Are you having problems with the IRS? If so, you’re not alone. The list of tax disputes involving the IRS is extensive.
The problems can range from an IRS refund to wage garnishment or an IRS lien. There’s no doubt that the IRS problems can be overwhelming – until you know there are IRS solutions you can use.
Take some of the pressure off by knowing the different types of IRS tax solutions available. The IRS has several options available – learn what they are here.
Installment Agreement
An installment agreement lets a taxpayer in financial hardship pay their tax problems over an extended period of time. By agreeing to the terms and successfully making payments on time, taxpayers can avoid the financial troubles of compounded penalties and interest.
But first, it must be generally approved by the IRS and can be tailored to fit individual needs. Payments are often required to be made monthly, and can be typically adjusted to reflect a taxpayer’s budget and individual situation.
Non-Filing Penalties
The Internal Revenue Service (IRS) establishes penalties for non-filing of taxes. These can be assessed by the IRS for delinquent payment, failure to timely file taxes, or failure to pay taxes in full.
Depending on the situation, penalties can range from financial fines to criminal charges. For delinquent payments, the IRS may
- Charge interest on the unpaid tax balance
- Charge interest on alate payment penalty
These penalties accrue for each month the taxes remain unpaid. If the taxpayer doesn’t file returns or pays taxes in full, an additional penalty can be assessed; the failure-to-file penalty is much larger than the late payment penalty.
Negotiating Tax Solutions
IRS tax solutions involve negotiating a resolution to resolve overdue taxes. Negotiating a resolution with the IRS is complex and requires a thorough understanding of the various options available.
It is important to consult a professional such as a lawyer or tax attorney to ensure that you select the right tax solution for your particular circumstances.
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Penalty Abatement
Penalty abatement is one of the IRS tax solutions available to taxpayers for assistance in paying off their taxes. Penalty abatement allows individuals or businesses to reduce the amount of fines and interest associated with their taxes.
An individual or business qualifies for Penalty Abatement if they meet certain requirements, such as
- Satisfying all filing and payment requirements
- Demonstrating reasonable cause for errors or delays
- Being a victim of a natural disaster
- Victim to extraordinary circumstances
Abatements can also be given for an inability to pay when payments are being made in a timely manner, or by eliminating late payment penalties in full or in part.
It can provide relief for those experiencing financial hardships that are unable to pay their taxes in full. It is important to note, however, that not all abatement requests are granted.
Currently Not Collectible Status
Currently not collectible status is a form of IRS tax relief that protects taxpayers who are unable to pay their taxes from potential collection actions such as wage garnishments, bank levies, and tax liens.
Eligibility for this program depends on a taxpayer’s financial circumstances and their ability to pay. If the taxpayer’s income and expenses are analyzed and it is found that they have no ability to pay the amount of taxes they owe, the IRS May place their debt into currently not collectible status.
This solution also allows taxpayers to continue to receive any tax refunds, as the debt Will not be deducted.
Fresh Start Program
The fresh start program is an IRS tax solution that was created to help taxpayers overcome tax debt and delinquency that May have been caused by temporary financial hardships.
These programs also allows taxpayers with overdue taxes to catch up without excessive penalties or fees. Taxpayers who are having difficulty making tax payments or are unable to file tax returns due to financial hardship are eligible for this program.
With the IRS fresh start program, taxpayers plagued with back taxes or delinquencies can get a “fresh start” and resolve their tax debt.
Separation of Liability
This tax relief solution is beneficial to those who are divorced or those who have experienced a long marriage. By separating liabilities, the taxpayer can absolve themselves of responsibility for any unpaid taxes their spouse or former spouse owes.
To be eligible for this solution, the taxpayer must be able to show that he or she did not have knowledge or reason to know of any unreported income, or that any of their assets were usually used to pay the liability.
Confirming the agreement of both parties is essential since the IRS will make a determination as to whether or not the liabilities are in fact separate.
Discharge of Debts
This type of solution is also used when the debt is typically considered to be so sizable that the IRS is unlikely to ever collect the full amount due. The taxpayer must apply for a discharge of debts with the IRS by filing an application and providing supporting financial documents.
Once an application is approved, the taxpayer will no longer be held responsible for the debt and will be no longer subjected to collection actions.
Offer in Compromise
The offer in compromise allows taxpayers a way to resolve their tax debt, however, the taxpayer must be financially able to submit a written proposal with the necessary information and documentation.
There are also restrictions on offers that can have an effect on when, how, and why an offer is valid. Each case is often reviewed on a case-by-case basis.
Innocent Spouse Relief
IRS innocent spouse relief provides relief to individuals who have filed a joint return, but are not accountable for the debt.
When the individual can prove that he or she was not aware of the issues with the tax filing, IRS will grant relief to the innocent spouse. This can include providing relief from all or part of the taxes unpaid.
In addition, the innocent spouse does not need to pay any interest or penalties incurred from the other party’s errors or omissions.
A Guide to Knowing IRS Tax Solutions
IRS tax solutions can be overwhelming, but arming yourself with the right information is key. With this guide, you now have the necessary knowledge to successfully navigate any complex tax situations.
Reach out to a qualified tax professional if you find yourself in need of further assistance.
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