Every year the IRS reports that billions of dollars in unpaid back taxes, interest, and penalties add to the already billions in uncollected taxes. The IRS is a feared creditor and they are looking to collect that debt that the government is owed. If you are one of the many taxpayers who need help with back taxes, we understand your problems and you are not alone! Community Tax Relief can provide you with back taxes help.
The amount of tax debt owed can quickly multiply and add up to an overwhelming amount that you just can’t pay. Many individual taxpayers fall behind for a variety of reasons: job loss, reduced income, major health issues, divorce, overall procrastination, and countless more. Small business owners may fall behind in payroll taxes, which can quickly escalate into a large tax debt, especially when adding the interest and penalties.
Maybe you’re worried that coming forward with a tax resolution will get you into more trouble. Maybe you think if you come forward, you will find out the amount you owe will end up being even larger than you imagined. Or you think if you keep quiet, the IRS might overlook you. Wrong.
Not doing anything is about the worst thing you can do, but what many taxpayers don’t realize there are many resolution options that allow you to resolve your tax debt for less than what you owe. Why not work with a firm you can trust? If you have the Community Tax Relief Tax Team on your side, you will have years of knowledge and experience in negotiating these resolution options with the IRS.
Tax Debt Settlement Options
Offer in Compromise (“OIC”)
The Offer in Compromise allows for any taxpayer to extend an offer the Internal Revenue Service for as much money as they are able to in a small time period (most ofetn 5-24 months) in return, the IRS will write-off or compromise the taxpayer’s outstanding liabilities. All of this is an intense and possibly time consuming process, but the end result helps our client greatly. We take a deep look at their allowable monthly expenses and income using the IRS framework as well as a net equity in assets analysis. This allows us to figure out the exact amount a taxpayer needs to offer the IRS for the Offer In Compromise to be successful. This is called the “pennies on the dollar” program.
Installment Agreement is a program where the taxpayer pays the Internal Revenue Service a monthly payment so they can pay their tax liabilities. Several installment programs can be chosen from.
Streamline Installment Agreement (“SIA”)
A streamline installment agreement is when a taxpayer’s assessed balance is less than $25,000.00 and the taxpayer can pay the entire balance in 60 months or less. The taxpayer doesn’t have to provide financial documents as long as they stay compliant, below $25,000.00. If they can afford a monthly payment plan that pays their entire IRS balance in full within 60 months.
Conditional Expense IA
This is used when a taxpayer has additional monthly expenses that they are paying for (such as credit cards, personal loans, 401K, etc) and must continue making these payments, but they can still full pay their entire IRS balance within 60 months. The taxpayer must provide a financial statement for this type of installment agreement and must PROVE those conditional expenses that they will continue to pay.
With a stair-step, the taxpayer agrees to pay a set amount for 12 months and then agrees to make a larger payment for the next 48 months so that the taxpayer full pays the tax liability within 60 months. This type of IA is generally used because the taxpayer is about pay off an expense (such as a car, mortgage, child support, student loan, etc).
Traditional Installment Agreement
This agreement is a“full pay” installment agreement in which the taxpayer pays as much as they can as determined by their financial documentation for the duration of their debt.
Partial Pay Installment Agreement (“PPIA”)
This installment agreement is an installment plan that will NOT full pay the taxpayer’s IRS liabilities within the collections statute. Basically, the taxpayer provides full financial disclosure and the IRS agrees to accept that monthly payment for the duration of the statute. This agreement can offer similar savings to those of the OIC, but the taxpayer must remain on the installment plan until the statute expires.
CNC status is used as a temporary resolution plan to keep the IRS from using enforced collection activity against a taxpayer. The taxpayer provides full financial disclosure to the IRS and if the taxpayer’s allowable monthly expenses exceed the taxpayer’s gross monthly income, the IRS determines that the taxpayer is suffering an economic hardship. As long as a taxpayer remains compliant and their income remains the same as it was when the CNC proposal was approved, the taxpayer can remain in this status until the CSEDs expire.
Penalty Abatement (PA)
The IRS may agree to relieve some of the penalties that have been assessed if we can show reasonable cause for falling behind and due diligence in resolving the debt on your part. A penalty abatement proposal asks the IRS to remove penalties for failure to file or pay tax on time. There are two critical elements of a successful Penalty Abatement petition: 1) Reasonable cause for the noncompliance; and 2) Due Diligence in resolving the tax debt. We prepare a detailed petition to abate penalties to re-create the context in which the penalties were assessed against the taxpayer.
Negotiating with the IRS to settle your back tax debt can be intimidating. The IRS tax code is astounding in its complexity. Trust the Community Tax Relief Team to work for you to negotiate a resolution you can afford to pay. Our Tax Team will analyze your tax situation and provide you with the best recommendations to settle your back tax debt.