You never meant to let your taxes get out of control, but when your tax liability accrues penalties and interest at an astronomical rate, doubling or tripling your tax debt, even the most determined among us are unable to pay the IRS. So now that the IRS is demanding you pay up, the day of reckoning has come. What do you do?
The first thing is stay calm. There is no hopeless tax case. There are many options available for people who need to pay down past income tax debt, most of which do not include selling your assets or handing over your paychecks to the Internal Revenue Service.
Six Proven Tax Relief Options
For your consideration are seven proven tax relief options that we deploy almost on a daily basis. Keep in mind that these tax relief options may be used alone or in combination with each other:
Partial Pay Agreements
This may be the most under reported, least publicized tax solution - and for good reason. The partial pay installment agreement allows qualified taxpayers to make "minimum" monthly tax payments without the requirement that the tax is paid back in full. The partial pay plan is alternative tax solution that, candidly, the IRS would rather not have you know about. I even had a Revenue Officer deny that that program existed - she insisted the taxpayer would eventually have to pay the tax in full. She was wrong!
Streamline Pay Agreements
This is the no hassle payment plan. I will often use this agreement to negotiate the withdrawal of a federal tax lien. Once you have set up the agreement, the IRS will cease to send letters or take other collection actions, and you may be able to negotiate the amount of your monthly payment. Interest will continue to accrue on your account until the debt is paid in full…but keep reading, because you may also be able to abate (eliminate) the penalties and interest.
In addition to the amount of taxes owed, the IRS may hit you with loan shark rates assessed against your tax bill. IRS penalties can double or triple a tax bill in a short time. You can end up paying the IRS for years and never pay it back. The good news is that under certain circumstances, taxpayers may not have to pay these penalties by obtaining a penalty abatement. Taxpayers who have a reasonable cause for late tax payments, such as an IRS error, unavoidable delay, or grievous bodily injury, may have some or all of their penalties forgiven. What is “reasonable” is a broad standard, so the key is presenting a compelling case to the IRS: know what to say, and what not to say.
Offer in Compromise (OIC)
An OIC is available to taxpayers who cannot pay the full amount of their taxes because it would cause them significant financial hardship. The IRS will examine your income, assets, and expenses before accepting or rejecting your offer to pay less than owed. People who are in the middle of filing for bankruptcy do not qualify for OIC, so you should consult with a tax attorney before entering bankruptcy proceedings. Fair warning: most successful OICs are won on appeal, not on the first try. Don’t believe the hype that it’s easy to obtain a successful OIC.
Hardship (Either Permanent or Temporary)
This is perhaps one of the most overlooked and misunderstood tax relief solutions. There are millions of people in the United States right now who are living with the mistaken belief that they owe the IRS because they don’t know they qualify for some form of hardship. You may be one of them!
Amending Your Tax Return
Most taxpayers do not take full advantage of all IRS deductions and so they end up needlessly paying too much tax. A skilled tax attorney can examine the amounts and exemptions in your past returns to make sure you have claimed all the appropriate deductions and potentially bring down your tax liability.
Declaring bankruptcy may eliminate all or part of your tax obligations. In most cases, your income tax may be discharged (erased) in bankruptcy as long as the income tax was reported on returns due at least three years before bankruptcy was filed.
We Can Help You Discover the Tax Option That Is Right for You
All of the solutions listed above are solutions we have used over and over again for individuals and businesses. Tax relief is not guess work for us. Call us 24 hours a day, 7 days a week at 414 771 9200.