Income Tax Debt Relief Services

Dealing with unpaid taxes can be a stressful and time-consuming experience, and it can be distressing to receive an IRS notice of deficiency .  In this post, we’ll discuss tax debt relief programs, payment plans, and more.

What is the IRS Tax Relief Process

The IRS tax relief process is the process through which a taxpayer solves a tax debt issue with a solution from the IRS. Typically, the tax relief process looks something like this: 
  • Step 1: Identifying the issue 
  • Step 2: Investigating the cause 
  • Step 3: Identifying the solution
  • Step 4: Building the case 
  • Step 5: Submitting the case 
  • Step 6: Tax relief 

Income Tax Relief for Wage Employees

The IRS requires all individuals who earn income in the United States to pay taxes on that income. If a taxpayer is a wage employee, her employer will withhold federal income taxes from her paycheck and send them to the IRS on her behalf. If the employer withheld more taxes than what was needed to pay the actual balance, as is generally the case, the taxpayer will receive a refund when he or she files their return.    When an employee incorrectly completes the form W-4 or claims too many exemptions, an employer may not withhold enough taxes to cover the balance owed according to the employee’s income tax return, resulting in a balance owed.

Personal Tax Relief for Self-Employed Workers

All income is taxable, and being an independent contractor can actually make the tax filing process more convoluted. If you’re self-employed, you have a host of tax responsibilities to consider. Self-employed individuals are responsible for withholding their own federal income taxes; t hese individuals should pay their income taxes throughout the year by making estimated tax payments. Estimated tax payments are based on the prior year’s taxes owed and can be made monthly or quarterly. If the taxpayer does not make enough estimated payments during the year, they will accrue an estimated tax penalty and owe a balance when they files their income tax return. The individual will then need to seek the assistance of income tax debt relief services to assist them in finding a resolution plan.

What are the Consequences of Not Filing a Tax Return?

It is always in your best interest to file a tax return on your taxable income, regardless of whether you can pay the amount owed or not. There are a wide range of consequences for taxpayers that file to file when they owe taxes, including a failure-to-file penalty, which can amount to 5 percent of your unpaid tax bill for every month the bill goes unpaid after the April deadline. You may also see losses carried over into the next year, along with a bevy of other detrimental consequences including a federal tax lien or levy. Although rare, unpaid taxes and unfiled returns could result in incarceration.

Don’t Lose Your Tax Return Money

If the government owes you money and you don’t file, you’ll lose your tax refund if you don’t file within 3 years of the April tax filing deadline date. After missing your filing deadline, the IRS will begin sending you reminders to file; if you ignore it, the IRS may file a substitute return, which may fail to grant you the credits and deductions you’ve qualified for.

What are the Penalties for Unpaid Taxes?

Penalties add up the longer your debt remains unpaid. Your debt will accrue interest, typically half a percent of the amount owed. As time goes on, this can add up to a maximum of 25% interest on the amount owed. If a tax levy is issued and your debt remains unpaid, the penalty will increase to 1%. Many taxpayers find themselves paying thousands more than their original outstanding balance. Community Tax can help you avoid these penalties.

What is a Tax Levy?

If you don’t settle your debt or come to an agreement with the IRS you may be subject to a tax levy, in which the government seizes your assets, including garnishing your wages and seizing your bank holdings. The IRS will send a series of letters before levying your assets, including a Notice of Intent to Levy.

Can I Settle My Debt for Less?

With the help of a tax professional, it is possible to pay less than the total amount you owe. There are various ways that this can be accomplished, including the government’s Offer in Compromise program and declared uncollectible resolutions. You may also be excused from a first-time offense using IRS first time penalty abatement.

Offer in Compromise

The Offer in Compromise or OIC program is an Internal Revenue Service feature that allows any qualified taxpayer with an unpaid tax debt to negotiate for a settlement that is less than the total outstanding balance. While rare, if approved, taxpayers may find the IRS will forgive debt in the hopes of receiving as much of the total bill as possible. In order for the IRS to approve an offer in compromise, the taxpayer must meet one of the three following conditions:
  •         Effective Tax Administration
If the taxpayer does not contest their collectability or liability but can demonstrate through certain and specific circumstances that paying their debt would create an unfair financial hardship or financial distress, the IRS may accept the offer in compromise.                                                         
  • Doubt as to Collectability
This means the taxpayer will never feasibly pay off their tax bill in full. The IRS will examine your assets and current and projected future income to determine if they will potentially collect more from enforcing traditional collection means than they would if they settled for an offer in compromise.
  • Doubt as to Liability
This condition requires the debtor to prove there is doubt the assessed tax liability is correct. This could be due to examiner mistakes, omitted information, or new evidence that would change the total tax owed.

Currently Not Collectible

If currently declared not collectible, your tax debt will be put on hold for a set period of time due to your hardship status. While your account is in this status the IRS will generally stop all collection activities, meaning your assets and income won’t be levied. However, your debt may still accrue interest and other failure to pay penalties and the IRS is still able to file a Notice of Federal Tax Lien, which can affect your credit rating negatively. Before you can file for a Currently Not Collectible (CNC) status, you’ll need to file any delinquent tax returns the IRS will also need a detailed look at your financial information, including:
  • your income status
  • current expenses
  • and other debts you may have incurred, like student loan or mortgage debt.
After being placed in CNC status, the IRS may annually review your income to determine whether your situation has improved in the meantime. Keep in mind that the IRS can also attempt to collect your original tax liability up to 10 years after the date they were assessed.

Does the IRS Offer Complete Income Tax Debt Forgiveness?

Complete debt forgiveness occurs in only the rarest of cases — the IRS will rarely cancel debt. While partial debt forgiveness from the internal revenue service is more common, you must meet a variety of qualifications in order to apply for this distinction. You must prove that you do not have the means to pay your tax debt, have few assets that the IRS would be able to levy, and don’t make an income above the minimum need for essential living expenses. There are strict regulations regarding all of the aforementioned options, so it’s in your best interest to file with a professional’s help. If you owe an unmanageable amount of back taxes and need filing back taxes help, talk to a tax preparer at Community Tax and determine the best route for settling your debt for less.

IRS Tax Debt Relief Scams

In today’s tax relief market, there are many less-than-reputable companies that claim to offer tax debt relief, but offer something quite different. Here are a few signs that the debt relief service with which you are speaking may be a scam: 
  • The representative instantly promises to erase all of your debt 
  • The representative doesn’t ask to review your finances 
  • The business requests you by mail or email 
Companies like this will use tactics such as repeatedly delaying your case to string you along. They also may turn around at the end and tell you that, suddenly, you no longer qualify for the relief they promise. Keep an eye out for any of these red flags. 

Innocent Spouse Relief

Looking for income tax debt relief services as a spouse of a delinquent taxpayer? Many married taxpayers choose to file a joint income tax return due to the benefits this particular filing status allows. However, when you file jointly, both taxpayers are severally liable for the tax, and any interest or penalties that result from the joint return, even if the couple later divorces. That means you can be held responsible for all the tax due, even if your spouse earned the reported income or improperly claimed credits and deductions.  If your spouse or former spouse failed to report income, improperly reported income, or claimed improper credits or deductions, we can help you apply for Innocent Spouse Relief .

Get Help with Innocent Spouse Relief 

We can help you prove that you are an innocent spouse as defined by the Internal Revenue code, exempting you from the taxes caused by another person. We can help you present the evidence and relieve you of unfair tax obligations due to a spouse’s failure to pay their income tax. Our experienced tax resolution services can provide you with both federal and state tax relief help.

Wage Garnishment

If you owe back taxes and have ignored IRS notices, they may enforce wage garnishment. This is an order from the IRS sent to your employer, directing your employer to withhold a specified amount of money from your paycheck. This money is then sent directly to the IRS. This garnishment will continue until you make other arrangements to pay your unpaid taxes, you pay off your back taxes, or the IRS releases the levy. Part of your wages may possibly be exempt from the levy and you will receive this exempt amount; this based on the standard deduction and the number of personal exemptions allowed to you. If you receive income outside of your main source, the IRS may choose to allocate your exemptions there, levying 100 percent of your income from a singular employer. An IRS wage garnishment can be devastating to your finances and cause undue hardship. Our team of tax professionals can help you stop a wage garnishment.

What is an Installment Agreement?

If you cannot currently pay your tax debt in full, but have the ability to pay what you owe back over time, you may choose to apply for an IRS installment agreement . Community Tax offers installment agreement advice within our income tax debt relief services program. We can help you negotiate a monthly payment plan catered to your unique circumstances. Once your installment agreement is approved, the IRS will immediately put a stop to any wage garnishment, property seizure, or federal tax lien. This will also help reduce any failure-to-pay penalties they are currently enforcing, lessening the overall amount of money you’ll owe over time.

What Happens if I Ignore the IRS?

Even if you can’t pay what you owe, be sure to set up a payment plan or other debt settlement agreement as soon as possible. Ignoring your tax debt can result in a host of consequences; the IRS could enforce wage garnishment, seize the contents of your bank account, enforce a federal tax lien or levy, or even incarcerate fraudulent taxpayers.

Get Professional Tax Help with the IRS Tax Relief Services

Our income tax debt relief services can help you reduce or even eliminate your tax debts. The tax practitioners at Community Tax are experts in negotiating resolutions and providing income tax debt relief services. When you’re in need of tax advice, Community Tax can help. Get advice for all of your tax relief needs by calling 1-888-676-4128. Our team of tax experts are ready and waiting to provide you with the income tax debt relief services you need.