How to settle IRS debt by yourself?

Taxes aren’t exactly a fun part of life, and they certainly aren’t optional. If left unpaid, your tax bill can balloon and cause a huge financial headache, one you might not be able to easily dig your way out from. 

If you don’t pay your taxes when you file, you’ll receive a bill for the unpaid balance. The unpaid balance is subject to interest as well as a monthly late payment penalty. But that doesn’t mean you shouldn’t file if you don’t have the money to pay all your taxes. The IRS also charges a failure-to-file fee that is equal to 5 percent of the unpaid balance per month, which can accrue to as much as 25 percent of unpaid tax. If you aren’t going to pay your whole bill at the time of filing, you should immediately get in touch with the IRS to figure out a plan. 

Your tax bill has an expiration date, but it’s not short. The IRS has 10 years to collect taxes, penalties and interest from you.  

How can you settle your IRS debt for less than you owe?

It’s not easy, but it is possible to pay less than you actually owe. The federal government considers an Offer in Compromisea last resort if you can’t pay what you owe in taxes. The qualifications are fairly murky, though. Generally, the IRS might let you pay less than you owe if they think that’s the most money they can expect to collect from you in a reasonable period of time. That time is likely the full 10 years they have to collect on the debt. 

To find out if you qualify for an Offer in Compromise, you can fill out an online questionnaire. Filing all your relevant tax returns is one requirement to be considered.

If you are approved for an Offer in Compromise there are two ways to pay your settled tax bill: lump-sum cash and periodic payment. In a lump-sum cash settlement, you submit the initial payment of 20 percent of your total offer with the application. If the offer is accepted the remaining balance must be paid in five or fewer payments. In a periodic payment set up, you submit the initial payment with your application and continue to pay down the balance in monthly installments if the IRS accepts the offer. 

How much should you offer in an IRS settlement?

Knowing what your settlement offer should be can be tricky and you might want to lean on an attorney or a service like Resolve during this process. The IRS’s form 433-A also offers guidance on an appropriate offer, meaning one you can not only afford but that the government will find acceptable for recouping their money. 

Ultimately the government is looking for a number that to them equals the most money they could expect to get back in the 10 years they have to collect the taxes, penalties, and interest. But the amount also has to be something you can afford. The IRS takes into consideration your bills and monthly expenses when determining how much you can pay. They won’t just take your word for it — they’ll do their own calculations too once you’ve put in an offer. If you’ve made a lowball offer, you will have a chance to increase it if the IRS isn’t satisfied. If you don’t qualify for an Offer in Compromise, you can still ask to be put on an installment plan to pay off what you owe.

Installment plan or paying delay

If you owe the government $50,000 or less, you may qualify for an installment agreement. And you’re guaranteed for an installment agreement if you meet certain criteria, such as owing less than $10,000 and agreeing to pay off your taxes in full within three years. Otherwise, you may have up to six years to pay what you owe. Keep in mind, you’ll still have to pay interest on the unpaid taxes and late penalties until you pay off your debt in full. So it makes sense not to drag things out.

You might be able to avoid paying penalties (but not interest) altogether if you meet the requirements for either penalty relief due to reasonable cause or the first time penalty abatement policy. Some reasons you might qualify for relief due to reasonable causes include a serious illness, a fire or a natural disaster.

If you’ve hit on a temporary financial hardship and simply can’t afford to pay at the moment, the IRS can also delay collection on your account by marking it not collectible. This is a temporary delay until your financial condition improves. The debt does not go away. 

Why Resolve 

Navigating government forms and requirements can be tricky. An application for settling debt with the IRS can be thrown out simply on a technicality like incorrectly filling out a form or omitting something in your proposal. Working with experts can be helpful. While the Resolve platform doesn’t deal with tax debt specifically, we assess each debt situation on a case-by-case basis to help point out your best options. That means we can put you in touch with tax experts who can help.

6 Considerations as You Settle Tax Debt

#1: Penalties and interest continue to accrue

Very few things stop IRS penalty accrual, including filing an Offer in Compromise. While the IRS considers your offer, penalties and penalty interest will continue to apply.  Once you reach a settlement, this stops being an issue. You pay the amount agreed, and you’re free and clear.

#2: Bankruptcy blocks tax debt settlement

Tax debt is generally resolved with the rest of your debts during a personal bankruptcy filing. So, you can’t have an open bankruptcy case and file for tax debt settlement at the same time. If you already filed for bankruptcy, the courts should resolve the issues with your tax debt during the bankruptcy proceedings.

#3: There is a possibility to get the application fee back

If you’re struggling to pay your taxes because of extreme financial hardship, that $186 application fee may be hard to manage. The good news is that if the IRS determines severe financial hardship, then they may refund the fee. They will let you know after you offer is processed whether you are eligible to request a refund.

#4: Form 433-A helps you determine an appropriate offer

You can’t just offer the IRS some random amount and expect that they’ll accept it. You also don’t have to just guess at what’s the right amount. Settlement negotiation always starts with the amount determined through Form 433-A; for the record, there is also Form 433-B if you’re applying for settlement as a business.

#5: You can make the settlement in payments

You won’t be required to pay everything back at once. You can choose the OIC Periodic Payment option. This allows you to make the settlement in installments. You basically pay the IRS each month with fixed payments. You can pay more than the minimum required amount if you have extra funds. However, you must pay the full amount agreed within two years from settlement acceptance.

#6: Defaulting on an OIC is extremely bad

If you don’t pay the amount agreed, the IRS will not be kind. You will be liable for the original tax debt, minus any payments you made. They’ll also reapply all penalties and accrued interest charges. What’s more, they will be much less willing to work with you; a second settlement agreement is highly unlikely.

How to settle tax debt yourself

You have two options to file an Offer in Compromise. You can work with a tax debt resolution service or you can try to file on your own. If you want to settle tax debt yourself, simply download the IRS Form 656 Booklet. In includes Form 656 and Form 433-A form that you need to fill out for your financial disclosure. Complete the forms and send them in to file on your own.

A word of warning about settling tax debt on your own

Form 433-A provides full financial disclosure, so it’s not exactly a short form. In fact, it’s a 10-section form. If you think filing your taxes is complicated, this is significantly more complex. And if the form is not filled out correctly and completely, the IRS will reject your OIC application.

As we mentioned above, OICs are not readily accepted by the IRS. If there’s any potential that you can pay off the full amount, they won’t accept your OIC. They will also reject you if you have any assets you can liquidate to pay off the debt.

So, proving that you qualify for an Offer in Compromise is not an easy task. Unless you know what you’re doing, we recommend working with a resolution team! It will increase your chances for a successful outcome and an accepted OIC.

The IRS Is Now Sending out Bills for 2018; Have You Received Yours?

The IRS Is Now Sending out Bills for 2018; Have You Received Yours?

The Internal Revenue Service has begun sending out bills to those taxpayers who filed on time for 2018 but have not paid in full. Because of recent law changes affecting most taxpayers, more taxpayers are finding that they owe money to the government this year. Regardless of the amount, owing money to the IRS can be scary. But ignoring the IRS can have severe consequences, including the filing of tax liens and/or levies. As previous blogs indicated if you find yourself owing money to the IRS, addressing the issue early can avoid bigger problems down the road.

Options for RESOLVING Your Tax Bill

There are many options available to resolve your tax balance with the IRS. Knowing which one of the options apply to you can result in a more expedient and more favorable resolution of your account.

1. Installment agreements. User fees will apply to setting up installment agreements, which will vary depending on whether the agreement is set up online or over the phone. In addition, fees can be reduced if you are setting up a direct debit agreement.

a. Full payment installment agreements. Depending on the amount you owe, there are options available to you if you will full pay the liability within the repayment period.

i. Debts less than $25,000. Can go up to 72 months. Financial information generally not required. Direct debit agreement generally not required. May be able to avoid a tax lien filing

ii. Streamlined criteria for debts $25,000 - $50,000. Can go up to 72 months. Financial information may be required. Direct debit agreement required to potentially avoid a tax lien filing.

iii. Expanded streamlined criteria for debts $50,000 - $100,000. Can go up to 84 months. Financial information may be required. Lien determination will be made. NOTE – THESE ARE TEST CRITERIA AND CAN BE DISCONTINUED AT ANY TIME.

b. Partial payment installment agreements. This type of agreement is based on current ability to pay and requires submission of your financial information. In addition, these types of agreements may result in a tax lien filing and are generally subject to review after 24 months.

2. Short-term extension of time to pay in full. The IRS will generally allow up to 120 days to pay the liability, plus the accrual of penalties and interest in full. There is no fee for setting up this arrangement and no lien determination is made.

3. Hardship statuses. If you are experiencing a hardship, you may qualify for currently not collectible (CNC) status or an offer-in-compromise (OIC) to resolve your balance. Lien determinations will be made for both of these options. There is no fee for CNC status but financial information is required. There is an application fee and a down payment requirement for an OIC. Financial information is required to determine your reasonable collection potential for an OIC.

Options for REDUCING Your Tax Bill

Besides the opportunity for an offer-in-compromise (see hardship statuses above), penalty abatement provisions may apply to reduce your tax bill. There are three main avenues to obtain penalty abatement or waiver.

1. First-time penalty abatement. If the following are true, you may qualify for administrative penalty relief from penalties for failure to timely file, failure to timely pay or failure to deposit taxes:

a. You didn’t previously have to file a return or you had no penalties assessed against you for the previous three (3) filing years.

b. You are current in your filing requirements or you have filed an extension of time to file for the current year.

c. You have paid, or have arranged to pay, any tax due.

2. Penalty abatement due to reasonable cause. The failure to timely file and/or failure to timely pay penalties can be abated if you can establish that there was reasonable cause for your failure to file or pay on time. Reasons for abatement can include:

a. Casualty, fire, natural disaster or other disturbance

b. Inability to obtain records;

c. Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family;

d. Any other reason which establishes that you used all ordinary business care and prudence to meet your tax filing and payment obligations but were nevertheless unable to do so.
NOTE - All of the options above require documentation to support the reason for abatement. In addition, lack of funds in and of itself is not reasonable cause for failure to file or pay on time. However, the reason for the lack of funds may meet reasonable cause criteria for the failure to timely pay the penalty.

3. Penalty relief due to statutory exception. If you received incorrect written advice from the IRS, you may qualify for penalty relief under a statutory exception. In addition, there are other specific statutory exceptions in the penalty provisions of the Internal Revenue Code. You should consult with an experienced tax attorney to see if any of the statutory exceptions apply to the facts of your case.

If you have a balance due with the IRS for 2018 or for any other year(s), you should speak with a tax attorney to evaluate your financial situation, the collection alternatives that may be available to you and your options for reducing the tax debt you owe.

Do you need a tax lawyer to help with tax relief?

Knowing when it is time to call on the services of a tax lawyer can be difficult. You may think they are too expensive, or that you can ignore your tax situation and it will go away.

Your first question when hiring a tax attorney is whether you need one. Maybe you prepare your company’s taxes or you rely on a CPA for your tax, accounting, and other financial questions. So why should you turn to an attorney when it comes to taxes?

Get the best settlement possible

Be sure all of your IRS back taxes are included in your offer.

Our tax attorneys run a comprehensive review of your IRS master tax transcripts before we settle, and update any changes, to make sure nothing gets missed.

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What is a tax lawyer? - Tax Lawyer California

The IRS is knocking at your door. They want your home because you haven’t paid your income taxes. Before you walk away and leave it all behind, consider how a tax lawyer can help you to protect your assets. Tax relief can be daunting on your own, but with help from an expert, you can prevent this nightmare from ever happening.

What is a tax lawyer?

Tax lawyers are legal experts with experience protecting clients from tax litigation and negotiating tax relief solutions. However, they do not practice tax litigation exclusively. In fact, many tax lawyers handle a variety of tax-related duties for individuals and corporations including:

• Navigating complex tax codes and laws.
• Structuring and documenting business entities.
• Overseeing business tax planning to legally minimize tax burdens.
• Advising clients on estate, tax, and financial planning.
• Handling disputes before the IRS.

Tax lawyers can also help to relieve the stress you may feel by dealing with the IRS on your behalf.

A tax attorney can represent you in state or federal Tax Court, or in other courts including the District Court, the Court of Federal Claims, or even the Bankruptcy Court. Additionally, a tax attorney can represent tax professionals who are the subject of IRS enforcement proceedings such as injunction actions or violations.

To know more please visit: https://nationaltaxattorney.com

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Some Tips to Find the Best Tax Attorney

An audit on your tax returns can leave you to a frightening state, and it is obvious for anybody to feel like that. The worst consequence of an audit on your tax returns is that of catching the attention of the Internal Revenue Service (IRS). If such is your situation, do not get freaked out and take help of a tax lawyer. 

Now the question that may get you confused completely is how to find the best tax attorney, on whom you can rely upon. Mentioned below are some of the factors you need to keep in mind while looking for a tax lawyer.

·      An experienced attorney:When it is about looking forward to hire a tax attorney, you must make it a point to get in touch with an experienced lawyer. An experienced lawyer always has an upper hand, as he will have inside information of what is going in the IRS. Also, since he has dealt into such cases since a long time, it will be easier for him to handle your case. 

·      The attorney must have a credential:The attorney you are planning to hire must have his credential. This means that he should have the license to practice law by the state’s bar and also have a Master of Laws degree. If you think your case is too difficult to handle, you should get in touch with an attorney who is a Certified Public Accountant.

·      Believe in words of the mouth and Internet:Before you take the decision of hiring a tax attorney, you must browse through the Internet. This will give you much information about the tax lawyer, as in today’s world there is hardly anything that is not there in the Internet. The other option that you can go for is that of the words of the mouth of the people that you know in your city or state. If the Internet and the people around you are not enough to get information about the tax lawyeryou intend to hire, you can even reach out to the state bar. From there, you will certainly get enough and authentic information about the tax attorney that you are going to hire.

·      Check with the professional organizations:The professional organizations are the ones with which tax attorneys are associated to. These tax lawyers are usually the ones with a lot of experience in the field of taxes. Also they are very professional when it comes to handle their clients’ cases. The best thing is that you can go to the websites of those organizations and get thorough information about the tax attorneys who are working with such organizations.

These are some of the points that you need to keep in mind while looking for a tax lawyer. You can simply take help of the web browser and type “tax attorney near me”. This way you will get information only about those tax lawyers who are in near proximity to you. So, wait no more, and start your search for the best tax attorney today itself.

Where to Find a Professional Tax Lawyer in Riverside CA

Taxes are confusing and any layman can find it difficult to file it on their own. As a matter of fact, filing taxes involves a lot of risk as one mistake can lead the taxpayers in a deep trouble. If it gets serious, the taxpayers, who get into the list of tax defaulters after making mistake in filing taxes, may even get noticed by the Internal Revenue Service. And, once the IRS starts taking actions against the tax defaulters, it can snatch away every bit of peace from the tax defaulter’s life.

However, with the help of a tax lawyer, you will easily be able to file taxes. As a matter of fact, the tax attorney will do everything that is required, on your behalf. If you are in Riverside CA, you might find it perplexing to decide about the tax firm as there are so many of them. But if you are looking for a tax law firm that can provide the best services and from where you can find a reliable tax lawyer, the best option for you is the National Tax Attorney. 

The National Tax Attorney provides its services in Riverdale CA and also in many other cities of the United States. The attorneys associated with them have years of experience. Therefore, they help the taxpayers in the best possible way. Before filing your taxes, the attorney may ask for some details from you. This will help them to know about your tax file in a better manner. 

The tax lawyers in the National Tax Attorney will not only file your taxes on your behalf but will also suggest you various ways to get some tax relief.This way you will be able to save some money that you have earned over the years. While filing your taxes, the tax lawyer will not go straight ahead and do it; they would rather tell advice several ways through which you can save money. If you are stuck in a tax problem, they will bring you out of it. Since they have spent so many years in the field of tax law, they remain in good terms with the Internal Revenue Service. This enables them to get in touch with the IRS whenever they need to. 

The National Tax Attorney is aware of all the consequences of tax situations, thus provide their services accordingly. To know about them in length, you can contact them as per your convenience.