How Tax Resolution Services Can Help
The IRS strikes fear in most law-abiding citizens, partly because tax matters are complicated and partly because this agency wields a lot of power. If you’re behind on your tax payments or can’t afford to pay the taxes you legally owe, it’s best to seek professional help right away. Your accountant offers various tax resolution services that can help you get your financial life back on track without fear of wage garnishments or loss important assets.
Fresh Start Program
The IRS offers a Fresh Start Program that allows people who have been behind on their taxes to catch up and start over. Since taxes accumulate every year, it is possible for people to get so significantly behind that they feel like they can never catch up. You probably know that the IRS has far-reaching powers to collect on your tax debt. For example, they may garnish your wages, add a tax lien to your property, and even bankruptcy won’t relieve you of this debt.
The Fresh Start Program was put in place to offer relief to a wider group of taxpayers. The advantages go both ways as the IRS is able to recoup their outstanding debt – or at least a portion of it. On the other hand, the taxpayer can have a chance to get their financial lives in order by making payments as agreed.
Tax Liens
Under the Fresh Start Program, the IRS generally won’t file a Notice of Federal Tax Lien on your property if you owe less than $10,000 in taxes. Taxpayers can also request to have the lien withdrawn if they meet certain requirements and are working to pay off their debt through a direct debit installment agreement.
A tax lien on your property makes it more difficult to sell as the IRS must be satisfied to transfer ownership. All taxes are due before the house can be sold, and this can create a hardship for many families who need to sell. Your accountant can help you file the necessary paperwork to remove the tax lien.
Notice of Deferment
You can file for an extension for filing your tax return and automatically gain an extra 180 days before the return is due. However, generally you must pay your taxes by the due date. However, there is one exception. You may be eligible to defer your taxes if you or your spouse served in a combat zone or hazardous duty station. You may be required to submit supporting documentation along with your notice of deferment.
Installment Agreement
The IRS makes it easier to repay taxes owed by allowing you to set up an installment agreement. You can pay through monthly direct debit payments for the length of the installment. Generally, taxpayers have up to six years to repay debt up to $50,000. If you owe more than that or need more time to repay, the IRS may require additional financial documentation.
Your accountant can help you set up your installment agreement to satisfy your outstanding tax debt. They can help you determine how much the IRS expects you to pay every month as it’s in everyone’s best interest to satisfy the loan in full as soon as possible. If you have trouble making any of the monthly payments, you must speak to your accountant to negotiate different terms. Some taxpayers may even be eligible for an Offer in Compromise.
Offers in Compromise
As part of the Fresh Start Program, the IRS may not accept an Offer in Compromise, or OIC, from a taxpayer who is behind on their taxes and unable to pay. In essence, the OIC allows a taxpayer to satisfy their tax debt for less than the full amount. However, you must disclose your income and assets to prove that you don’t have the ability to pay the sum within a reasonable amount of time.
While the IRS is more flexible in assessing your ability to pay, they will not accept an Offer in Compromise if they believe you have the ability to cover the full amount at once or through payments. Your accountant can help determine your eligibility and draft a compelling Offer in Compromise the IRS is willing to accept and that you can afford.
At Demian & Company, we have many years of experience dealing with the IRS. Most of our clients don’t even have to talk to an IRS agent – we handle the entire process for you. If you’re behind on your tax payment, it’s time to give us a call!