Resolve Back Taxes:
Back taxes can come as a surprise and catch you off guard. Here are a few tips on dealing with back taxes to minimize your losses.
4 Steps to Pay Off Your Income Taxes
Paying off your taxes can be extremely stressful, especially when you’ve got a tax bill that’s much higher than you can afford. But, if you follow these 4 steps, it can help you choose the best way to approach your tax bill.
Step 1: Calculate Your Taxes
– The most important thing to know when it comes to taxes is how much you owe. When filing for your tax returns, be sure to correctly answer every question and leave no detail behind. If the IRS contacts indicating that you need to pay more money, ask for clarification.
Step 2: Tax Penalties
– If you owe more taxes, chances are there may also be penalties and interests attached to the amount owed. Not to worry, there are a few ways to reduce or even remove those interests. An abatement of penalties is the reduction or removal of penalties if the taxpayer explains their situation and has a valid reason for you owing the IRS money. Also, you should always pay your taxes owed as quickly as possible to avoid any sort of time-bound penalties.
Step 3: tax payment Assistance
– If you are struggling to pay your taxes financially, the IRS allows for installment payments in order to help you pay for your outstanding taxes. To be eligible for installment payments, you must owe $25,000 or less in taxes, must not be able to pay the full amount you owe currently, and be able to pay off the full amount in 3 years or less.
Step 4: offer in compromise
– As a very last resort you can apply for an offer in compromise. An OIC has a very low acceptance rate by the IRC and should only be considered when all other methods of paying your outstanding taxes have been used.
What is the IRS Debt Forgiveness Program?
The IRS provides a variety of ways to help taxpayers pay for their tax liabilities, and the debt forgiveness program is one of them. The debt forgiveness program, in the form of an Offer in Compromise, is a method in which the IRS reduces the amount of taxes owed by an individual under specific circumstances. The OIC is known to have a very low acceptance rating, which is why the IRS supplements this program with one of the features of the Fresh Start Initiative.
IRS Fresh Start Program
The IRS Fresh Start Program is a program provided by the IRS to make tax paying easier for taxpayers. There are 3 major features of the Fresh Start Program:
– Tax Lien: The Fresh Start Program allows for a higher amount owed by the taxpayer before a lien is implemented, at $10,000. There are also different ways to get your tax lien withdrawn under circumstances such as utilizing the Direct Debit Installment Agreement.
– Installment Payments: The Fresh Start program has increased amount owed in order to be eligible for installment payments from $25,000 to $50,000 and from 3 years or less to 6 years (72 months). This means that the installment payment option is available for a wider range of taxpayers.
– Offer in Compromise: The Offer in Compromise is a very strict program that only accepts a small number of applicants. With the Fresh Start Program, the OIC restrictions have become more flexible, allowing for more taxpayers to be accepted into the program.
How Can I Get the IRS to Reduce the Penalties?
As mentioned above, one way to avoid penalties and interests is through an abatement of penalties. An abatement of penalties refers to the reduction or overall elimination of the penalty on your tax liabilities. This can be done through filling out Form 843 Claim for Refund and Request for Abatement
After filling out all the necessary information, you can explain your reasoning as to why you believe your penalty should be reduced or eliminated. Since each form is approved or denied by an IRS agent, you are more likely to get your abatement accepted if you have a genuine and valid reason.
How to Negotiate Back Taxes with the IRS
With the new Fresh Start Initiative, the IRS is making it easier for taxpayers to pay their outstanding taxes. In order to negotiate back taxes with the IRS, there are a few key things you should follow in order to minimize the financial toll of back taxes. First, always file your tax returns regardless of your ability to pay the outstanding fees in one lump sum.
Second, never sit on your tax liability. Instead, gather all the information you need about your current situation and seek assistance if required in order to solve your problem right away. Third, the IRS provides a variety of methods to assist you in paying off your tax debts. Learn as much as you can about these services and use them to your advantage. Lastly, once you have negotiated your terms with the IRS, stick with the terms and do not violate them.
IRS Back Taxes: Your Options
Your back taxes do not have to be paid in one lump sum of cash, especially if you currently do not possess the assets to do so. Here are a few options you have in paying your back taxes to the IRS.
– Installment Payments: You can negotiate with the IRS to pay your debt in monthly installments. Be aware, your interests still accumulate while you pay your debt off, so you may be spending the last set of payments paying off the interest alone.
– File for Amends on Past Tax Returns: You can file to get your past tax returns amended if some of your past tax returns had overstated liabilities. This will reduce your current back taxes.
– Offer in Compromise: Getting an OIC approved means your back taxes get a significant reduction, but this method is very difficult to get accepted, and have very strict rules and regulations if you are lucky enough to get your offer accepted.
– IRS Collection Period Expiration: The IRS typically can only collect back taxes 10 years after they have assessed tax liability. In the worst-case scenario, with no assets and income, it is possible to benefit from such a method. This method is highly not recommended.
Expert Advice on Dealing with the IRS About Back Taxes
Dealing with the IRS can be stressful and difficult when it comes to back taxes. Here are some suggestions to help you deal with the IRS. First, ensure that you follow all the requirements when it comes to the IRS and your back taxes. This includes filing for tax returns, being completely honest to the IRS agent, and never missing a deadline.
Next, gain all the information available for your situation when it comes to back taxes and IRS, such as your options when it comes to paying your back taxes. You may wish to get professional or legal representation to help your situation. Lastly, when dealing with IRS agents, negotiate with them and try to provide solutions to your tax problems . If you are proactive with trying to fix your back taxes, you should be debt free in no time!
Can the IRS Revoke Your Passport Because of Back Taxes?
Simply put, the IRS cannot revoke your passport because of your taxes as long as your tax liabilities do not exceed $50,000. If you do owe more than $50,000, then the IRS notifies you of their decision to revoke your passport, but you have 90 days from then on to settle with the IRS. Once the settlement is complete, the IRS agent will submit a reversal notification to the State Department.
Tips on Applying for Uncollectible Status
Another program that the IRS offers to help with your back taxes is something called the Currently Not Collectible, or Uncollectible Status. CNC, typically available for seniors, is a status placed on a taxpayer in which the IRS does not seek to collect their debts.
This status is given typically to individuals who can prove financially that they do not have enough income or assets to pay off their monthly payment installments for their back taxes. For seniors, this status is typically given indefinitely, as retirement income does not alter year after year and retirees do not work in the future.
The Uncollectible Status requires you to supply your financial information to the IRS proving that you do not have any surplus income after paying for monthly living expenses. When applying, be sure you have all the financial information, as well as your monthly budget that the IRS may inquire about. Also, having a promising idea of budget standards by the IRS will allow you to determine whether you qualify for the status.
Call a Trained Tax Law Attorney to Help You Settle Back Taxes with the IRS
Unable to pay your back taxes? Don’t know what direction to go in? Call Sheppard Law Offices today for a free consultation and see what your options are to get the best settlement possible. Kenneth Sheppard Jr. and his team of tax Attorneys are trained for nationwide tax laws.
At Sheppard Law office we work with individuals and businesses nationwide. We have 5 locations located in Ohio, staffed with a team of professional tax attorneys that are up to date with all updated tax law information for each state. Our Ohio locations are in Hilliard, Canton , Newark , Mount Vernon and Akron . Call us for a free consultation today, our toll-free number is (877) 505-9455 .
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