All year long, taxpayers across the nation face building anxiety over their taxes. The IRS can seem like a foreboding entity that is working against the taxpayer, but in fact there are many resources the IRS provides to help taxpayers maintain their status and to pay off debt. Many people don’t realize that they can receive free tax help from the IRS by telephone, email, or Internet at www.irs.gov. United States residents are able to access account transcripts, seek advice on identity theft, and find answers to frequently asked questions by utilizing these resources. The IRS website, one of the fastest and easiest ways to get tax information and advice, allows an individual or business to track tax refunds, and amend returns. They will even offer advice for anyone who has back taxes and are in danger of Notice of Intent to Levy letters or tax liens. Additionally, the IRS offers email correspondence that allows taxpayers to keep up-to-date on tax and filing requirements. Dealing with the IRS and your taxes does not have to be a stressful experience, so long as you use the resources to communicate with them.
Nevertheless, tax issues can be overwhelming. Even with all of these questions answered, you still may wonder how you can handle your taxes and plan for your future. If you have owed tax debt, the urgency for a plan may be even more pressing. Take the stress out of doing your taxes by exploring your options with Community Tax.
What Are My Options as a Taxpayer?
Many taxpayers may not be aware of their options when they can’t make their current year tax payment. This can trigger mental and physical stress, impact relationships, and cause issues with employers. Even though the IRS website does offer valuable information, the options can still be a conundrum to taxpayers who are unable to make a timely payment. Community Tax professionals provide relevant and useful tax relief help to ease the anxiety by explaining various payment options while ensuring the taxpayer remains compliant with the IRS until an optimal tax resolution is approved. Additionally, working with Community Tax professionals to resolve your tax problems can provide you with the assurance that all the necessary steps are being taken to fix your case correctly. Community Tax CPAs, tax attorneys and enrolled agents will work directly with our customers to make sure their case is handled correctly and the best tax relief help is provided until the case is resolved.
What Are Some of my Payment Options?
When you are faced with tax debt, it is critical that you act upon it as soon as possible. If you do not comply with the IRS, you put yourself at risk of accruing interest and penalties that you will be forced to pay over time. There is no escaping the IRS—if you know that you have debt or will be unable to handle an upcoming tax liability, you should reply and get in contact with the government agency, or else you will receive a Notice of Intent to Levy. If you receive this notice, that means that after thirty days of the posted date, the IRS has permission to take money from your bank account or other finance account, garnish your wages, seize and sell all of your vehicles, take your real estate, and seize any and all other personal property and assets. You will likely also be issued a tax lien, which will alert creditors and make it difficult for you to obtain credit in the future. Fortunately, there are many ways to avoid this, and with proper assistance, you can get the plan you need.
If you would like to apply for any installment agreement, then you must owe no more than $50,000, including income tax, penalties, and interest. Keep in mind you must have also filed all tax returns up to this point. If you are enquiring about your business, the business must owe $25,000 or less in payroll taxes and filing returns. If this is the case, the IRS will allow you to make online payments.
1. Use a Credit Card.
If you need to pay in full, but you do not have the money or the time, it may be best to use a credit card. This is not most people’s favorite option, however if you are in dire need to pay off debt immediately, it may be the best choice. The IRS accepts all major credit cards, including American Express, MasterCard, Visa, and Discover cards. The IRS even provides payment over the phone so you can simply input your credit card information to charge the card. Replacing debt with more debt can seem perplexing, but credit card debt may be better than having the IRS at your heels. If this is the path you wish to take, the IRS will likely recommend that you communicate with your provider for a better payment plan if you pay more than $100,000 on a card. Do remember that you will be charged interest for your card.
2. Re-Finance Your Home.
This is another option that incurs more debt. Again, it is not the most desirable option, but if the clock is ticking and you are almost out of time, refinancing your home can be a great idea. Unlike credit card interest, you are able to deduct the interest you accrue on home mortgages on your income tax as long as you itemize. Be sure that you can truly afford to do this first, but consider this: people refinance their homes for many reasons, and paying off debt is likely one of the more practical options.
3. Enter Into an Installment Agreement.
Installment agreements are usually the most viable of all options if you cannot afford to pay your debt in full right away. If you negotiate with the IRS to enter an installment agreement, then you both agree that you will settle your tax debt for a certain number of months or years by making a minimum payment every month. Remember, the IRS does want to work with you, it is just important to find the resources and communicate with them what you can accommodate. Below are some options you can use to reach your goal.
A. Guaranteed Installment Agreements. This type of agreement is generally the easiest to get. If you meet the basic requirements, the IRS is obliged to comply and allow you to use this installment agreement. There are many attractive reasons to go for this plan. One of the most attractive features is that you are required to make a minimum payment of only $25. The flipside to this, though, is that it is mandatory that you pay in thirty-six months or less (five years). In addition, if this plan is instated, the IRS will not file a federal tax lien, so you will not have issue getting credit in the future. The stipulations are simple: the principle being that your debt must be no more than $10,000. Also, you must have also already filed any and all delinquent tax returns. If the IRS approves your request, you have both agreed that you will make all payments on time, that your debt will be paid off in five years or less, and that you will file your taxes on time in the future. So long as you hold to these guidelines, you will be able to use this installment plan.
B. Non-Disclosure Installment Agreement. You may qualify for this plan as long as you owe no more than $25,000. Just like the title implies, you do not have to disclose most detailed financial information when you apply for this installment agreement. This means you do not have to fill out a form called a Form 433F, Collection Information Statement. This statement would make you present information on all of your accounts, non-wage household income, credit cards, other lines of credit, business information, monthly living expenses, and all other assets. You will also have more time to pay off your debt—as long as seven years or less. In addition, you will not have a tax lien placed in your name, meaning creditors will not be alerted and you should not experience a change in the ability for you to gain credit. This plan was started by the IRS when it introduced The Fresh Start initiative, so that the IRS could accommodate the financial needs of the taxpayer.
C. Streamlined Installment Agreements. The Streamlined Installment Agreement is meant for those with debt totaling $50,000 or less. In fact, there are two different plans under this agreement: one designed for those who have $25,000 in debt or less, and one for those who owe $21,000 to $50,000. Just like with the Non-Disclosure Installment Agreement, you will have to promise that you will pay off all debt within seventy-two months. You must also agree to file all of your taxes from the past and in the future. As with the Non-Disclosure Installment Agreement, this installment plan eliminates the need to disclose detailed financial information to the IRS. However, depending on your situation, you may be obliged to disclose some financial information during the financial resolution process.
D. Partial Payment Installment Agreements. This plan is designed for those who cannot afford to pay off their debt to the IRS in any other installment agreement without experiencing extreme financial hardship. If you do not qualify for any other plan, this may be the right payment option for you. The Partial Payment Installment Agreement will help a taxpayer make a payment without the risk of becoming impoverished. If making a large payment will force the taxpayer to go without basic necessities such as food and water, the IRS is willing to negotiate. Under this plan, you are able to adjust your monthly payment based on what you can afford minus living expenses. In this case, the IRS may impose a tax lien in so that your payment is secured, and as a result you may find yourself having difficulty obtaining credit. In order to attain a Partial Payment Installment Agreement, you must fill out a financial statement form given by the IRS, who will then take the form, inspect it, and assign you your monthly-allotted payment based on what you can afford. Once in the hands of the IRS, they will analyze the statement form and designate what you will pay based on your finances.
4. Apply for an Offer in Compromise.
An offer in compromise is a deal with the IRS to pay a smaller amount than you actually owe. While it is difficult to obtain this option, if the IRS approves it, you will experience a lighter debt than before. In order to qualify for an Offer in Compromise, you will have to submit detailed financial records for both you and your spouse. It is important to note that an Offer in Compromise is determined on a case-by-case basis. The IRS will analyze all of your records and determine whether this option is viable. While the IRS is in the process of scrutinizing your records, the collection of all assets and wages is put to a stop. While acceptance for an offer in compromise is rare, it is often still worth the attempt. The filing process for an Offer in Compromise is extensive, but a tax professional can help you determine the integrity of your case. Your form will be scrutinized, so it is important to go over your financial history effectively. If your application is accepted, your levy will be released, the IRS will stop seizing assets or garnishing your wages, and you will have good standing with the IRS.
While looking for help, taxpayers can become overwhelmed with the different options and wonder which is worth applying for. At Community Tax, we will communicate directly with the IRS and find a payment plan that fits your financial status. Our professionals have years of experience in dealing with the IRS and can take the stress and guess work out of paying your taxes. Contact Community Tax today for your past, current, and future tax relief help needs at 1-888-676-4319.