Help With Tax Debt
Although the best way to avoid problems with the IRS is to pay your tax debt as quickly as possible by either obtaining a loan, liquidating savings accounts, or even borrowing against a 401K or life insurance, for some people is not an option. If you cannot do any of the above, don't panic! It is still possible to settle tax debt with the IRS.
If your financial situation is so bad that you have difficulties paying your monthly bills, you might be a candidate for a Currently Non Collectible (CNC) status. Be prepared to supply the IRS with completed financial statement and additional documents to support your situation before your request can be granted. However, if your case is placed on CNC, you will not be required to pay your back taxes until your financial situation improves. There are some conditions to this agreement, one of which not to accrue any new liability and to file all returns on time. In addition, the IRS reserves the right to review your financial condition every 12-24 months. You should also be aware that CNC status does not stop the accrual of penalties and interest.
Another option to resolve your federal tax liability is to negotiate a payment plan (also known as an installment agreement) for your debt. Once again, the amount of your monthly installments will depend on your ability to pay. However, there is something that needs to be clarified about the IRS payment plans. What you can afford to pay the IRS on a monthly basis is not always what you believe you can afford. The IRS applies National Standards for expenses when calculating your disposable income. In other words, if you have an expensive car or large credit card payments, these expenses might not be taken into consideration by the IRS. As with any IRS tax debt settlement, you have to make sure that all subsequent tax returns are filed and paid in full to prevent a default of your payment plan agreement.
An Offer in Compromise is probably one of the most widely advertised IRS resolution options. Many companies promise to settle your IRS debt for pennies on the dollar. However, an Offer in Compromise is not something the IRS will automatically agree on & only a small percentage of requests are accepted. Because an Offer in Compromise allows a delinquent taxpayer to settle the debt for less than the full amount, the IRS digs deep into your financial information to make sure there is nothing you can sell, refinance or borrow against to full pay your debt. Equity in your assets and a difference between your average monthly income and allowable expenses are two main figures that will be used by the IRS to calculate your Offer amount.
Although the IRS made some modifications to the Installment Agreement and Offer in Compromise requirements under its Fresh Start program, negotiating the best resolution option for your tax debt remains a complex process that often requires experience and knowledge of the IRS Code.
At 20/20 Tax Resolution we are trained to handle negotiations with federal and state taxing authorities. Before these negotiations take place, we analyze our client's financial situation to determine the best way to deal with your debt. Even if you are not ready to hire a tax resolution specialist, but would rather try to resolve the situation by yourself, we are still willing to talk to you to make sure you do not make the wrong decision & as just requesting one of these resolutions can have consequences. 20/20 Tax Resolution provides free consultation with our Enrolled Agents where you can ask questions and discuss your tax issues.
If your financial situation is so bad that you have difficulties paying your monthly bills, you might be a candidate for a Currently Non Collectible (CNC) status. Be prepared to supply the IRS with completed financial statement and additional documents to support your situation before your request can be granted. However, if your case is placed on CNC, you will not be required to pay your back taxes until your financial situation improves. There are some conditions to this agreement, one of which not to accrue any new liability and to file all returns on time. In addition, the IRS reserves the right to review your financial condition every 12-24 months. You should also be aware that CNC status does not stop the accrual of penalties and interest.
Another option to resolve your federal tax liability is to negotiate a payment plan (also known as an installment agreement) for your debt. Once again, the amount of your monthly installments will depend on your ability to pay. However, there is something that needs to be clarified about the IRS payment plans. What you can afford to pay the IRS on a monthly basis is not always what you believe you can afford. The IRS applies National Standards for expenses when calculating your disposable income. In other words, if you have an expensive car or large credit card payments, these expenses might not be taken into consideration by the IRS. As with any IRS tax debt settlement, you have to make sure that all subsequent tax returns are filed and paid in full to prevent a default of your payment plan agreement.
An Offer in Compromise is probably one of the most widely advertised IRS resolution options. Many companies promise to settle your IRS debt for pennies on the dollar. However, an Offer in Compromise is not something the IRS will automatically agree on & only a small percentage of requests are accepted. Because an Offer in Compromise allows a delinquent taxpayer to settle the debt for less than the full amount, the IRS digs deep into your financial information to make sure there is nothing you can sell, refinance or borrow against to full pay your debt. Equity in your assets and a difference between your average monthly income and allowable expenses are two main figures that will be used by the IRS to calculate your Offer amount.
Although the IRS made some modifications to the Installment Agreement and Offer in Compromise requirements under its Fresh Start program, negotiating the best resolution option for your tax debt remains a complex process that often requires experience and knowledge of the IRS Code.
At 20/20 Tax Resolution we are trained to handle negotiations with federal and state taxing authorities. Before these negotiations take place, we analyze our client's financial situation to determine the best way to deal with your debt. Even if you are not ready to hire a tax resolution specialist, but would rather try to resolve the situation by yourself, we are still willing to talk to you to make sure you do not make the wrong decision & as just requesting one of these resolutions can have consequences. 20/20 Tax Resolution provides free consultation with our Enrolled Agents where you can ask questions and discuss your tax issues.
