Millions of Americans are struggling to pay their taxes due to the long-lasting effects of the pandemic, the cost of living crisis, and the 2022 bear market. Many of them have had liens and levies placed on their property. The IRS can seize their homes, cars, savings, retirement accounts, and even a part of their earnings. Fortunately, there is a comprehensive tax forgiveness program. Let’s have a closer look at how Louisiana tax resolution works.
How Can I Avoid Tax Liens and Levies?
If you don’t pay your taxes on time, the IRS can place a lien on your property. This means that they have a right to your assets if you don’t settle your debt, and this alerts creditors to the fact that you owe the IRS, and it makes it harder for you to borrow money in the future. If you still don’t pay the outstanding balance after a lien has been placed on your property, the IRS makes an attempt to claim your assets.
This is called a levy, and it’s much worse than a lien because you might lose your home, car, savings, or income. The best way to avoid liens and levies is to pay your taxes on time. If you can’t do this, reach out to a tax specialist. They can assess your situation and help you access the IRS forgiveness program. This allows you to either pay off your debt slowly, pay less, or defer your payments until your financial situation has improved.
Pay Your Taxes on Time
The best way to avoid problems is to always file and pay your taxes on time. If you’re an employee, your employer automatically withholds federal income tax from your wages, so you don’t have to worry about saving money to pay your taxes. However, this isn’t the case if you’re self-employed, or if you run a small business. In this case, you have to keep track of your income and estimate how much you will pay in taxes.
The best way to prevent tax problems is to withhold some money in a savings account each month. The exact amount depends on your income, expenses, and tax band. If you’re not sure how to estimate your tax bill, speak to us at Geaux. We can help you come up with a formula that works for your business, so you don’t fall short or unnecessarily withhold too much money.
Make Use of the IRS Tax Forgiveness Program
Don’t panic if you can’t pay your tax bill. Instead, reach out to a tax expert and ask them to analyze your situation. If you haven’t filed your taxes yet, do so immediately. The penalties for late filing accumulate much more quickly than those for late payment. That’s why it’s worth submitting your return even if you know you can’t pay your tax bill.
Although the IRS believes that most people can eventually pay their bills, they understand that taxpayers sometimes run into issues that prevent them from meeting their obligations. The forgiveness program allows taxpayers who are struggling with unmanageable debt. Ask your tax advisor about the various options and which one could be suitable for you. Your tax bill can either be spread out, deferred, or reduced.
The most accessible tax resolution method is the installment agreement. When you set up an IA with the IRS, your payments are spread out over many months or years, so it’s easier for you to pay off your debt. If you owe the IRS less than $50,000, you can set up your installment agreement online. If you owe more than that, you have to reach out to them. In this case, working with a tax specialist is advisable because your situation is more complex.
It’s important to consider all your options before setting up an installment agreement. You have to pay the IRS a setup fee and interest on the outstanding balance. Currently, the rate is 0.25% per month, but it fluctuates. That’s why using a zero-interest loan or credit card is sometimes a more cost-effective way of paying off tax debt than using an installment agreement.
Offer in Compromise
The offer in compromise is the most sought-after tax resolution option because it reduces the outstanding amount. This solution is suitable for people who might still have an income but are unlikely to have enough money to pay the full amount in the next few years. Most offers in compromise are rejected because the IRS believes that almost all taxpayers can eventually pay off their debts.
You might be a good candidate if paying the full amount would cause hardship. Before applying, you have to file all your previous tax returns. Once you’ve submitted the necessary forms, IRS officials determine your eligibility by looking at your income, expenses, and assets. To increase your chances of success, hire a Louisiana tax resolution specialist.
Currently Not Collectible
Currently not collectible status is a good solution for people who don’t have any money to spare at the moment. They might have lost their jobs or become too unwell to work, so they don’t have an income. It’s important to remember that currently not collectible status isn’t permanent, and interest continues to accumulate on the outstanding amount. Unless more than ten years have passed, the taxpayer has to restart payments once their situation improves.
There might be another option if you’re not eligible for the offer in compromise or currently not collectible status. Innocent spouse relief is a tax forgiveness solution open to people who are in debt because their spouse made a mistake. Only people who didn’t know about the error are eligible.
At Geaux, we can also help you to get the fees and penalties removed from your account. Because you have to pay interest and a penalty of up to 25% if you file or pay late, this could make a significant difference. Penalty abatement is available to people who have never had issues with the IRS before and those who have a legitimate reason for filing or paying their taxes late. Acceptable reasons include illness and the death of a close relative.
Choosing a Louisiana Tax Resolution Specialist
If the IRS has placed a lien or levy on your property, don’t try to resolve the situation on your own. Reach out to an experienced tax professional, who can determine which of the above-named forgiveness programs you’re eligible for. Always choose someone in your local area because they can assist you with your state taxes as well as the federal taxes.
At Geaux, we’ve been helping Louisiana residents with their tax problems for many years. Bryon, our team leader, previously worked for the IRS, so he has first-hand knowledge of how the system works. If you’re worried about your taxes, he’s one of the best people to speak to because he has over 25 years of experience in public accounting.
People who fail to pay their taxes risk losing their assets. The IRS can place a lien on homes, cars, income, savings, and even retirement accounts. If the taxpayer doesn’t react, the IRS then places a levy on the assets and seizes them. Contact us at Geaux Tax Resolution to find out more about the IRS tax forgiveness program, which protects you from liens and levies. Our experienced Louisiana tax resolution specialists are happy to help.