Common Misconceptions about Tax Debt Relief

Posted on August 3, 2011 by admin

Tax debt can only be radically reduced if you are willing to make an offer-in-compromise which is subject to rejection by the IRS if you are still making the same type of income as when you defaulted. Your debt will only be compromised or reduced if you have lost income and the debt is old. It’s not likely to happen if your income is significant and you simply don’t want to pay.

When the IRS is forced to it will issue liens, levies, garnishments and as a last resort conduct a seizure of property. People fear these things for good reason. But none of them will take place unexpectedly. Each step that the IRS takes is done with plenty of forewarning. At least months will pass before action is taken.

The IRS will not suddenly garnish your wages for unpaid taxes. The tax payer will be notified by the IRS at least 30 days in advance of garnishment. First the tax payer is notified of the child support in arrearage or the outstanding taxes and given time to contact them in response. The hope is that the tax payer will set up a payment plan and begin making payments for the debt. If that doesn’t occur another notice is sent and once again they wait for a response. Again if they do not receive one the third and final notice goes out and 30 days later your wages are garnished.

A tax lien is the first step the IRS will take to collect past due taxes. It is best to work out a payment with them at that point. This will save you a lot of disappointment later. If you fail to resolve your tax debt at that time, it will lead to wage garnishment, liens on your property, levies on your bank account and later property seizure.

The misconceptions about tax debt relief are exaggerations of the opportunities to pay tax debt for less, leaving some with the belief that they will pay pennies on the dollar. Also, people are made to believe that the IRS is this evil monster that will arbitrarily swoop down on you and take your possessions. The IRS sends out notices on a timely basis. If you have responsibilities and you choose to ignore them, you will not be prepared to take action when prompted. As long as you respond to the notices in the time allotted you should be able to manage your IRS debt in a manner that suits your financial situation.

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Avoid Fake IRS Emails About Your Tax Return

Posted on August 2, 2011 by admin

There are many different scams out there. Every year, there are more and more people being caught in these types of scams by people claiming to be from the IRS. These people claim there is a problem processing your tax refund, and they need your bank account information to finish processing your refund. This is a scam and many people have had their bank accounts drained by these people.

This scam is called “phishing”. Phishing is when people pretend to be from a bank or government agency, claim that they have a problem with some aspect of your account, and then require your personal information to resolve the problem. Many people fall for these because they look official with the right words and even an official appearing logo in the email. Even the email address they are sent from appears to be legitimate. So what should you do if you get an email that claims to be from the IRS?

First, the IRS does not email you about your personal returns. Due to Federal laws and regulations, any request for information the IRS would have from you is conducted in writing with a letter mailed to your address. If you have moved since you filed your return, a change of address form will get the materials to your new address. You can also go to the IRS website and change your address through their system. This allows you to verify your information in case they do need to contact you. If you prefer to do it over the phone, their website has phone numbers to contact their account specialists and customer service representatives.

Secondly, whatever the email is asking of you, don’t do anything until you call the IRS themselves to verify the email. If you believe that it might be a genuine email from the IRS about your IRS tax return, call them and speak to a representative. They will be able to tell you if any emails were sent from their office in regards to your account. Do not reply to the email. You could be allowing for your personal information to be stolen and your bank account drained of funds.

Finally, the IRS reviews all returns themselves. If there is a discrepancy, they will contact you in writing. If you owe them money and need debt help, they will include programs available to help you repay your balance. If they cannot process your bank account information, they will print you a check and mail it. This is to protect your privacy and bank information from potential thieves. They have policies, procedures and laws that protect your personal information, such as social security numbers and bank accounts. They cannot violate these by sending you e-mails requesting this information.

In this age of identity theft and computer scams, one cannot be too safe with their personal information and account setting. It is very important to protect yourself from IRS email phishing scams. These tips can help you stay safe.

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3 Ways to Get Out of Tax Debt

Posted on August 1, 2011 by admin

Tax debt can be an ugly issue and with the current economical situation, more people are falling behind year by year. Taxes, just like any other bill are ultimately the individual’s responsibility. If someone is late on any type of bill, they will be charged interest. Keep in mind that the country needs everyone’s tax money in order to provide the citizens with the freedom people have come to know. There are several ways to get out of tax debt, but three of the best strategies are covered below.

One strategy is to enter into an installment agreement. This is similar to the easy-pay program people often see stores advertise, allowing people to make a monthly payment towards the full amount owed. The Internal Revenue Service, better known as the IRS is required to provide an installment agreement to any individual who owes $10,000 or less in taxes, provided the tax payer meets a few other requirements. The payer must have not made any late tax payments in the last five years and all of their tax returns must have been filed. The individual must agree to pay off the full debt in 36 months or less. Under this plan, the user may be able to get off with partial payment after the government evaluates the individual’s annual income and expenses. They will not let someone slip away paying a proportion of the amount, but go out and buy a luxury automobile, for example.

Another strategy is called an Offer in Compromise. This is a way for the IRS to collect a minimal amount if they do not believe they can possibly collect the full amount. The taxpayer will be instructed to fill out a couple of forms with the IRS and must meet a few other requirements to demonstrate their inability to pay the full amount of taxes. The individual must agree to pay all of their taxes in full and on time for the next five years. The IRS will also receive any tax refunds, payments and other credits until the amount is paid in full. While it will be somewhat of a hardship on the individual to not receive credits for their children or other expenses in the upcoming years, but it is better than facing legal penalties or bankruptcy today.

Taxes can also be forgiven under chapter 7 or 13 bankruptcy. Chapter 7 bankruptcy will allow the full amount of the debt will be excused. Under chapter 13 bankruptcy, the individual is still responsible for the amount of taxes the IRS believes they are capable of paying. Chapter 13 does not get the customer out of the full amount, but it is better than paying the full amount if the person is in a major rut in coming up with the money. The bankruptcy plan only applies under a few circumstances. The person must be at least three years late in their filing, the return is not fraudulent and the person is not guilty of tax evasion.

These three ways should be carefully evaluated before they are employed to determine what best fits the individual.

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Dealing with IRS Personal Tax Debt

Posted on July 29, 2011 by admin

People who have personal tax debt are at risk of receiving a federal tax lien or even having their wages garnished. In addition to the initial tax debt, penalties will be added to the balance until the entire amount is paid. The IRS tax system has different debt help solutions available to deal with personal tax issues.

If you do not consider yourself able to pay back the personal tax debt, it may be classified as non collectible by the IRS. Tax payers who do not have the funds or assets available for payment, may be able to file a form 433F. The form is a Collection Information Statement that details your assets. The IRS professionals will review this document and determine if you do or do not have the ability to repay the tax debt. If it is determined to be uncollectible, you will no longer have your wages garnished and levies will be removed.

File Bankruptcy for Tax Relief

Income tax bankruptcy may be a viable option for some people who need tax debt help. The IRS tax rules must be followed. Liquidation bankruptcy, commonly called Chapter 7, gets rid of the tax debt without payments. However, Chapter 13 bankruptcy instates a three to five year plan to repay a predetermined amount of debt. To have either of these methods eliminate tax debt they must comply with certain rules. The tax debt must be at least three years overdue, the filing date for the newest amount must be at least two years old, the debt must have been assessed by the IRS tax office at least 240 days prior to filing, fraud must not be involved including tax evasion.

Deal with Personal Tax Debt through OIC

OIC is called the Offer in Compromise. This is a method instated by the federal government that provides a method for people to pay their personal tax debt at a significantly reduced cost. The Form 656 must be completed by the taxpayer or their professional representative. The IRS will review each application, however less than 25-percent are typically accepted. The IRS is not obligated to accept an offer, so securing professional guidance may help you improve your chances of having the offer accepted.

Installment Agreements Help Deal with Personal Tax Debt

Instead of going to a bank to get a loan to pay off personal tax debt consider completing form 9465 and 433F. These IRS tax forms request an installment agreement with the IRS. The IRS will provide a more affordable rate than a bank which lets the taxpayer apply more toward the debt and get it paid more quickly. The IRS has four different types of agreements. The one you need is based upon the total debt.

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Eliminate your IRS Tax Debt

Posted on July 28, 2011 by admin

IRS tax debts can be very stressful. However, there are some steps that you can take to ensure that you can easily manage your IRS tax debt.

You can either decide to handle the tax debt situation yourself or you can hire a tax attorney. Then go over the tax returns that you filed – perhaps you overlooked certain deductions in your haste at filing returns. If such is the case it would be worthwhile to make an amendment in your tax return which will help you to lower the tax that you owe. Choosing a tax debt plan that is most suitable for your current financial situation is important too.

If your tax debts are less than $10,000, you can try and resolve the tax problem yourself. In such a situation, your debt help consists of five strategies. The first is to make arrangements for a monthly installment payment to the IRS. This is a binding contract and you will be expected to deposit monthly payments at the IRS. This amount is calculated by the IRS with your current income and your basic necessities in mind. For the purpose of defining “basic necessities”, only your food, mortgage and your travel to and from work is considered. This arrangement is an orderly one even though the interest that accrues can be still significant. As long as you have a paying job, this could be a good option.

The second strategy would be to settle for a partial payment installment agreement which is a new debt settlement feature of the IRS. This is an arrangement by which you can make long term payments to the IRS at a reduced amount.

There is also the “offer in compromise” feature that you can use which consists of making lump sum payments as part of short term payments which in effect will settle your tax debts for less than what you owe to the IRS.

The “Not currently collectible” program can also be worked on whereby the IRS will give you six months to one year time to straighten out your finances and at the end of which you must settle the tax debt amount.

The final option is of course to file for bankruptcy which discharges you of all tax debts. But this is possible only if it can be proved absolutely to the IRS that there is no way you can pay your debts.

If you owe more than $10,000 as tax debts to the IRS, then you should consider getting debt help in the form of a tax professional. Finding a tax attorney also requires some considerations. The tax professional should be a tax attorney, a certified public accountant or an enrolled agent. While choosing one, bear in mind that the Certified Public Accountant and the tax attorney can practice only in those states where they are licensed to practice. The enrolled agent can put forth your case in any state.

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Avoid These Three Mistakes with your Tax Settlement

Posted on July 27, 2011 by admin

It is common that people would learn from their mistakes. However, when it comes to IRS tax issues, these are the kind of mistakes you will not want to learn from. These are mistakes you will want to avoid! Unfortunately, a number of taxpayers were seen to commit some common mistakes over and over. It is critical to avoid these mistakes as they will make your debt skyrocket from $100 to $1000 easily. Be aware! Avoid these three mistakes with your tax settlement.

Procrastination

The IRS will not go away no matter what effort you put in to ignore them. Doing this will only drain you of your money even more. It is important that you read all and every single notice from this office, especially if you start receiving certified letters. Why? Because these letters and notices, though they contain unpleasant news on how much you owe the government, they also provide you with details of your legal rights! It will just make it more difficult for you to get debt help if you keep ignoring your rights.

Moreover, if you start receiving certified letters, take action! Otherwise, things will begin to be more expensive. This is because the IRS adds penalties and interest every single month that you do not pay your debt. And if this goes long enough, you will sure be seeing the dreaded IRS Levies and Liens.

Falling further behind

Meet your current tax obligations. It is easier to deal with the people from the IRS if the issue is temporary failure to settle taxes. Continued failure to pay taxes, however, is a different story.

Most taxpayers thought that if they have already fallen behind with their taxes, they simply could ignore their current dues. This is a deadly mistake. Other than your debts will skyrocket as have mentioned, it is going to be much more difficult to seek debt help from professionals. Not unless there is a perfectly good reason for you failing to pay your obligations.

The best that you can do is to be a good taxpaying citizen and the IRS will be easier to deal with when it comes to your debts.

Not filing your taxes

Many people refuse to file their taxes every year with the reason that they will not be able to pay for it anyway. This is another common yet debt deadly mistake. Aside from the fact that this is illegal, there are penalties for failure to file your taxes and also for late filing. This is, of course, in addition to the interest that is bound to be added to your unpaid taxes monthly! Avoid these penalties just by filing your taxes on schedule.

More so, if you are diligent in filing your dues even though they remain unpaid, you just might qualify for Penalty Abatement or an Offer to Compromise. So you see, filing your unpaid taxes on time may bring you good things after all.

So now you know the things you should avoid in managing your IRS tax issues. If you find yourself guilty of these offenses, do not despair! It is never too late to seek resolution. Get with a Tax professional and ask for debt help. And remember next time that to prevent further debt with the government, it is better to avoid these mistakes.

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