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The Top 10 IRS Tax Relief Strategies

1. An Offer In Compromise

Many taxpayers qualify for the IRS Offer in Compromise program. If you qualify, this program gives you the opportunity to settle a tax liability for far less than the total amount owed. A tax resolution specialist is able to calculate if a taxpayer can qualify for an OIC.

2. Penalty Abatement

The IRS can grant abatement and remove penalties or interest if there is a legitimate reason for not paying taxes on time. Penalties and interest can comprise a large percentage of the overall tax debt, sometimes as high as 50{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} or more. A taxpayer should consult with a tax resolution specialist to see if they are a candidate for abatement.

3. Wage Garnishment Removal

The IRS can garnish a taxpayer’s wages until the tax debt is paid in full. It is important to act quickly to stop or release this type of levy. The taxpayer should seek help from a tax resolution expert who can develop a strategy to reduce or release the wage garnishment.

4. Stopping A Bank Levy

A bank levy is another form of legal seizure of property by the IRS to satisfy a tax liability. A bank levy freezes an amount available in your checking or savings account and sends it to the IRS in 21 days. It is advisable to work with a tax resolution expert to resolve your tax problem quickly with a goal of getting a release of levy.

5. Filing Delinquent Tax Returns

A taxpayer cannot successfully resolve a tax problem unless they file all previously unfiled tax returns. Often the IRS files a “substitute for return” which does not include any deductions owed to the taxpayer. Filing a first time or an amended tax return can often obtain those deductions and lower a taxpayer’s tax liability.

6. Optimizing An Installment Agreement

The most common IRS tax debt solution, for taxpayers with enough assets or income, is an installment agreement. The taxpayer should consult with a tax resolution specialist to develop a plan which fits their specific case. A properly structured installment plan can reduce the total amount to be paid.

7. Managing The Statute Of Limitations

The IRS has 10 years from the date of assessment of taxes to collect all taxes, penalties and interest from a taxpayer. A tax resolution specialist can help the taxpayer reduce an overall tax liability by managing the debt with an eye on the 10 year statute of limitations.

8. Innocent Spouse Relief

When two individuals file a joint tax return, typically each is liable for the tax debt. Occasionally the tax liability is the responsibility of just one individual. There are three categories of innocent spouse relief in which a taxpayer may qualify for tax relief.

9. Filing An Appeal

Every taxpayer has the right to appeal an IRS tax ruling. An advantage to filing appeal is the IRS will typically suspend their efforts at collecting the tax debt. This reprieve gives the taxpayer time to meet with a tax resolution expert to develop a defense.

10. Currently Not Collectible

If you have no assets or income above that which is necessary to cover living expenses you become currently not collectible. Collections against you will temporarily stop. This is a temporary form of relief.

 

 

 

 

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The 8 Biggest Tax Relief Mistakes

Mistake 1: Believing That Tax Resolution Firms Are Regulated

Neither the IRS nor any other branch of the government regulates tax resolution firms. This has resulted in rampant abuse. Large nationally advertised firms have charged many thousands of taxpayers excessive fees with little or no results. Research whether a firm is a scam artist. Google the firm by entering “name of the firm, scam” or “name of the firm, complaints”. Chances are the nationally advertised firm you are speaking with has at least one huge class action suit against them.

Mistake 2: Letting Emotion Dictate Tax Relief Decisions

This is usually the result of the taxpayer falling prey to the empty promises of sales agents of the large TV advertisers mentioned in Mistake 1. Taxpayers with tax debt problems hear what they want to hear instead of what they need to hear. Do the following slogans sound familiar?

  • Settle your tax debt for “pennies on the dollar”!
  • The IRS has a “one chance program” to settle your tax debt!
  • Reduce your tax debt to a fraction of its current amount!
  • Become tax debt free!
  • End your IRS fears today!
  • Get the IRS off your back!
  • Don’t become another IRS victim!
  • Are IRS tax problems ruining your life?

Mistake 3: Choosing The Wrong Tax Resolution Company in Long Island

It is startling how many taxpayers fail to do the following necessary homework when researching a tax resolution firm:

  • Avoid firms who say “former IRS agents” will handle your case. While the IRS background may be significant, it can lack “big picture” experience. Look for a tax resolution specialist with lengthy and broad experience rather than a former IRS employee with only specialized experience.
  • Only Enrolled Agents, CPAs or Attorneys can represent you before the IRS. Look closely at qualifications, certifications and length (and breadth) of experience. These should suggest a dedication to the tax resolution field. The person handling your case should be the same person representing you.
  • Large tax resolution firms usually do not have efficiencies which lead to faster conclusions or lower costs to you. They are more likely to neglect the case.

Mistake 4: Believing It Easy To Qualify For An Offer In Compromise

An Offer In Compromise (OIC) can lead to a significant decrease in tax debt. However, OIC programs aren’t for everyone. The IRS resolves less than 30{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} of cases in taxpayer favor. Reasons like significant debt or negative cash flow are not always good enough reasons to chase this solution. The taxpayer should seek the advice of a tax resolution specialist. Familiarity with IRS financial models is necessary.

Mistake 5: Focusing Only On The Back Tax Problem

Use of a financial plan can solve a back tax problem. The taxpayer may simply need to follow a budget. Often, full-blown financial planning is necessary. Trying to resolve tax debt without a budget or a financial plan is like a ship trying to reach its destination without benefit of navigation instruments.

Mistake 6: Settling For A High Cost Installment Plan

Less expensive options may be available. Lack of a budget or a financial plan will cause the taxpayer to be unaware of alternative solutions. Please see Budgeting Your Way Out of Tax Debt.

Mistake 7: Assuming The Tax Resolution Specialist Will Do All The Work

This is the single biggest obstacle to the tax resolution specialist. It increases the time to resolve a case. These taxpayer clients believe that once signing the necessary forms to engage a tax resolution firm, their job ends. Total cooperation is necessary. The client needs to present added tax documentation and background information.

Mistake 8: Believing The IRS Has Forgotten About You

The IRS might delay contacting a taxpayer. The taxpayer may then mistakenly think the IRS is finished with them. A taxpayer’s representative may file paperwork on their behalf. The taxpayer may confuse this with speedy resolution. The IRS has thousands of  talented and capable employees. But the sheer size of the organization, the volume of work and complexity of tax related issues makes the IRS plodding and slow. Eventually they will get to you.