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Tax Debt

Back Tax Debt Relief Under the New Tax Law

Back Tax Debt Relief Under the New Tax Law

By on May 21, 2018 in Debt Relief, Tax Debt, Tax relief | 0 comments

The Internal Revenue Service (IRS) has tried to make life a bit easier for those who owe back taxes. The IRS Fresh Start Initiative was put in place to help make it easier for taxpayers to pay back their tax debt and avoid tax liens.  Here are some key parts of the new tax law that you should take note of if you currently owe back taxes to the IRS: Things to Keep in Mind if You Owe Back Taxes   Installment Agreements: An installment agreement allows taxpayers to pay their tax debt over time, rather than in one large lump sum. The IRS has made the application process for an installment agreement more simple and straightforward.  Now, individual taxpayers who owe the IRS up to $50,000 can pay their tax debt in monthly direct debit payments for up to 72 months (six years). If you fall into this category, you will likely not have to show the IRS detailed financial documentation as required in the past.  Use Form 9465 to apply.  If you owe more than $50,000, you are still required to present the detailed financial documents.   Offer in Compromise: An Offer in Compromise allows a taxpayer to pay the IRS less than they actually owe to resolve their debt.  An Offer in Compromise is now available to a wider group of taxpayers and the application process has also been streamlined to make it easier and user-friendly.   Tax Liens: The new tax law also impacts the threshold at which the IRS will file a Notice of Federal Tax Lien. The amount has been increased by the IRS to $10,000.   The IRS has made a concerted effort to simplify the process for applying for debt relief programs and has, in many cases, increased the thresholds for who may qualify.  The net result is that more taxpayers can now benefit from these tax relief programs and actually put their tax debt behind them once and for all. Put Tax Debt Behind You   It’s important to note that if you have a significant tax debt and are not sure best way to move forward, you may also want to partner with a professional tax relief company that...

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Getting Help With State and Federal Tax Debt

Getting Help With State and Federal Tax Debt

By on May 17, 2018 in Debt Relief, IRS Debt Forgiveness Program, Tax Debt | 0 comments

More than 18 million Americans owe money to the IRS.  If you owe federal or state tax debt, making a plan for paying off this debt as soon as possible is extremely important.  There are many reasons taxpayers have trouble paying their tax debt and fall behind.  Some of the most common reasons include being too busy to complete the paperwork, experiencing a major life event that prevents them from filing, or simply not having the resources to pay the debt. No matter the reason is for getting behind, there are many resources to help you get back on track.   The Internal Revenue Service (IRS) offers several programs that you may be able to take advantage of that can help you take control of your outstanding tax debt once and for all.   Installment agreement:  An installment agreement allows you to pay your tax debt off over time, rather than all at once. Think of an installment agreement like a credit card. You make a monthly payment to the IRS or the state each month. This payment includes your tax debt plus and penalties and interest and you can generally have up to 5 years to pay down your debt. Offer in Compromise: If you have a financial hardship that makes you unable to pay your tax debt in full, you may qualify for an Offer in Compromise. This program allows you to settle your tax debt for less than you owe. You have to prove to the IRS that you are actually unable to pay, so be prepared to show detailed financial documentation. Not currently collectible status:  Another option that the IRS offers is where the IRS actually agrees not to collect your tax debt for a period of time (usually 1 year).  Getting the status “not currently collectible” means that according to the IRS, you have no ability to pay your taxes. This classification will stop a levy, lien or termination or denial of an installment agreement.   Put Your Tax Debt Behind You   As you decide what path to pursue, you should be aware that if you continue to let your federal and/or state tax debt add up, you will have to pay much...

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State Tax Debt Resolution: When Should You Seek Professional Help?

State Tax Debt Resolution: When Should You Seek Professional Help?

By on May 10, 2018 in Debt Relief, Tax Debt, Tax relief | 0 comments

Do you owe back taxes to your state tax office?  Is the amount too high for you to pay off?  If you are unable to see a path for paying this state tax debt off in the foreseeable future, it may be time to get professional tax help.  Most states follow the IRS guidelines for resolving tax debt, meaning they may contact you soon after they realize that you have not paid. You should be sure to be aware that many states often collect back taxes more quickly than the IRS.  This means that you may have less time to find a solution before you are hounded by your local state for repayment. The bottom line is that it’s always better to be proactive about paying your tax debt. Don’t wait until the last minute to repay your state tax debt. How Can a Tax Firm Help Resolve Your State Debt?   A professional tax service can help you come up with a reasonable plan for settling your state tax debt once and for all. This plan may include reaching out to your state agency before they contact you to find out what kind of programs you may qualify for if you are unable to pay at the present time. For example, most states allow taxpayers to request an installment agreement which allows you to pay your state tax debt over time, rather than in one lump sum. You can pay your tax debt in monthly installments for over a period of several years. You will still pay penalties and interest, but have more time to pay, providing you with financial flexibility. You might also qualify for what is known as an Offer in Compromise if you cannot afford to pay the state what you owe. The application process for an Offer in Compromise is complicated and a reputable tax firm can help ensure that you complete a strong application, giving you the best possible chance of getting approved.  You will need to provide detailed financial information in order to make your case, and a tax firm can guide you through this process. Benefits of Consulting a Tax Relief Firm   One of the most useful functions a tax firm...

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IRS Penalty Abatement: What are the Reasonable Cause Criteria?

IRS Penalty Abatement: What are the Reasonable Cause Criteria?

By on Apr 10, 2018 in IRS, IRS Cases, Tax Debt | 0 comments

Internal Revenue Service (IRS) penalties for filing or paying your taxes late can add up quickly and be financially detrimental.  If you owe back taxes to the IRS, you should work to develop a plan that allows you to pay off your debt as soon as possible to help avoid additional interest and/or penalties.  There are instances in which the IRS will abate the penalties that you owe. The most common reason for penalty abatement is called “reasonable cause.” The IRS will take each request for penalty abatement on a case-by-case basis and you should be prepared to provide a very compelling reason why you are requesting that your penalty be waived. In most cases, the issue that prevented you from filing must be out of your control. Some common examples of reasonable cause include: Death or unexpected serious illness of the taxpayer, a family member or loved one Natural disasters such as a fire, flood, or other unexpected disturbance Unavoidable absence, including being incarcerated or being in a rehabilitation facility Inability to determine the amount that you owe for a reason that was out of your control Another reason which clearly shows that you used all ordinary business care and prudence to meet your Federal tax obligations but were still unable to do so. Gathering the Information for File a Request for Penalty Abatement It is also important to note that insufficient funds are not considered a reasonable cause for failure to file or pay your taxes to the IRS. However, the reason that you don’t have sufficient funds may meet the criteria for a reasonable cause penalty abatement. Additionally, interest cannot be abated for reasonable cause. An interest that is charged on a penalty that you owe will be reduced or removed when that penalty is reduced or removed. If you decide to request a penalty abatement for reasonable cause, you should be prepared to provide detailed information to the IRS about the circumstances that prevented you from paying and/or filing on time.  Relevant documentation may include hospital records, a death certificate, letter from a physician with a description of illness, or documentation of a natural disaster. You should provide as much detail as you can, specifically...

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Getting Help with State and Federal Tax Debt

Getting Help with State and Federal Tax Debt

By on Feb 28, 2018 in IRS, Tax Debt, Tax relief | 0 comments

Are you concerned about owing money to the IRS? Do you have tax debt that you are unable to pay? You may have options for getting help with your state and federal tax debt without ruining your credit and overall financial outlook.  The Internal Revenue Service (IRS) has put some new programs in place to help taxpayers manage their debt effectively and avoid tax liens. The Fresh Start Initiative was first introduced several years ago with the goal of helping struggling taxpayers. Here are some of the key components of the program and how it might help you: Installment Agreements:  The IRS has made installment agreements available to more taxpayers who owe back taxes to the IRS. So, instead of having to pay your debt off in one (large) lump sum, this program allows you to pay that debt off in lower monthly payments, over the course of several years.  You can request an installment agreement for up to $50,000 without having to provide the IRS with a detailed financial statement, and you will now have longer to pay the debt off when you are approved for one of these streamlined installment agreement (72 months instead of 60 months).  While you are still responsible for penalties and interest, an installment agreement is exactly what many taxpayers need to get out from under the burden of tax debt. Offer in Compromise:  If you are under financial hardship and are unable to pay the full amount that you owe the IRS, you can also apply for what is known as an Offer in Compromise.  This program settles your debt with the IRS for less than you actually owe, based on what you can actually afford to pay.  The Fresh Start Program still requires a significant amount of financial information in order to grant an OIC, but this has become a bit easier as the threshold has become more flexible overall. Unemployed Penalty Relief:  If you are without a job, you may be able to have some of your penalties waived that have been added to your actual tax debt.  To assist those most in need, the IRS now provides a six-month grace period on failure-to-pay penalties that can be made available...

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Does Owing the IRS Affect Your Credit Score?

Does Owing the IRS Affect Your Credit Score?

By on Dec 20, 2017 in IRS, Tax Debt, Tax Tips | 0 comments

A strong credit score is extremely important when it comes to qualifying for loans to buy a house, buy or lease a car, and accessing a line of credit whenever you need it. Whether you like it or not, ratings provided by the three major credit bureaus can really make or break your financial future. Some people feel that it’s completely unfair, but for better or worse the system is here to stay and you’re possibly concerned about how every single financial maneuver could potentially impact your score. If you owe taxes to the Internal Revenue Service (IRS), you may wonder if this tax debt can negatively affect your credit score. As you might expect, the answer is somewhat complicated. Nothing ever really seems all that cut and dried when it comes to dealing with tax-related issues. Here is what you need to know: Quick Facts About the IRS and Your Credit Score Your credit score can be impacted if you do not pay your taxes in a timely manner. However, if you file your return, but are not able to pay the full amount due right away, this alone will not automatically mean a lower credit score. Owing back taxes does not automatically translate to a lower credit score. Remember that the IRS doesn’t assign credit scores either. Several semi-private organizations oversee credit reporting, and they’re technically not even directly associated with the government anyway. As a result, the IRS can’t ever say that you deserve a lower or higher credit score. They don’t have any real power over this at all. If you’ve ever heard an IRS agent tell you that they could just cut your score in half or something like that, then there’s a good chance said individual doesn’t really work for the IRS after all. The amount that you owe the IRS is probably the biggest factor when determining whether your debt will impact your credit score. The only way that your credit can be impacted is if the IRS files what is called a Notice of Federal Tax Lien that gives the government the right to seize your property, including your home and your vehicles. The IRS will only do this if you...

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