Just about everyone in the U.S. tax system tries to voluntarily
comply with the tax laws. We are required to file tax returns
and pay the correct tax amount owed to the government. Not
complying, threatens the stability of the tax system. Sometimes,
if not most of the time, non-compliance is due to the lack of
knowledge by the taxpayer. Usually the IRS will help the
taxpayer become compliant. If the taxpayer purposely decides not
to pay taxes then they may be subject to criminal sanctions by
the IRS. There are those times that a taxpayer has financial
trouble paying taxes or that their tax returns have been
incorrect for a long period of time. The amount of the tax
liability can be staggering if you consider the interest and
penalties that the IRS will tack on due to your mistakes. The
IRS can take advantage of a taxpayer who does not understand the
tax law or the IRS Audit and Collection system. The good news is
that there are tax debt relief programs that can help
individuals or businesses like you.
1) IRS Tax Relief Settlement - The IRS developed this program to
allow the taxpayer to settle their tax debts for a percentage of
the taxes owed. Depending on your age, total assets, income and
expenses, you could save thousands of dollars with this program.
2) Offer in Compromise (OIC) - This is a settlement to collect
unpaid taxes for less than the full amount due. Congress
developed this program to offer taxpayers a one time opportunity
to eliminate their debt for a fraction of what is owed. IRS
agrees on the amount to settle the debt. The IRS follows certain
guidelines or circumstances for a compromise.
A) Doubt as to Liability: some doubt if tax is correct.
B) Doubt as to Collectibility: doubt that the full amount tax
owed will ever be paid.
C) Effective Tax Administration: no doubt the tax and amount
owed is correct but due to circumstances the taxpayer can't pay
i.e. economic hardship. If there is a financial hardship where
the amount owed exceeds the ability to pay off the tax debt in 5
years, the qualification for this program should be easy. The
problem with the program is that it is very popular. Some
frivolous cases were submitted, which now causes the IRS to
scrutinize each and every case. You can actually perform the OIC
yourself but it is best to let a professional help. The IRS will
take advantage of the less than knowledgeable taxpayer. If the
OIC is not to the requirements set forth by the IRS, it will be
rejected and you will still have to pay the full amount of the
tax liability.
3) Penalty Abatement - If you can't pay your tax debt due to
circumstances out of your control, the penalties and interest
owed can be challenged and thus should be able to negotiate down
the debt. Four categories fall into this relief:
A) Reasonable Cause - mistakes on taxes, death, serious illness,
unavoidable absence and ignorance of the law. B) Statutory
Exceptions - minor to major tax code changes. C) Administrative
Waivers - hardship beyond your control: fire, flood, natural
disasters, bad tax/legal advice.
D) Correction of Service Error - IRS mistakes.
For a successful penalty abatement, the stated representations
for relief of penalties and interest have to be very specific.
This will involve a skilled professional to work with the IRS
protocol and bring a resolution to the taxpayer's problem.
4) Payment Plan - This program allows taxpayers to make payments
on their tax debt because they can not settle their tax in one
entire payment. This gives the taxpayer time to pay and reduce
their tax debt without the harassment and embarrassment of the
IRS officers. If there is a financial condition where you can't
pay, your account can be placed in a "not currently collectible"
status. Under this program, the IRS will withhold collection
activity until you are financially able to accept a payment plan
or an Offer in Compromise is submitted.
You should try to avoid working or negotiating with the IRS
yourself and hire a professional who knows and understands the
IRS and the tax laws.
About the author:
K Hoyng is the web master and operator of
www.quickcash2u.com
which is a good source of financial information and much more
information. Visit this site at
http://www.quickcash2u.com/TaxHelp.html
