Each year the government expects a partial amount of your salary. If you get behind and aren’t able to pay taxes to Uncle Sam, you will find yourself facing IRS Tax Liens, enforced collection or repossessed assets. If you owe money to the government for taxes, then you may need help managing your debt and keep from losing your possessions and getting fined for additional money. Here are a few tips if you are or think you may soon be in tax debt:
Hiring a tax law professional or an ex-IRS agent is best for finding ways to consolidate and manage tax debt. A professional can look for any deductions you may have missed and work with you to find what options you can use to reduce and eliminate your debt. The higher your debt the more you will need the help of one-on-one time with an experienced and qualified professional.
If you are not paying your taxes, then you will face stiff penalties set up by the government to make avoiding taxes less than ideal. Here are two things that may happen:
A lien may be filed by the IRS when your taxes are not paid or have only been partially paid. These liens ruin credit and make selling your assets impossible until the amount owed is paid in full.
The federal taxes you owe will accumulate penalties and interest if they are not paid or are paid late. If you file a return late or pay your taxes late the IRS may add penalties to your debt. Interest is also assumed for late payments and will add to the total amount you owe the government.
No one wants to live their life hounded by the IRS and haunted by the looming threat of overwhelming debt. Money owed for past taxes could affect your job, home and way of life. The stress of debt weighs on your mind, causing irritability and anxiety for as long as you are unable to come up with a foreseeable solution. Rather than continue to dodge your tax debt, find a professional who can help you examine each solution and work to enact the one that best works for your situation.
Some taxpayers may need to participate in a tax amnesty program if they have previously filed a false tax return or overstated their qualified deductions. The government offers programs to encourage taxpayers to re-file and pay back taxes with reduced or eliminated penalties and fees. Typically, this opportunity is only available for a short amount of time and a tax professional will help you determine if this option will help solve your tax debt. Potential programs include:
• Tax Amnesty
• Voluntary Disclosure
• Voluntary Compliance
A tax professional is able to set up an installment plan with the IRS that you can agree to and pay on a regular basis. This keeps you from facing IRS penalties or an overwhelming amount. Each month you pay the additional taxes owed and your tax debt is eliminated. Your tax professional will be able to quickly set up this installment agreement over the phone or via paperwork. Someone skilled in understanding tax law and budgets will help you find a number that is reasonable for you each month and will reduce your tax debt in considerable amounts.
There are four types of agreements that may be set up with the IRS and a tax professional will be able to explain each one and help you understand which ones you qualify for:
• Guaranteed Installment Agreements
• Streamlined Installment Agreements
• Partial Payment Installment Agreements
• Installment Agreements
Requesting a partial amount, or compromise, may be a difficult and lengthy process. You will have to pay filing fees to process your offer and there is no guarantee the IRS will accept it. You will also have to pay and file correct taxes for the next five years without any problems, but all tax liens and debt will be removed from against you. Also, if your compromise offer is rejected, additional time will be added to your tax debt’s statute of limitations.
This may be an option, but is often a last resort. A tax professional can help you understand the difficult nature of bankruptcy and how it will affect your future credit. Filing bankruptcy can end IRS harassment for owed taxes, wage garnishments and liens.
When a taxpayer is declared “currently not collectible” by the IRS, the government can no longer garnish wages or seek collection. A 10-year statute of limitations for tax collection continues to run, and if the time expires before the taxes are collected then the tax debt expires. You may still have liens filed against you and you will be taken out of uncollectible status if you your income increases.
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