Offer In Compromise, Tax Levies, Federal Tax Lien
Owing money to the Internal Revenue Service is a terrifying situation.
Nevertheless, over 13 million Americans owe the IRS thousands or even tens of thousands of dollars every year.
The IRS can collect the debt at any time, putting the taxpayer at a serious risk of losing their earnings, savings, and other assets.
While there isn’t a specific IRS tax forgiveness program, this article covers all that anyone owing serious IRS debt should consider.
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WHO SHOULD CONSIDER AN IRS TAX FORGIVENESS PROGRAM?
Anyone who owes more money to the IRS than they can reasonably afford to pay should look at a payment plan or some kind of IRS tax forgiveness program.
By law, the IRS cannot attempt to collect back taxes if it would throw a person into financial hardship. However, the taxpayer must first demonstrate to the IRS why they cannot afford to pay up.
The IRS won’t erase all of a taxpayer’s debt if they cannot afford to pay in full in most cases. However, although rare, the IRS does provide options that allow taxpayers to pay less than they owe and settle their liabilities.
WHY SHOULD YOU APPLY FOR AN IRS TAX FORGIVENESS PROGRAM?
Usually, it’s in a taxpayer’s best interest to seek a forgiveness program if they believe they owe several thousand in back taxes and cannot make the monthly minimum payments on an installment agreement, also known as a payment plan.
Ignoring tax debt won’t cause the IRS to realize a taxpayer doesn’t have money suddenly. Instead, the IRS will use the following channels to collect the money the taxpayer owes:
TAX LIENS
The IRS starts enforcement actions by filing a lien against a taxpayer’s assets, such as homes, cars, or boats.
Under a tax lien, the government lays legal claim to the asset and prevents its sale or transfer. The IRS won’t immediately seize the asset under a lien, but the taxpayer cannot sell the asset in most cases.
TAX LEVIES
A levy is when the IRS legally seizes a taxpayer’s assets.
Beyond physical belongings, the IRS can levy bank accounts, retirement savings (including IRAs and 401ks), inheritance, and other financial sources.
If someone dies with outstanding back taxes, the IRS might levy their assets or even seek payment from their next of kin.
WAGE GARNISHMENTS
The IRS may garnish a taxpayer’s wages in order to recover taxes owed. They generally cannot levy your whole paycheck but it can leave taxpayers with very little left.
HOW THE IRS COLLECTS TAXES
During garnishment, the IRS takes a portion of someone’s paycheck every pay period until the debt becomes satisfied. Technically a type of levy, the IRS will contact a taxpayer’s employer or hire a third party to get the job done.
OTHER ISSUES
Depending on the amount owed, the IRS can make a taxpayer’s life extremely difficult.
The IRS might tell the State Department to revoke a taxpayer’s passport if they owe $52,000 or more in back taxes, penalties, and interest.
FIND OUT WHAT YOU OWE
Before negotiating with the IRS, a taxpayer must figure out exactly what they owe – including interest and penalties. The number might be frightening, but it’s an essential first step.
Anyone can figure out what they owe by using the IRS online tool, calling the IRS, mailing the IRS, or hiring a professional.
HOW TO SETTLE WITH THE IRS:
The IRS offers several solutions for people who cannot afford to pay their full sum of back taxes.
On a general note, each IRS tax forgiveness program considers the following factors:
Taxpayer’s monthly income, monthly expenses, assets, and liabilities
What the taxpayer owes in total (including interest and penalties)
The taxpayer’s ability to make income in the future Physical assets and properties like cars, homes, and high-value items. Financial assets the taxpayer has like 401ks, savings accounts, IRAs, stocks, and more.
Keep in mind that each case is 100% unique. A tax professional can help you analyze your specific financial situation and choose the perfect IRS tax forgiveness program.
OFFER IN COMPROMISE
An Offer in Compromise (OIC) is best suited for a taxpayer with severe financial trouble. The taxpayer offers to pay a specific amount, and the IRS either accepts or rejects the offer. In 2019, the IRS approved less than a third of all OICs.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company that can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants, and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
Advance Tax Relief is rated as one of the best tax relief companies nationwide.
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