If you owe back taxes or if the IRS has threatened you with a bank levy, wage garnishment, lien, seizure, penalties, or denial of an installment agreement, you can put an end to your IRS problems. Whatever your IRS tax problem is, there is always a solution. The following are six methods commonly used for IRS tax relief:
Installment Agreement (IRS Payment Plan)
The most widely used method of resolving IRS tax problems is the use of an installment agreement. An installment agreement allows you to set-up a payment plan with the IRS and pays your back taxes in full over a specified period of time. Once you enter into an IRS payment plan, collection activity against you will stop as long as you continue to remain current with your tax filing and payment obligations.
Partial Payment Installment Agreement
A partial payment installment agreement (PPIA) allows a taxpayer to enter into a payment plan that results in only partial payment of the back taxes owed. If a taxpayer is unable to make full payment of their tax liability before the expiration of the Collection Statute Expiration Date (CSED), but has some ability to pay, the IRS has the authority to enter into PPIA. Before a PPIA may be granted, a taxpayer’s equity in assets must be addressed and, if appropriate, be used to make payment. Until the CSED is reached, the IRS will review your financial position every two years to determine whether you can afford to increase your installment payments. If you do not qualify for an Offer in Compromise, a PPIA may be a good alternative for IRS tax relief.
Offer in Compromise
An Offer in Compromise is an agreement between you and the IRS to settle a tax liability by paying less than the full amount owed. The IRS may accept an offer for three reasons: (1) when it is not likely that the tax liability can be collected in full and the offer amount reflects what can be collected over a reasonable period of time;(2) there is doubt as to the actual amount of the tax liability; or (3) due to special circumstances collection of the full tax liability will create economic hardship to the taxpayer. Historically only one in three of the offers submitted are accepted. If you are a candidate for an Offer in Compromise, the tax resolution experts at East Coast Tax Consulting Group can significantly improve your chances of having your offer approved by the IRS.
Currently Not Collectible (Hardship Status)
If you do not have the ability to make even small monthly payments to the IRS for your back taxes you may come under the status of “Currently Not Collectible” (CNC). If you qualify for this hardship status the IRS will stop collection activities against you and release any levies and garnishments. However, interest and penalties will continue to accrue. You can qualify for CNC status by proving to the IRS that after paying all of your reasonable basic living expenses there is no money left over to make payments on your back taxes. In addition, you must not have any equity in assets that you can sell or borrow against to pay your taxes. Normally, unless your financial situation changes, you will remain in not collectible status until the statute of limitations on collections expires, at which time your tax debt is forgiven. The IRS will periodically monitor your financial situation to determine whether there has been any improvement which allows you to make payment in full or partial payments of your back taxes.
Taxpayers who have been assessed penalties by the IRS can request abatement of those penalties. Penalty abatement is the process of reducing or eliminating penalties assessed by the IRS and may save you a significant amount of money. The IRS will normally consider penalty abatement due to what is known as “reasonable cause”. We are familiar with the criteria, guidelines, and procedures followed by the IRS in determining whether reasonable cause exists to abate your tax penalty and will submit a written request for penalty abatement on your behalf. In addition, you may be eligible for first-time penalty abatement. The IRS will typically grant penalty relief if you have not been assessed a penalty in the three years prior to the year you’re requesting abatement.
If you disagree with a decision of the IRS regarding a collection matter or the results of an IRS tax audit, you generally have appeal rights. The IRS Office of Appeals is separate from and independent of the office that rendered the initial decision or conducted the audit of your tax return. The goal of the Appeals office is to settle disputes between the IRS and taxpayers. In order to protect your appeal rights you must file a written appeal within the prescribed time period. The IRS will not attempt to collect back taxes from you during the appeals process. Some of the IRS matters they may be appealed are:
• Rejected Offers in Compromise
• Denied or Terminated Installment Agreements
• Penalty Abatement Requests
• Denied Innocent Spouse Relief
• Proposed Trust Fund Recovery Penalty
• Audit or Examination Results
The tax professionals at East Coast Tax Consulting Group have been successfully representing taxpayers in Appeals for many years and will work to give you a better chance of resolving your tax dispute in a favorable manner.
Remember, there is a solution to your tax problem that will provide you with IRS tax relief!