Everything You Need to Know about Tax Resolution

April 22, 2019

In 2009, approximately 8.2 million Americans owed the IRS $8.3 billion in back taxes, interest, and penalties. This is an average of over $10,000 in debt per person, and the situation has not improved. Luckily, there is hope. To learn more about the most effective tax resolution methods, keep reading.

Effective Tax Resolution Methods

If you are in over your head in back taxes, interest, and penalties due to the IRS, you are not alone. Fortunately, there are experienced tax professionals who have years of experience with tax resolution to help you successfully through this trying time. Today, we will highlight the most effective methods of resolving income tax debt with the IRS.

Installment Agreement

An installment agreement is one of the most common tax resolution methods used by tax professionals. Under an installment agreement, the taxpayer makes 72 even installment payments of the debt, making it manageable and not overwhelming. Once the tax debt is paid in full, the IRS will remove the federal tax lien held against the debtor up until that point.

Partial Pay Installment Agreement

The terms of a partial pay installment agreement are similar to those of a standard installment agreement. It differs, however, in that you have until the statute of limitations expires, normally 10 years, to pay your tax debt back. This drastically reduces your monthly payments. Unfortunately, your financial situation is subject to review by the IRS every two years. If the IRS determines that your income has increased significantly, it is at their discretion to raise your monthly payments. If your financial situation does not improve, and you still owe income tax at the end of the statute of limitations, your debt is wiped clear and you no longer have to pay your monthly installments.

Currently not Collectible

Currently not collectible is an extremely useful tax resolution method. Under this status, all collection attempts by the IRS are suspended. To qualify for this status, the IRS will consider national standards for basic living expenses. If they determine your expenses legitimately exceed your income, they will cease debt collection attempts.

Offer in Compromise

Commonly, people who made more than expected freelancing or started a business in the previous calendar year find themselves with an unexpectedly large tax bill. Many of these people benefit from an “offer in compromise”. This program allows an individual to satisfy the entire tax debt while paying a lesser amount, such as the original tax bill without any penalties or interest.

Furthermore, if paying your entire tax bill causes a legitimate financial hardship for you, you may qualify to pay less than you originally owed before penalties and interest. Keep in mind, if you qualify for this program, the IRS will continue to review your financial status to ensure you still cannot afford to make larger payments.

File Returns

Frequently, the vast majority of your tax debt can be wiped clean if you file your taxes. This is because the IRS imposes interest and fines on estimated taxes if you fail to file. However, if you made fewer than $12,001 in 2018, you do not need to file. If you made $12,001 or more, you will owe penalties and interest if you did not file your taxes. The most common tax resolution method to have penalties and interest written off in this circumstance is submitting a penalty abatement.

Seek Professional Help with Tax Resolution Today

For most people, taxes are complicated and frustrating. With a knowledgeable professional tax accountant on your side, you can find tax season this year stress free. Here at Geaux Tax Resolution, we specialize in resolving tax debts on your behalf. For more information on expert tax resolution assistance, contact us today. We can’t wait to hear from you!