IRS has the responsibility to ensure that citizens pay their yearly taxes on time failing which the bureau has the authority to penalize and even imprison the defaulters. IRS tax debt relief is the process of debt reduction by enabling those who are under heavy tax debts. This does not mean that the tax defaulter is wiped clean of all his liabilities. It is just a means of helping the defaulter to pay all his debts in a convenient manner. a9-300x300IRS is forced to work out a solution with each tax payer to recover the pending amount from him based on the payer’s financial condition. In order to facilitate effective tax collection, IRS offers various tax relief programs to defaulted taxpayers. IRS offers these various tax relief programs to help defaulters in different ways and resolve their tax liabilities without having to resort to hard measures. Some of the common IRS tax relief programs are Offer in Compromise, Installment Agreement, and Currently not Collectible status.

IRS also offers income tax relief to payers affected by disasters. The law permits IRS to provide extended time to disaster affected tax payers to perform activities like filing returns and paying taxes when the original and extended due date falls within the disaster period.

There are many qualified and experienced attorneys who can liaison between the IRS and the tax payer to make the process of IRS tax debt relief easy. If you owe taxes or have any kind of tax problems, it is always advisable to go to an expert who can guide you through the system and negotiate with the IRS for the best deal.

A IRS tax lien is a kind of security interest granted over a property to secure payment of the debt. A tax lien on a property is imposed to secure payment of tax debt. A tax lien may be imposed against delinquent taxes against property or on account of failure to pay taxes. In the United States a federal tax lien may be raised in connection with any kind of federal tax.

IRS can have  a legal claim to your property as a security or payment for tax debts through a lien. IRS will file a Notice for a Federal Tax Lien only after:

  • The liability of the tax payer is assessed

Good vs. bad tax debt – What is the difference?

So, What is Good and Bad tax debt?

Do you know what to expect from your tax return? If you get a tax refund, then, you’ll have no problem figuring out how to use the money! But what if with all the current changes to the Tax Code you will end up owing the IRS and can’t pay it immediately? You may then ask the question, is there a tax attorney near me?

a5-300x300Many find themselves in a similar situation each year. They filed their taxes and had a life changing event that also impacted the taxes they pay. For instance, one client filed his taxes after buying a condo with money he had withdrawn from his 401K account. Smart or not, he did it not realizing the income tax implications and ended up with a federal tax debt of about 15,300.

There are many reasons for people ending up with a tax debt, but income tax debts are most common for the individual taxpayers.

It’s a somewhat painful road to take, but people manage to deal with their own taxes issues when they are under $10,000 and do not need a tax attorney to offer tax help services to them. And so can you. That’s what a person who called me and explained they owed about ~$8,700 in taxes. I gave them a frame work of how he could solve his problem without me  since the tax debt was small. He worked out an installment plan with the IRS and paid his debt off in about a year. The interest rate is compounded (interest on the accumulated unpaid interest and also on the original principal) that will add up, and tax penalties for not paying the taxes on time, so its advisable to pay off the debt quickly. The steps are:

a10-300x300a) Call IRS or state as soon as you realize you can’t repay your tax obligation.

If you filed your tax return, and determined a tax liability, deal with it immediately. Don’t wait. It’s going to make things worse if you don’t. Besides your original tax debt you may end up owning loads of back taxes, tax levies and penalties. Those add up pretty fast! Get ahead of the problem as quickly as possible. If you owe a lot, get tax help from a qualified professional.

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Tax Relief: From our experience as New York Tax Attorneys, if you owe the IRS taxes and presently are unable to make a payment in full to satisfy the debt and you have either assets or regular income to make good on your debt, you may very well be able to arrange an installment agreement of some form with the IRS. This page discusses the various types of tax relief installment agreements can provide and the conditions under which you may be qualified to obtain this form of IRS relief.

There are 3 main steps to set up an IRS installment agreement, each with its own special considerations:

Step 1: Before you can establish an IRS installment agreement:  First, file all your past tax returns

In general, the IRS imposes a penalty against any person who has the obligation to either collect, or pay over employment taxes that are withheld from an employee’s salary, when those monies are not paid to the IRS.  Often this happens, when a business is having financial difficulties and uses the payroll withholding to pay other expenses. IRS Tax Relief is then needed.

The Trust Fund Penalty is not a true penalty. It is the amount of monies that should have been paid to the IRS, that were taken from the employees wages (federal withholding taxes, and social security). Therefore, it is actually a portion of the the wages which were not paid, and not a true “penalty”.  Therefore, this penalty does not include interest and penalties charged against the employer for the failure to pay in the taxes owed. However, once the assessment is made against the person, interest will begin to accrue and you will need IRS Tax Relief.

a7-300x150The IRS can collect from an officer, member, partner or other owner or operator of the business. It sometimes comes as a shock to a person that they are liable for the unpaid taxes since they may have been an owner of the business but not in charge of the financial affairs of the business. In addition, the penalty can be assessed against more than one person, but once it collects it from any other party your liability will also be reduced.

Every month I am contacted by a new client who has a tax issue from the 1990’s. You may wonder if it is even possible to have a tax issue going back that far in time. The answer is yes, I hate to say since if you did not a tax return, the IRS will not start the statute of limitations on that year, and its still an “open year” where they can assess taxes against you. The other scenario of when old tax debts are still relevant is where the State, such as New York, has 20 years to collect the tax. Therefore, they are chasing people for tax debts for these years since the twenty years may not have expired yet (since there is almost always a delay after the end of a tax year and when the tax return is audited) so this tax debt is still on the books.

Therefore, it is important to maintain good records, and to maintain them forever. This may seem harsh and a painful experience, but its better to keep good tax records than to pay a tax bill that is inflated greatly with interest if you made a mistake and did not file a tax return when you thought it was filed (which is easy to happen with e-filed tax returns) and need your tax records to file a new tax return.

a9-300x150The Lucky number is twenty three years. This is the number of years you should keep your tax records, since you are covered in case of some mistake, and need to prove what happened. This is not as bad as it seems since other permanent records (deeds, Wills) need to be kept forever. Often, it is less paperwork than you think if you get rid of the extra paperwork and envelopes that come along with the tax records. I am sure your still in shock. 26 years is not a short period of time, but it worth it when needed to prove that you paid the correct taxes.

A client who has unpaid IRS or State taxes and is needing back taxes help, is not without defenses to the IRS or State collection process of his or her outstanding income tax liability. In determining which defenses are available for their tax case,  the taxpayer and adviser will analyze many options to determine the best course of action.

  • Determine whether the income tax was properly assessed to make sure you need back taxes help. While the IRS does not ordinarily does not assess an incorrect tax by not processing a tax return correctly, the IRS frequently will determine the tax owed of a taxpayer who has not filed an income tax return. In these cases, the IRS often computes an incorrect tax since they were not aware of any of the particulars of the taxpayer, such as the number of child they have, whether they are married, or if they had business expenses (which would offset business income).
  • Make sure that the statute of limitations (SOL) on collection of the tax debt has not expired. Normally the IRS has 10 years from when they assessed the tax to collect it. This period of time can be increased if you file an offer in compromise, or pending payment plan. Therefore, it makes sense to double check the IRS on the dates your tax debt expires since they sometimes miscalculate the date.

When the Internal Revenue Service analyzes a taxpayer’s ability to pay, they follow certain rules contained in the Internal Revenue Manual.  Depending on whether a revenue officer has been assigned to your case, either a form 433-F or 433-A will need to be completed. From the IRS’s perspective, these forms are used to compute the amount of money you can pay them each month. The problem with this approach from the taxpayers perspective, it that the IRS uses certain unrealistic expense standards that do not take into account such items as your child’s sports expenses, vacations, or regional food expenses. Therefore, it takes skill and effort to formulate a plan to “sell” to the IRS of the actual amount that is available to them each month.

a2-300x150Below are the relevant sections are of their manual:

Financial Analysis Handbook — IRM 5.15.1 Excerpts