BREAKING DOWN THE BASICS OF TAX RELIEF

Taxes are an inevitable part of life, but sometimes, they can become a burden too heavy to bear. In these situations, tax relief programs can provide much-needed assistance to taxpayers who are struggling to meet their tax obligations. 

Understanding the basics of tax relief, how it works, and the different programs available can provide taxpayers with the knowledge needed to navigate the complex world of tax relief options.

Defining Tax Relief: What Does It Mean for Taxpayers?

Tax relief, in simple terms, refers to a reduction in the amount of taxes owed by an individual or business. It can come in the form of deductions, credits, or exemptions, and can be applied to various types of taxes, such as income, property, or sales taxes.

Tax relief programs are designed to alleviate the financial burden of taxpayers who are experiencing economic hardship or are unable to pay their taxes due to specific circumstances. These programs are typically administered by the government or tax agencies, such as the Internal Revenue Service (IRS) in the United States.

How Exactly Does Tax Relief Work?

Tax relief programs work by either reducing the amount of taxes owed, allowing for a delay in payment, or offering a compromise where the taxpayer pays a lesser amount than what is originally owed. To qualify for tax relief, taxpayers must meet specific eligibility criteria set by the tax agency. 

These criteria may include income level, financial hardship, or specific circumstances surrounding the tax debt. Once a taxpayer is deemed eligible, the tax agency will work with them to determine the most appropriate relief program and set up a plan for repayment or settlement.

Different Tax Relief Programs

1. Offer in Compromise (OIC)

An Offer in Compromise (OIC) is a program that allows taxpayers to settle their tax debts for less than the full amount owed. The IRS considers OICs when there is doubt regarding the taxpayer's ability to pay the full amount owed, or when doing so would create financial hardship. 

To apply for an OIC, taxpayers must submit a detailed financial statement, along with an offer to pay a specific amount to settle the debt. The IRS will then evaluate the offer and decide whether to accept or reject it based on the taxpayer's financial situation and ability to pay.

2. Currently-Not-Collectible (CNC) Status

Currently-Not-Collectible (CNC) status is a temporary reprieve granted to taxpayers who are unable to pay their tax debts due to economic hardship. When a taxpayer is placed in CNC status, the IRS will temporarily halt all collection activities, including levies, liens, and garnishments. 

However, it's important to note that interest and penalties will continue to accrue during this time. To qualify for CNC status, taxpayers must provide financial information to the IRS, demonstrating their inability to pay the tax debt.

3. IRS Installment Agreement

An IRS Installment Agreement is a payment plan that allows taxpayers to pay their tax debts in smaller, more manageable monthly installments. This option is suitable for taxpayers who can't pay their taxes in full but can afford to make smaller payments over time. 

The IRS offers several types of installment agreements, including short-term and long-term plans, as well as streamlined agreements for smaller tax debts. To set up an installment agreement, taxpayers must submit a request to the IRS and provide financial information to determine the appropriate payment plan.

4. Penalty Abatement

Penalty abatement is a form of tax relief that involves the reduction or removal of penalties associated with tax debts. Taxpayers may qualify for penalty abatement if they can demonstrate reasonable cause for their failure to meet tax obligations, such as a natural disaster, serious illness, or other unforeseen circumstances. 

To request penalty abatement, taxpayers must submit a written statement to the IRS, explaining the circumstances that led to the failure to meet tax obligations and providing supporting documentation.

The Bottom Line

If you are struggling to pay your tax debt, consider consulting with a tax professional who can help you navigate the tax relief process and determine the most suitable course of action.

If you’re dealing with IRS tax issues, don’t hesitate to contact Advance Tax Relief LLC. Our experienced tax relief attorneys and enrolled agents are here to help you get the best resolution for your situation. Contact us today to learn more about how we can help you!

HOW A BANK LEVY WORKS AND YOUR OPTIONS: PART 2

Welcome back to Part 2 of our series on bank levies. In Part 1, we discussed a bank levy and how it works. This article will review the steps to avoid a bank levy and what you can do if a levy has already been placed on your account.

Preventing a bank levy is the best course of action. Here are some steps to avoid a bank levy:

Pay Your Taxes

A bank levy is often imposed due to unpaid taxes. To avoid this, paying your taxes on time to the IRS or your state is important. You can opt for a payment plan if you cannot pay in full. This will prevent the IRS from taking other actions like wage garnishments or liens.

Respond to Creditor Notices

Your creditor might send you notices regarding missed payments, late fees, or other issues with your account. Responding to these notices promptly and addressing the issue at hand is important. Ignoring these notices can lead to further collection actions like legal action or debt collection agencies getting involved.

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Keep a Low Balance

Managing finances can be tricky, especially when you have a history of unpaid debts or tax liabilities. In such a scenario, keeping your bank account balance low can be a smart move to avoid further financial troubles.

One approach to do this is by setting up automatic payments for your bills and expenses. This ensures that your payments are made on time and reduces the risk of late payments. Consider reducing your expenses and cutting back on unnecessary purchases to help keep your balance low.

Use Exemptions

Certain funds in your bank account may be exempt from levy depending on your state. For example, some states exempt Social Security, disability, and unemployment benefits. If you receive these benefits, inform your bank and provide the necessary documentation to claim the exemption.

What to Do If a Bank Levy Has Been Placed on Your Account?

1. Verify the levy: Make sure the levy is valid. The IRS or creditor must follow specific procedures before placing a levy on your account. They must send you a notice of intent to levy, give you time to respond and obtain a court order. If they do not follow these procedures, you can challenge the levy.

2. Contact the creditor or IRS: Once you verify the levy, contact the creditor or IRS to resolve the issue. You can negotiate a payment plan, settle the debt, or request a levy release. You may qualify for a hardship release if you are facing financial hardship.

3. Claim exemptions: If you believe you qualify for an exemption, inform your bank and provide the necessary documentation. The bank will release the exempt funds, and the creditor or IRS can only levy the remaining balance.

4. Appeal the levy: If you disagree, you can appeal the decision. The IRS or creditor must provide you with the appeal procedures. You can also request a collection due process hearing or file a lawsuit in court.

Final Thoughts

A bank levy can be a stressful and challenging situation. However, by taking the steps mentioned above, you can avoid a bank levy or resolve the issue if a levy has been placed on your account. By taking these steps, you can protect your assets and financial future.

Protect your hard-earned money from bank levies with Advance Tax Relief LLC. Our experienced tax professionals offer customized solutions to help you avoid bank levies and resolve tax issues. Contact us now for a free consultation and regain control of your finances.

Seeking professional help when handling back taxes can help you avoid the discussed errors. At Advance Tax Relief, we offer specialized tax resolution services to help you deal with IRS debt.

Our experts can help rectify erroneous tax bills and guide you in picking a suitable repayment program. Contact us today (713)300-3965 for back tax filing and tax relief services.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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Tax Debt Relief: 9 Proven Strategies to Settle Tax Debt

Tax Debt

 

Did you know that the average American taxpayer owes around $8,400 in tax debt? Tax debt is a financial burden that affects millions of citizens. If not addressed, it can lead to serious consequences such as wage garnishments, bank levies, and even property seizures. The good news is that there are various strategies available to help you settle your tax debt and regain control over your finances. 

In this article, we'll discuss ten proven strategies to help you find tax debt relief and get back on track financially.

1. Assess Your Financial Situation

Before you can begin to address your tax debt, you must first have a clear understanding of your current financial situation. Gather all of your financial records, including income, expenses, assets, and liabilities, and create a comprehensive budget to identify areas where you can potentially reduce spending and allocate funds towards paying off your tax debt.

2. File and Pay Your Taxes on Time

The first and most important step in resolving tax debt is to file and pay your taxes on time. Late filings and payments can lead to penalties, interest, and an increased amount of debt. Stay current with your tax filings and work with a tax professional to ensure you are taking advantage of any deductions and credits available to you.

3. Seek Professional Help

If your tax debt is overwhelming or complicated, it's a good idea to seek the help of a tax professional, such as an enrolled agent, certified public accountant, or tax attorney. These professionals can help you navigate the complex tax code, find potential deductions and credits, and negotiate with the IRS on your behalf.

4. Set Up an Installment Agreement

An installment agreement is a payment plan that allows you to pay off your tax debt in smaller, manageable monthly payments. You can apply for an installment agreement online or by submitting Form 9465, "Installment Agreement Request." Keep in mind that interest and penalties will proceed to accrue on your outstanding balance until it's paid in full.

5. Apply for an Offer in Compromise

An Offer in Compromise (OIC) is a settlement agreement between you and the IRS, in which the IRS accepts less than the entire amount of your tax debt. This option is typically reserved for individuals who can demonstrate financial hardship and prove that paying the full tax debt would create a significant burden. To qualify for an OIC, you must prove that you cannot pay the full tax debt due to financial hardship, and the IRS must determine that accepting the offer is in the government's best interest. You can apply for an OIC using Form 656, "Offer in Compromise."

6. Request a Collection Due Process Hearing

If you disagree with the IRS's assessment of your tax debt or believe that the collection actions taken against you are unjust, you can request a Collection Due Process (CDP) hearing. During the hearing, you can present your case to an impartial IRS appeals officer, who will review your situation and make a determination. To request a CDP hearing, you'll need to submit Form 12153, "Request for a Collection Due Process or Equivalent Hearing."

7. Request a Penalty Abatement

The IRS may be willing to waive or reduce certain penalties associated with your tax debt if you can demonstrate reasonable cause for failing to meet your tax obligations. Common reasons for penalty abatement include illness, natural disasters, or other significant life events that were beyond your control. To request penalty abatement, you'll need to submit Form 843, "Claim for Refund and Request for Abatement," along with a written explanation of your situation.

8. Apply for "Currently Not Collectible" Status

If you can prove that paying your tax debt would cause undue financial hardship, the IRS may grant you "currently not collectible" (CNC) status. While in CNC status, the IRS will temporarily halt collection actions against you. However, interest and penalties will continue to amass on your tax debt, and the IRS may reevaluate your financial situation in the future.

9. File for a Bankruptcy

While bankruptcy should be considered a last resort, it may provide relief from certain tax debts. Chapter 7 bankruptcy can potentially discharge income tax debts, while Chapter 13 bankruptcy can provide a structured repayment plan for your tax debt. Keep in mind that bankruptcy has long-lasting consequences on your credit and financial future, so consult with a bankruptcy attorney to determine if this is the right thing to do depending on your current situation.

Conclusion

There are many strategies available for tax debt relief. The key is understanding your options and choosing the best strategy for your situation. With the right approach, you can settle your tax debt and get back on the road to financial stability.

Are you in search of a dependable tax relief service that can assist you in resolving your tax debt? Then, look no further than Advance Tax Relief LLC located in Houston, Texas! As one of the top-performing tax resolution companies, we offer the most suitable tax resolution services to meet your business requirements. Our skilled team of tax relief attorneys is prepared to assist you in resolving your tax debt and helping your business thrive. Let us help you take the first step towards financial freedom! Contact us today to get started!

What to Do When You Receive a Tax Letter or Notice

 Receiving a tax letter or notice from the Internal Revenue Service (IRS) can be overwhelming and stressful. It's important to understand that receiving a notice doesn't necessarily mean you've done something wrong.

The IRS sends notices for various reasons, including requesting additional information, notifying you of a change to your tax return, or alerting you to a potential issue. In this article, we'll discuss the steps you should take when you receive a tax letter or notice.

Step 1: Read the Notice Carefully

 It's essential to understand the reason for the notice and what action the IRS is requesting from you. The notice will include specific instructions on how to respond, including deadlines and where to send the information.

Step 2: Gather Documents and Information 

Once you understand the reason for the notice, gather all the necessary documents and information. This could include tax returns, receipts, bank statements, and any other documentation related to the issue. Make sure you organize the documents and have them readily available when you're ready to respond to the notice.

 

Step 3: Respond to the Notice

The next step is to respond to the notice promptly. The IRS will typically provide a deadline for your response, so meeting that deadline is essential. If you need more time, you can request an extension by contacting the IRS.

When responding to the notice, make sure you follow the instructions carefully. Provide only the information requested and nothing more. If you're unsure about something, seek the advice of a tax professional.

 

Step 4: Keep a Copy of Your Response

After you've responded to the notice, make sure to keep a copy of your response and any supporting documentation. You may need this information in the future in case the IRS requests additional information or if you need to dispute any changes made to your tax return.

 

Step 5: Pay Any Amounts Owed

If the notice indicates that you owe additional taxes, make sure to pay that amount promptly. If you're unable to pay the full amount, contact the IRS to discuss payment options, such as an installment agreement.

 

Step 6: Dispute the Notice if Necessary

If you disagree with the notice, you have the right to dispute it. The notice will include instructions on how to dispute the notice, including the deadline for filing a dispute.

You can also seek a tax professional's advice to help dispute the notice. They can help you understand the notice and provide guidance on how to respond. They can also help you navigate the tax system and ensure that you're in compliance with all tax laws and regulations.

 

Step 7: Take Preventative Measures

Receiving a tax notice can be stressful, but there are steps you can take to prevent issues in the future. Make sure to keep accurate and detailed records of all financial transactions, including income, expenses, and deductions. Keep receipts, invoices, and bank statements organized and easily accessible.

 

If you're self-employed, make sure to pay estimated taxes throughout the year to avoid owing a large amount at tax time. By taking preventative measures, you can reduce the likelihood of receiving a tax notice in the future.

 

Conclusion

 

Receiving a tax letter or notice can be overwhelming, but it's important to remain calm and follow the steps outlined above. Remember, receiving a notice doesn't necessarily mean you've done something wrong. The IRS sends notices for various reasons, and it's important to understand the reason for the notice and take the appropriate action.

 

By reading the notice carefully, gathering the necessary documents, responding promptly, keeping a copy of your response, paying any amounts owed, disputing the notice if necessary, and taking preventive measures, you can effectively handle any tax issues that may arise.

 

If you need help from professional tax filing consultants, Advance Tax Relief LLC is the best choice. Our experienced tax consultants can help you navigate the complexities of the tax system and provide personalized tax solutions that meet your unique needs. Contact us today to learn more about how we can help you with your tax needs!

TRANSFERRING REAL ESTATE TO A SPOUSE AFTER THE IRS FILES A FEDERAL TAX LIEN

There are a number of difficult questions that come up when one spouse has a debt with the IRS and also owns property jointly with their spouse. The question is often whether the spouses can transfer the property to the non-liable spouse. 

The answer is, maybe. The court addressed this in U.S. v. Gerard, No. 1:14-CV-67-TLS (N.D. Ind. 2018).

Contents

1 Facts & Procedural History On Gerard Case

2 Real Estate Title & the IRS’s Lien

3 Purchaser for Value

4 The Amount Invested Does Not Impact the Lien

5 If the Facts Were Different

Facts & Procedural History On Gerard Case

The taxpayers were married and they lived in a common law state. They purchased real estate together in 1990. The taxpayer-wife owned a sole proprietor business that accrued a balance for unpaid employment taxes. Several years later, the taxpayers filed a gift deed to transfer the real estate to the taxpayer-husband’s individual name. The court considered whether the IRS’s tax lien survived the transfer of the real estate to taxpayer-husband.

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Real Estate Title & the IRS’s Lien

Generally, when a married couple acquires real estate during marriage, state law will provide that the real estate is held in tenants by entirety (this is true for most non-community property states; the rules are substantially different for community property states…).

The term “tenants by entirety” is a real estate concept. It refers to a spouse owning an undivided one-half interest in the real estate.

Our Federal tax laws generally say that the IRS’s lien or right to property looks to the state definition of property. For property held by tenants by entirety under state law, the IRS’s lien attaches to the spouse’s fifty percent interest.

There are several nuances and exceptions to these general rules. One of these is the purchaser for value rule.

Purchaser for Value

The taxpayer-husband in this case argued that he was a purchaser for value and, as such, the IRS’s lien did not continue to attach to the real estate after the real estate was transferred to him.

A purchaser for value is:

a person who, for adequate and full consideration in money or monies worth, acquires an interest (other than a lien or security interest) in real estate which is valid under local law against a subsequent purchaser without actual notice.

The taxpayer-husband argued that he paid value for the real estate given that the taxpayer-wife had used marital assets to pay for her individually-owned business and that the transfer of the real estate was in satisfaction of that debt to him.

The court noted that, at best, this is past consideration. Past consideration represents an amount owed prior to the transfer that is being considered. Past consideration generally does not count for this purpose.

The Amount Invested Does Not Impact the Lien

Since the court concluded that the taxpayer-husband was not a purchaser for value, the IRS’s lien would attach to his wife’s interest despite the transfer. This leads to the question as to what interest the taxpayer-wife had in the real estate.

The taxpayers argued that the taxpayer-wife owned less than a 50 percent interest in the real estate. The taxpayers’ argument was that the taxpayer-wife had contributed 10 percent of the monies to purchase the real estate. Therefore, the argument was that the taxpayer-wife only owned 10 percent of the real estate.

The court did not agree. It concluded that the taxpayer-wife acquired a 50 percent interest despite only putting in 10 percent of the monies to purchase the real estate. The court reached this conclusion by examining the applicable state law.

If the Facts Were Different

While the taxpayers did not prevail in the court case, they may have other options.

What if the taxpayer-husband argued that the transfer was made to relieve the taxpayer-wife of her future obligations, such as an obligation to pay alimony to the taxpayer? This was not part of the case, but it may be that this future consideration may suffice to qualify a non-liable spouse as a purchaser.

It may also have been possible for the taxpayer-husband to refinance the real estate with a third party lender and pay the proceeds to the taxpayer-wife. If the taxpayer-husband were to do this, perhaps he could then qualify as a purchaser for value.

Similarly, if the taxpayer-husband could not qualify for a loan or find a lender who would lend given the potential IRS lien, maybe he could pay the taxpayer-wife a lesser amount to reduce the value of her 50 percent interest to 20 percent or less. The IRS usually does not pursue real estate assets that have less than 20 percent interest. Perhaps this would also have allowed the taxpayers to keep their real estate.

Hiring a Tax Relief Company

It’s not uncommon for tax debt advisors and tax relief companies to help taxpayers in distress. This can be quite helpful, especially if you aren’t sure how to fill out the forms you need. Taxes are complicated and there’s clearly a wide margin for error. Many people get into trouble with the IRS just for accidentally filling out a form wrong. Tax debt advisors can help you avoid this.

Our experts can help rectify erroneous tax bills and guide you in picking a suitable repayment program. Contact us today (713)300-3965 for back tax filing and tax relief services.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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FOUR WAYS TO TAX DEBT RELIEF IN HOUSTON

If you owe back taxes to the IRS, you may need to hire tax debt advisors to help you. Here are four options you may have in seeking small business tax help.

In 2016, 22% of small business owners didn’t know what their effective tax rate was, according to CNBC Small Business Survey.

We get it — taxes are complicated. But if you’re behind on paying them, they get even more complicated, and quickly.

If you owe back taxes to the IRS, you may need to hire tax debt advisors to help you. To help you understand your options and determine your way forward, the following are four options you may have in seeking small business tax help.

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IRS Payment Plans

If you require extra time to pay your tax bill, the IRS will probably accommodate you. Tax debt advisors can help you set up a payment plan with the IRS so you can pay back your debt in regular installments.

There are some things you should know about payment plans. First of all, having a payment plan setup doesn’t make you exempt from having to pay penalties and interest on what you owe. As long as your balance is above zero, those will continue to accrue.

Second, if you owe more than $25,000 you will need to make your payments in the form of automatic withdrawals from your checking account. If you make payments using a debit or credit card, you will have to pay an additional fee. This fee is usually between $2 and $4, or 2% of the payment.

Offers in Compromise

If you absolutely cannot pay your tax debt off without causing serious financial hardship for yourself, you may qualify for an offer in compromise. This option allows you to settle your back taxes for less than you actually owe.

To decide if you qualify for an offer in compromise, the IRS will consider your ability to pay, your expenses and income, and how much you have in the form of assets.

If the IRS accepts your offer, you will have to make an upfront payment that equals 20% of whatever you’re offering to pay. Also, some of your personal information could be made public. Details such as your name, city, state, liability amount, and offer terms could go into the IRS’s public inspection files.

Even though it is a possible option for those with lower income or higher expenses than usual, more than half of all people who request one are turned down. Because of this, you should explore other options before attempting to qualify for an offer in compromise.

“Currently Not Collectible” Status

If you cannot currently pay your taxes and necessary living expenses, you may speak with the IRS about placing your account in “Currently Not Collectible” status. You will need to request this delay in collection and you may be asked to fill out a Collection Information Statement to prove that your finances truly aren’t adequate to pay back your taxes. You will need to provide information about your monthly expenses and income on that form.

It’s important to note that being deemed “Currently Not Collectible” is not permanent. It does not make your tax debt disappear. In fact, the IRS could still file a tax lien against you.

Once a year, the IRS will probably review your income again to see if your financial condition has improved. In the meantime, acquiring “Currently Not Collectible” status can give you the chance to catch up on your finances.

Hiring a Tax Relief Company

It’s not uncommon for tax debt advisors and tax relief companies to help taxpayers in distress. This can be quite helpful, especially if you aren’t sure how to fill out the forms you need. Taxes are complicated and there’s clearly a wide margin for error. Many people get into trouble with the IRS just for accidentally filling out a form wrong. Tax debt advisors can help you avoid this.

Our experts can help rectify erroneous tax bills and guide you in picking a suitable repayment program. Contact us today (713)300-3965 for back tax filing and tax relief services.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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