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Tax Relief: How to Get Rid of Your Back Taxes

Table of Contents

WATCH: How to Get IRS Back Taxes Forgiveness 3 Different Ways

Tax Attorneys &
IRS Tax Relief Options

Tax problems can harass and takeover your life, but a tax attorney can help. Tax attorneys fight for you with your tax issues and problems to give you the best advice and negotiate with the IRS for you. Find a tax attorney firm that is genuinely interested in your current and future financial well being and that can set you on the road to financial success for life.

If you have had or currently have tax problems, you know the amount of stress and tension this brings into your life. The IRS is a formidable opponent, one that should not be fought alone. In this dire situation, a tax attorney is the help you need.

By hiring a tax attorney, you’ll have a remarkable weapon that will help you fight the harassment and worry tax problems create. If you want your life back, free from the bureaus of the IRS, a tax attorney will work with you to make this happen.

What Do Tax Lawyers Do?

Tax attorneys can help you combat all types of tax problems and issues such as tax planning, wage garnishment, audits, offer in compromise and more. So whether you have avoided your taxes so long it has become a criminal case or you simply need help with filing your tax returns, a tax attorney will work to give you the best options and advice available, even negotiating with the IRS directly so you do not have to.

How to Find The Right Tax Attorney

However, the decision of who to hire as your tax attorney should not be taken lightly. You’ll want to make sure you have the best weapon possible to conquer your tax problems. Since you are putting faith in your tax attorney to give important advice on life impacting decisions, you cannot afford to hire someone you don’t trust.

For this reason, finding a tax attorney through a trusted and well established firm is one of the best options available. Also, a way to find a tax attorney you can trust is by looking for a firm that is particularly interested in your future as well as your current financial well being.

Firms such as Nationwide Tax Relief, which commits to not only help with current IRS problems, but also to give expert advice on taxes for the rest of your life, can help you build trust and a lasting relationship with your tax attorney and the firm they are a part of.

When looking for a tax attorney, you’ll also want to find one that is knowledgeable about tax laws. Your tax attorney should be able to tell you information regarding new tax laws that are now in effect, and if and how you can be benefited by them. Laws and requirements for taxes are being changed constantly; you need a tax attorney that stays on top of these changes and knows how to use them to your best advantage.

Most importantly, you need a tax attorney that is aggressive and is prepared to do what it takes to get you the best settlements and options available. You need a tax attorney and firm who will fight for your needs and who are genuinely interested in your current and future tax well being.

The right tax attorney is the only defense you need in your battle for a better life through tax relief. Don’t settle for less, expect the very best out of your tax attorney by choosing one that is part of a reliable and expert team who will work to help you achieve financial success for life. Act now and obtain your financial freedom.

Understanding The Process of a Bank Levy

Receiving a bank levy can be a terrible shock to your monetary funds, as well as your life and credit. Learn the process of how a bank levy is issued and what you can do about it.

What it is a Bank Levy?

If you owe money for your taxes, a bank levy can be applied to your checking and/or savings accounts. A bank levy is the process through which the IRS has the ability to freeze the amount of money you owe, whether you are a member of a bank, savings and loans institution, thrift institution, or credit union. You cannot use any of the money the IRS freezes, which could cause your checks to bounce and get you into further financial trouble.

You will receive a bank levy only after you have been sent a Notice and Demand for Payment by the IRS, neglected or refused to pay the tax, been sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (sent 30 days before the levy is served), and failed to comply with the amount owed or did not figure out some other means of negotiation with a collector.

What happens next

From the day the IRS contacts your financial institution, the bank levy is applied and freezes the money owed for 21 days. Once the 21 days are up, your financial institution must comply with the bank levy and send the IRS the amount of money owed, or as much as is available in the account(s), plus any interest the money might have made in the holding period of the bank levy. However, financial institutions are not allowed to send more than the bank levy requests.

Some financial institutions apply a fee if a bank levy is served. So even if you have the amount requested by the bank levy, more money could be retrieved from your account(s) by your financial institution individually. Contacting your financial institution regarding the bank levy should help clear up any confusion.

Any deposits made after the initial notification of the bank levy will not be surrendered to the amount frozen, even deposits made during the holding period. However, another bank levy may be served if that money must be reached to fulfill the tax amount needed. Also, the bank levy only reaches deposits that have cleared and that the taxpayer would have been able to withdraw under normal circumstances.

If you are forced into economic hardship because of a bank levy, the IRS may release some of your funds. Sometimes a copy of a notification of foreclosure or a utility cut-off notice is needed in order to release part of the bank levy, and then, only the amount specified on the notification will be released.

What you should do

The 21 day holding time is meant to be a final warning and should be used wisely. Speaking to or hiring a professional consultant can be very beneficial and can help get the bank levy released. Discussing and working with your financial institution can also achieve release of the bank levy, or at least some kind of compromise. Postponing the problem will only make matters worse, so act quickly and work wisely to avoid any further complications.

Common IRS Problems and Solutions

Many people have IRS problems and have no idea what they really mean or what options they have to help. Read on to learn about a few common problems and a few ways that may help ease the burden.

A large part of the population has at least one IRS problem. Of those people, many do not even really understand what the IRS problem is, let alone how to get help for the problem. Here are a few common IRS problems that many face daily; these are followed by a few possible ways to alleviate the stress causes by each IRS problem.

IRS Problems

IRS Liens: The IRS can file federal tax liens, which are public records that specify various taxes you owe the IRS. These prove to be a common IRS problem for many taxpayers. This IRS problem can make it difficult for one to get financial approval on many things, including a home or car loan.  This also often leads to a further IRS problem in that once a lien is filed against one’s property, they cannot sell that property without a clear title; so often one may find his or herself with property, but no way to use it.

Excessive Tax Debt: Penalties and interests can build so fast that debt that is too large to pay becomes a serious IRS problem.

IRS Audits: IRS is able to audit the taxpayer through the mail, in their or your office and at your home.

IRS Seizures: The IRS has the power of Seizure of Assets, which can be a serious IRS problem for taxpayers. Basically, the IRS is permitted to take control of personal and business assets to pay one’s debts after that person has avoided the IRS.

Penalties and Interest: Another frequent IRS problem is the penalties and interest the taxpayer may have to pay. A taxpayer may be penalized for not paying their taxes or filing them late; in addition to these penalties, one is hit with a further IRS problem — interest on these penalties.

Possible Solutions to an IRS Problem

Payment Plans: The IRS does accept payment plans to help alleviate IRS problems. To qualify, one must do the following: file all tax returns, disclose all assets owned, not have enough money in any form to pay the IRS, not have the ability to borrow said money from any source and not have enough equity in a retirement account from which you could borrow. 

Also be aware that even though one is on a payment plan, that person is still charged penalties and interest.

Audit Reconsideration: This can be used to reopen a closed audit. This is used for IRS problems and other circumstances where the person did not receive a fair deal during the original audit.

Appeals: A taxpayer can appeal to the IRS if they did not agree with a decision made by the IRS. A taxpayer must file their appeal within a certain amount of time and following IRS guidelines to help with their IRS problem.

Collection Appeals: These are used for those who are dealing with the IRS problem of seizure. When the taxpayer is threatened with such action, they may issue an appeal to explain how they think the situation could be handled without resorting to the seizure.

Offers in Compromise: This program helps people whose IRS problem involves a debt of more than they could ever afford, an opportunity to pay a small amount of their debt as a final settlement.

Penalty Abatement: This helps taxpayers who have an IRS problem that lies in the penalties and fees they have incurred due to unpaid amounts or taxes that were filed late. There are circumstances such as natural disasters and illness, which allow the taxpayer a refund or reduction in penalty and interest that have been paid or must be paid.

What is an IRS Offer in Compromise?

What if you owe the Internal Revenue Service more money that you can possibly pay? Believe it or not, the IRS will actually agree to accept less than the full amount due. 

This might sound like a wonderful loophole. The catch, however, is that you have to have a seriously delinquent tax bill that has gone to collections and basically ruined your credit before the IRS will consider giving you a break.

An IRS Offer in Compromise: Too Good to Be True?

Basically, an offer in compromise is exactly how it sounds – a compromise between you and the IRS. But don’t get your hopes up just yet. 

The IRS resolves less than one percent of overdue tax accounts with an offer in compromise. Therefore, an offer in compromise should only be considered after all other payment options have been exhausted. Additionally, you have no legal right to a compromise; it is solely at the discretion of the IRS.

Legitimate Reasons for an Offer in Compromise

An offer in compromise will be considered as an option only under special circumstances. The first is doubt as to whether or not the assessed tax amount is correct. 

In other words, you were overtaxed. The second is doubt as to your ability to ever pay the full amount owed. The final consideration for an offer in compromise is taxpayer demonstration of hardship.

Disqualifications for an Offer in Compromise

If your offer in compromise is based on any circumstance besides doubt of liability, you can be disqualified if you haven’t filed all necessary tax returns and documents, or if you are currently involved in bankruptcy proceedings.

How to File an Offer in Compromise

Unless your offer in compromise is based on doubt of liability, or if you are at or below the poverty level, you will have to pay an application fee of $150. 

Of course, there is a required form to fill out, totaling 40 pages. IRS Form 656 can be access and printed at www.irs.gov or by calling 1-800-829-1040. The IRS will suspend all collection activities while they review your offer in compromise or while you appeal the rejection of your application.

How Much Should I Offer in Compromise to The IRS

The IRS requires that your offer in compromise repayment be at least the value of the equity of your assets if they were sold today at 80 percent of market value. 

For example, let’s say your house is valued at $200,000 and your mortgage is $150,000. Since the IRS allows you to use the quick sale value of 80 percent, your house would sell for $160,000. That leaves $10,000 in equity that the IRS could get if they wanted to. Simply put, the IRS will not accept an offer of less than $10,000.

In addition to the equity in your assets, the IRS will also calculate how much money it will take from your future income. Calculating the amount the IRS can take from your future income is a bit complex, but the best explanation I’ve found is at www.nolo.com/lawcenter.

What if you Default on Your Offer in Compromise Agreement?

If you default on your repayment agreement, of if you fail to file and pay taxes at any time in the future, the IRS will reinstate your original tax debt, re-file a Federal Tax Lien, and resume collection efforts. In other words, if you make even one little mistake, you’ll be back in the same position as you were before your offer in compromise.

What is Tax Penalty Abatement?

Taxes. Everyone has to deal with them — no one is exempt. Sometimes situations arise that prevent people from getting them done on time and they are charged a penalty for their tardiness. To the relief of many, there is a solution: penalty abatement. Read on to see if you qualify to get your hard-earned cash back.

If someone is able to pay his or her taxes in full, they should; but if this is not possible, the person will incur penalties and see their tax bill rise even higher. When one is late in paying his or her taxes, the IRS evaluates this and automatically adds penalties to the taxpayer’s account. This means the penalty is added by the IRS without knowing the reasons for the taxpayer’s lateness. The person may have a valid reason for this delay and be entitled to penalty abatement — a refund or reduction of penalties. It can be difficult to prove one deserves penalty abatement, but with the help of professionals, one can get his or her money back.

Who Should Apply

Whenever a person can pay off their debt in full, they should — as soon as they can — but unfortunately for many, this is not possible, and penalties and interest grow daily, making the concept of penalty abatement a good option for many taxpayers.

Waiting to pay off a debt when one has the funds but just hasn’t gotten around to it is not a valid reason to ask for penalty abatement. For those who have already paid off their debt, they may be eligible to get penalty abatement on the penalties they previously paid.

In addition, those who had a good reason for filing late or not paying may also qualify for penalty abatement. Nevertheless, the IRS needs to be convinced absolutely that is it true, thus the process of penalty abatement usually involves a lot of documentation.

Valid Reasons to get a tax penalty abatement

 

Some circumstances that are valid to get penalty abatement include:

  • Natural disasters
  • If you are the victim of theft or embezzlement
  • Necessary records have been destroyed or lost
  • Bad advice from an accounting professional
  • Death in the family or serious illness of you or a family member
  • Alcohol or drug addiction of you or a family member
  • A long unemployment despite serious efforts to find work
  • Error in filing a new form for the first time
  • Psychological problem needing professional help
  • Fixed income because of retirement or other reasons
  • Acting as caregiver for someone who is unable to care for him or herself

The taxpayer should try to provide as much documentation as possible to help strengthen their case for penalty abatement. For example, if the problem was a theft, then a copy of the police report would be good to show in the penalty abatement case. Or, if there was a natural disaster, photos, newspaper clips, insurance claims and any other evidence of the disaster would greatly help one’s case. Basically, no matter what the claim for penalty abatement is, the person must be able to back up the story to convince the reviewer of its validity.

How to Get Penalty Abatement

As discussed previously, to receive penalty abatement, the taxpayer must be able to prove they were prevented from paying or from filing on time, due to issues that he or she could not control. Professional help is often sought when applying for penalty abatement because specific wording and a concrete understanding or the relevant IRS codes is necessary. To get penalty abatement, the taxpayer must demonstrate the validity of their claims to the IRS in writing.

The circumstances that one is citing for penalty abatement have to have occurred during the time the person fell behind as well as correlate with the reasons for the tardiness (some of these causes to receive penalty abatement were listed previously). The IRS also must see that the person has made an effort to pay back debts, such as a payment plan.

Lastly, when trying for penalty abatement, one should keep in mind that these causes are evaluated by an actual person at the IRS. Your penalty abatement case is up to that person’s discretion, so one should document their cause as well as they possibly can, and always remember to keep a record of everything remotely related to tax issues, because you never know when it may be needed.

Tax Relief Options

Are you feeling the burden of tax debt? Maybe you’re simply looking for the best tax-planning strategy, or perhaps you are trying to negotiate a better deal with the Internal Revenue Service. Whatever your situation, you have some legitimate options for relief.

Options for Tax Debt Relief

What if you owe the IRS more money that you could ever possibly pay? Believe it or not, the IRS will actually consider offering you tax debt relief from the full amount due. This might sound like a wonderful loophole. The catch, however, is that you must have a seriously delinquent tax bill that has gone to collections before the IRS will consider giving you a break.

It’s called an offer in compromise, and it’s exactly how it sounds – a compromise between you and the IRS. But don’t get your hopes up just yet. The IRS resolves less than one percent of overdue tax accounts with an offer in compromise, so you better consider all other tax debt relief options first. Additionally, you have no legal right to a compromise; it is solely at the discretion of the IRS.

Your House Can Help You with Tax Debt Relief

Tax debt relief may be right in your own home. You see, mortgage debt is considered “good debt,” because the interest is tax deductible. The interest on a back tax debt, however, is not tax deductible. Therefore, a common method for tax debt relief is to use the equity in your home to consolidate tax debt. Talk to your bank or credit union about tax debt relief in the form of a home equity loan or line of credit. Some lenders will loan up to 125 percent of your home’s value, but be careful – your past tax debt is now secured by your home. As a caveat, you should consult your attorney about this tax debt relief strategy if you are planning on declaring bankruptcy.

Where to Go For Advice on Tax Debt Relief

One of today’s most savvy financial counselors is Dave Ramsey and Suze Orman, whose books and TV shows have helped many with debt relief. Her Web site, Suzeorman.com, can be a powerful tool for understanding debt and how to eliminate it. If you have questions about tax debt relief, you can send her an e-mail.

Tax Debt Relief by Planning Ahead

One of the ways you can offer your children tax debt relief after you’re gone is by establishing a revocable living trust while you’re alive. This eliminates the requirement for probate costs, estate taxes and court fees to settle your estate. In the “old days,” all you needed was a will to delineate your wishes about your estate. Today, you simply must have a revocable living trust for tax debt relief purposes, unless you want to include Uncle Sam as one of your beneficiaries.

how does optima tax relief work?

Optima is a tax relief company that charges a fee, however before you pay a penny, they offer a 100% free consultation. During your initial consultation, you can ask just about anything about their service including the fees involved. Once you agree to the fee, Optima goes to work on your behalf to reduce your IRS tax bill.

Bankruptcy: The Final Option for Tax Debt Relief

No one likes the word bankruptcy, but it may be your last option for serious tax debt relief. There are some criteria that must be met in order for your tax debt to be eligible for discharge under bankruptcy. The Web site, Taxhelpers.com, has a good definition of what will work and what won’t.

 

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