We know the story all too well: finances are tight so you either don’t file your tax return or file the return but don’t pay the balance due. But you tell yourself not to worry as next year things will get better. However, the next year comes and goes and your finances aren’t any better and now you’re receiving threatening letters from the IRS.
Maybe it reached the point where the IRS is about to levy your bank account or garnish your wages. The stress is getting to you and affecting all aspects of your life. You don’t know what to do or where to turn for professional IRS tax debt relief help.
We know as we have helped many clients through that exact scenario. Don’t worry, there is light at the end of the tunnel.
Fortunately, the IRS is usually willing to work with taxpayers, but there are some ground rules you need to be aware of and follow.
Tax Compliance
The first step in resolving your IRS tax problem is to get into “tax Compliance.” Compliance means that you have filed all tax returns due for the last 6 years and have made your current tax payments. Once you are in tax compliance we can work on getting you tax debt relief.
Collection Alternatives
You must propose an alternative to enforced collection. While there are additional solutions for IRS tax debt relief, the most commonly used collection alternatives are Installment Agreements, Uncollectible Status, and an Offer-in-Compromise.
Installment Agreement
An installment agreement is an agreement to pay your taxes back over time. There are four variations of the installment agreement:
- Regular
- Streamlined
- Non-Streamlined
- Partial-Pay
Which agreement works best for you depends upon your personal circumstances and is something we can help you address when you are ready.
Uncollectible Status
Your back taxes may be considered Uncollectible when you’re unable to meet basic living expenses. When a taxpayer is deemed uncollectible the IRS may still file a Notice of Federal Tax Lien to secure its position in your assets but will not otherwise take enforced collection action to seize (or levy) your assets or income streams.
Offer-in-Compromise
An Offer-in-Compromise is an agreement between you and the IRS where they will accept less than the total amount owed to settle your back tax problem, and you agree to maintain tax compliance for 5 years following the acceptance of the Offer-in-Compromise (“Offer”).
The basis for an Offer is a formula known as “Reasonable Collection Potential” or “RCP.” RCP is effectively the net equity in assets plus your excess future income ( which is your income less allowable expenses) for 12 or 24 months, depending upon how the Offer is structured. We can provide you with planning opportunities to help maximize the potential for your Offer’s acceptance.
Request Your Free Consultation
If you find yourself with unpaid back taxes and need help with IRS tax debt relief, please contact East Coast Tax Consulting at 866-550-7655 for a free consultation.