Showing posts with label Owe back taxes to IRS or state governments and don't have the ability to pay. Show all posts
Showing posts with label Owe back taxes to IRS or state governments and don't have the ability to pay. Show all posts

Tuesday, September 22, 2020

Tax Resolution can settle tax debt with a offer in compromise.

You don't want to mess with the Internal Revenue Service. 




For example, in recent years the IRS has increased its filing of levies, liens and wage garnishments. In fact, in 2004 alone, approximately 2.5 million levies were filed.





1. Filing too many exemptions. An exemption gives you a major tax deduction, and some taxpayers can't resist the temptation to report more exemptions than they're entitled. You can only claim exemptions for yourself, a spouse and for all "dependents." Dependents have to meet specific criteria, however, so make sure you follow the IRS guidelines so that you don't mistakenly file an extra exemption.



2. Being unaware of taxes levied for early withdrawal from certain retirement plans. If you withdraw from a retirement fund such as a 401(k) or IRA before you're 59 1/2, you may face a 10 percent federal penalty on your investments, as well as a state penalty and an income tax on the money withdrawn.



3. Not paying enough taxes when self-employed. Many people who own their own businesses don't know how much they have to pay in taxes. The tax structure for a self-employed person - what to pay, how to pay and what can be deducted - is decidedly complex, so it's easy to become confused.





4. Not paying taxes on winnings. It is necessary to report all gambling winnings, including winnings from lotteries, casinos and horse races, as income. For people who are in trouble with the IRS, there are various programs available that can provide debt relief if a taxpayer qualifies. JK Harris helps its clients determine if they meet the requirements for one of these IRS programs. Its staff includes former IRS agents, certified public accountants, attorneys, enrolled agents and other experts that offer tax services, financial planning, small business services and other assistance.

Wednesday, September 16, 2020

Do you owe $10,000 or more in IRS tax debt?

Owe $10,000 or more in IRS tax debt? In some cases, you can reach a tax resolution and settle for far less than the amount you owe. This is known as an Offer in Compromise


 Tax Resolution

An offer in compromise is a tax resolution settlement of a delinquent tax account for less than the original amount owed. However, you will not get such an Offer approved without specialized assistance. As per the data available, in the year 2004 only sixteen percent of Offers were accepted. 

 


Tax Resolution

If you are the having tax disputes with the IRS, tax professionals like experienced Enrolled Agents (EAs), Certified Public Accountant (CPAs), and tax attorneys can help you reach a tax resolution. Tax resolution encompasses a wide variety of settlements which includes IRS audits, Federal Tax Liens (IRS Liens), bank levies or wage garnishments, IRS penalty abatement, innocent spouse defense, bankruptcy discharge analysis, Offer in Compromise, un-filed or delinquent tax returns, and IRS collection statute of limitation analysis. 


Tax Settlement Services

Thus, it is advisable to seek services of professionals (like EAs, CPAs or tax attorneys) specializing in solving tax problems or negotiating a tax resolution. You should get in touch with these professionals if you are involved in tax disputes like un-filed tax returns, missing records, threat of tax levy, or, if you need a tax resolution like Installment Agreement or an Offer in Compromise or want to be declared Currently Not Collectible. 

Tax Settlement Services

For taxpayers, who are not able to reach a tax resolution immediately, an installment agreement can be a reasonable payment alternative. Installment agreements permit the full payment of the tax debt in smaller, more manageable amounts for the taxpayer. Currently Not Collectible is another tax resolution strategy, which implies that an individual has no ability to repay his or her tax debts. The IRS can affirm a person as "currently not collectible" after the IRS receives concrete substantiation that the individual has no capacity to pay. Once the IRS proclaims an individual as "currently not collectible", the IRS discontinues its recovery or collection activities, including levies and garnishments. However, the IRS sends an annual statement to that taxpayer stating the amount of tax still owed. 

IRS offer and compromise

While currently in not collectible status, the ten-year statute of limitations on tax debt collection remains in force. If the IRS cannot collect its tax dues within the ten-year statutory period, the tax debt expires. The IRS is perennially, under tremendous pressure to recover the billions of dollars, currently outstanding. Therefore, it will seriously consider all the reasonable offers to recover its debts and try to reach a tax resolution or close cases in all these areas. 
IRS offer and compromise

Thursday, July 16, 2020

File Past Due Tax Returns

Why You Should File Your Past Due Tax Return Now? 




File tax returns that are due, regardless of whether or not you can pay in full. 

File your past due tax return before the IRS files a substitute tax return for you.

This return might not give you credit for deductions and exemptions you may be entitled to receive. We will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment. You will have 90 days to file your past due tax return or file a petition in Tax Court. If you do neither, we will proceed with our proposed assessment. If the IRS files a substitute return, it is still in your best interest to file your own tax return to take advantage of any exemptions, credits and deductions you are entitled to receive. 
Avoid interest and penalties File your past due return and pay now to limit interest charges and late payment penalties. Claim a Refund You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. 





The same rule applies to a right to claim tax credits such as the Earned Income Credit. We hold income tax refunds in cases where our records show that one or more income tax returns are past due. We hold them until we get the past due return or receive an acceptable reason for not filing a past due return. 


Tuesday, July 14, 2020

IRS will accept an offer in compromise

Tax relief

An offer in compromise (OIC) is an agreement between a taxpayer and the government that settles a tax liability for payment of less than the full amount owed. 

Tax relief

The IRS will accept an offer in compromise when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. 



Tax relief


Doubt as to liability (DATL) comes into play when a taxpayer doesn’t actually owe the tax the IRS claims they do. This isn’t a question of amount or inability to pay the requisite tax, but rather a claim that a certain portion of the tax isn’t owed at all, because doubt as to liability isn’t a question of finances, you won’t need to provide any of your client’s financial information to qualify for the offer. 

Tax relief

Doubt as to collectible (DATC) is what most people associate with offer in compromise. This offer comes into play when the taxpayer doesn't dispute that the tax is owed, but has no way of paying the full amount owed. A doubt as to collectible offer will be based on what the IRS calls reasonable collection potential, or RCP. There are three components when calculating reasonable collection potential: equity, income, and allowed expenses. 

Tax relief


  • At its core, the settlement comes down to an equation:
  • Lump Sum Equation (to be paid in 5 months or less)
  • Disposable Monthly Income x 12 months + Net Realizable Equity = Settlement Amount 
  • Periodic Payment Equation (to be paid in between 6 and 24 months)
  • Disposable Monthly Income x 24 + Net Realizable Equity = Settlement Amount 


Thursday, April 30, 2020

Owe back taxes to IRS or state governments and don't have the ability to pay, the IRS fresh start program will benefit you.

While it would be ideal if everyone could resolve their tax issues by hiring a highly qualified professional, the fact is there are some instances in which delinquent taxpayers owe more than they can afford to pay but the amount owed is too low to warrant paying for representation services. 


In other instances, delinquent taxpayers will owe a substantial amount in back taxes but do not have the ability to pay a qualified representative to resolve their tax matters. 

 It is always the “Right” choice to retain a qualified representative to assist you in resolving your tax concerns; but the “Right” choice is not always the practical choice. 

If you fall into either of the two above-mentioned categories, it is important for you to realize that either the inability to pay for representation, or having a liability that is too low to warrant representation does not preclude you from needing to take action.Whether you owe the IRS or your local State taxing agency, it makes sense to make contact sooner than later. Aside from the stress of not knowing what they expect from you, you face the threat of collection activity. Once a taxpayer becomes delinquent, they will receive several notices increasing in degree of seriousness. If a taxpayer continues to ignore these series of notices, they will surely encounter one of two types of collection. 


It makes sense to contact the government prior to the commencement of collection activity rather than to wait until one is being actively collected upon. The first type of collections is passive collection. Passive collection involves the taxing agencies filing a tax lien against the taxpayer. Typically, a lien is filed within the county in which the taxpayer lives. In this instance, there is no inherent call to action. Second type of collections is active collection on the other hand can affect the taxpayer more directly. If a taxpayer is facing active collection, they may be subject to having the funds in their bank accounts frozen, having their wages garnished (reduced) to amount equivalent to earning minimum wage, or having the vendors that would usually pay them, now be required to pay the IRS or the State instead. Active collection is used to “wake up” the taxpayer. If someone owing tax initially ignores delinquent notices, they have two choices. The first is to “fall off the grid” and bury their head in the sand. The second is to “fess up” by contacting the government and get into compliance so that they may reach an agreement amenable to both parties.