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Settle Your Tax Related Debt Issues Today
Tax Debt Relief
IRS (Internal Revenue Service) Tax liens can be crippling, preventing refinance options, garnishing wages and even emptying your bank accounts, and leaving you responsible for the repercussions of the other items bouncing as a result of the IRS money grab. While tax debt and its fallout can be frightening there are steps you can and should take to reduce the risk of losing everything to the Internal Revenue Service.
Top Things To Remember When Fixing Tax Debt
- Do not ignore notices from IRS or your state or local tax agency. You need to know what the government thinks you owe and compare to your records. If you believe you owe the money, but cannot afford to pay it in full, there are options still available to you.
- Get Assistance. Enrolled agents are registered with the IRS to negotiate on your behalf. Because they regularly work with the IRS and state tax agents, tax advocates know what forms and supporting documents are needed, and how to structure negotiations. That alone can yield better results than bulldozing your way in and demanding a reduction. There are specific forms to use and criteria to meet.
- Remain polite. If you attempt to negotiate your own tax debt, keep in mind that the agent employed by the IRS is trying to do their job. Your overdue taxes are not their fault. Remaining calm when you speak to your IRS representative can help resolve the differences and help you reach a resolution sooner. This is important, because representatives are changed frequently, and it would be easier to work out the issues with one IRS agent, rather than starting over with a new IRS agent.
- Stick to any agreement you reach with your tax agency. Do NOT violate any promise you make to your tax agency whether it is the federal agency, the IRS or your state or local tax agency. If a true emergency prevents you from adhering to a structured repayment plan, contact your tax advocate and/or tax representative immediately to explain the issue and when you may be able to resume payments. Be prepared for additional costs to be applied.
- If you are negotiating with the tax entity yourself, keep a log of all phone conversations, and keep every written communication that occurs. It is a good idea to mark the date you receive each letter. Federal letters will contain a reference to the debt. State references change and may be harder to track, if there is more than one debt obligation. If you get help, keep every letter of satisfaction and be sure to follow up with your tax representative to verify any tax liens satisfactions are filed as well as the lien releases. Verifying this while it is fresh in your mind will be easier than to try to track it down years later when the tax lien is restricting your financial opportunities.
- Learn your options. Discuss possible and probable outcomes of the IRS tax lien negotiations with your tax representative. Take a close look at your cash flow and figure out how closely it mirrors potential settlement amounts or repayment plans. Experienced IRS Negotiators can often reach a settlement agreement on your behalf that is less than the balance owed. If that happens, have you set aside funds to pay that debt? If that is not an option, talk to your negotiator to determine whether a structured payment plan will be better for you…and whether you need to set up a bank account to handle just those payments.
Tax Debt Relief Can Take Many Forms
Today, tax relief can take several forms. As mentioned earlier, a tax relief negotiator may obtain different forms of relief for your tax debt:
- Tax Debt Settlement. Your tax negotiator works with the tax agency to obtain a settlement for less than the total amount owed. Once that number is reached, you will be asked to sign an agreement. Tax negotiators do not work for free, so be prepared to pay for this service. The form usually used in this negotiation is called an “Offer in Compromise”. You may submit this form yourself, but be prepared for time consuming follow up. The “Offer in Compromise” will require supporting documentation to prove your circumstances, regardless of who prepares and submits the package. Keep in mind, that though the IRS has expanded its criteria for whose offer may be accepted, if it believes the liability can be paid in full as a lump sum or through an installment agreement, the IRS will still not accept an offer.
- Penalty Abatement. Sometimes the amount owed isn’t the reall issue. The penalties added over time can be devastating. One negotiated tax relief method results in abatement of penalties. You will still pay the full past due tax and interest, but the hefty penalties may be forgiven.
- Interest Abatement. Rarely, but sometimes, the IRS grants an abatement of interest. If this is negotiated and approved on your behalf, you will still owe the original tax due, but without the add ons.
- Structured Tax Installment Repayment Plan. This too, can be negotiated on your behalf, and depending on your current financial status, may repay a lower amount than the amount owed. You will be encouraged to set up automatic deduction, and it may be a good idea to set up a separate bank account just for this purpose. When the payments are complete, you should still ask for a letter of satisfaction, so you can prove the payments were made as agreed and that the debt is closed.
- Pay Full Lump Sum. This requires no negotiation, but does need a payoff statement with a good through date. If you are able to pay your tax debt in full, congratulations! Make sure you get your letter of satisfaction for the debt.
State tax Agencies may have similar but different guidelines for relief options. Our experience will also pay off here. Knowing not only what is possible but how to help ensure a more beneficial outcome can make thousands of dollars difference when it comes to tax debt. Call, chat or complete our form to speak to someone who knows how to work with the government and get the relief you deserve!