options to you, and if you find yourself confused on what to do, seek professional help. If you are ready to take action:
- Use our simple form to request a free evaluation.
- Debtco will connect you with an accredited credit counselor.
- They will evaluate your unique situation and help to identify and review the best solutions for you.