Q: I Owe The IRS A Lot Of Back Taxes, What Can I Do?
A: The IRS Offers A Fresh Start Program
Millions of people are behind with their tax payments. Owing back taxes to the Internal Revenue Service (IRS) is bad enough by itself, but it gets even worse when the IRS adds interest and penalties to it every month that you have not paid your taxes in full. This can complicate your financial situation and might lead to wage garnishment, liens and levies on your bank accounts and properties and even confiscation of your properties. Some people do not even know that they owe taxes to the IRS, some do know but believe that the IRS has made a mistake but do nothing about it, and some can truly not afford paying the tax that they know they owe to the IRS.
If you are in the first category, you eventually will be hit with the bad news!
If you are in the second category, I highly recommend that you contact the IRS or have your CPA do it on your behalf, because the IRS is not going to correct its mistake unless you provide them with evidence. And the longer you wait, the more interest and penalty will accrue on the taxes that you owe.
If you are in the third category, you are in luck, because you are in the right place :) Despite the general belief, the IRS is not as heartless as it seems to be. In fact, the IRS has many programs to help taxpayers. One of these programs is to help people who are behind their taxes and it is called the IRS Fresh Start Initiative (IFSI).
The Fresh Start Program consists of 4 main tools to help taxpayers who struggle paying of their taxes.
When you neglect or fail to pay your taxes, the IRS has the legal right to keep your personal assets until you eliminate your debt. This is called the tax lien. The tax levy is next step that the IRS takes and it permits the IRS the actual seizure of your assets. Both tax lien and levy, even if do not end up in confiscation for your assets, can damage your credit score. If the tax lien is issues, the Fresh Start Program can help remove the lien: You will still owe the tax to the IRS, but by removing the lien, we can help protect your credit score while you are trying to payoff your back taxes.
Installment Agreement
If you cannot pay off your debt in full, we can put you in an installment agreement with the IRS, so can can make smaller monthly payments until you eliminate your debt. The Fresh start Program increases access to the Installment Agreement. The IRS has 5 different installment agreements:
Penalty Relief
The IRS has different types of penalty to impose on tax payers:
Offers in Compromise
On occasion, the IRS settles for less than the full amount of taxes that you owe. If you meet the requirements, you can use the Offer in Compromise (OIC) to pay less than what you originally owed to the IRS. Under the Fresh Start Program, the IRS shows more flexibility in OIC. There are three types of OIC available to taxpayers:
We Can Help
If you are behind your taxes and you do not know how to pay off your taxes, we can help you protect your credit score and avoid the IRS lien and levy, make the IRS forgive some or all of the penalties they imposed on you, put you on an installment agreement with a reasonable monthly payment where you feel comfortable and it does not make financial hardship for you, and finally we try get an offer in compromise and have the IRS forgive some of your taxes. Please contact us for a first time free consultation
If you are in the first category, you eventually will be hit with the bad news!
If you are in the second category, I highly recommend that you contact the IRS or have your CPA do it on your behalf, because the IRS is not going to correct its mistake unless you provide them with evidence. And the longer you wait, the more interest and penalty will accrue on the taxes that you owe.
If you are in the third category, you are in luck, because you are in the right place :) Despite the general belief, the IRS is not as heartless as it seems to be. In fact, the IRS has many programs to help taxpayers. One of these programs is to help people who are behind their taxes and it is called the IRS Fresh Start Initiative (IFSI).
The Fresh Start Program consists of 4 main tools to help taxpayers who struggle paying of their taxes.
- Tax Lien Avoidance
- Installment Agreement
- Penalty Relief
- Offers In Compromise
When you neglect or fail to pay your taxes, the IRS has the legal right to keep your personal assets until you eliminate your debt. This is called the tax lien. The tax levy is next step that the IRS takes and it permits the IRS the actual seizure of your assets. Both tax lien and levy, even if do not end up in confiscation for your assets, can damage your credit score. If the tax lien is issues, the Fresh Start Program can help remove the lien: You will still owe the tax to the IRS, but by removing the lien, we can help protect your credit score while you are trying to payoff your back taxes.
Installment Agreement
If you cannot pay off your debt in full, we can put you in an installment agreement with the IRS, so can can make smaller monthly payments until you eliminate your debt. The Fresh start Program increases access to the Installment Agreement. The IRS has 5 different installment agreements:
- Guaranteed: If you owe less than $10,000 and agree to repay it in three years or less
- Streamlined: If you owe less than $50,000 and agree to repay it in less than six years,
- Partial Pay: You will make an agreed upon monthly payments for a specific time period (regardless if you pay off your entire debt or not).
- In Business: If you owe less than $25,000 and agree to repay it in less than two years.
- Routine: This is for larger amounts and longer repayment periods.
Penalty Relief
The IRS has different types of penalty to impose on tax payers:
- Late payment penalty
- Late filing penalty
- underestimated tax penalty
Offers in Compromise
On occasion, the IRS settles for less than the full amount of taxes that you owe. If you meet the requirements, you can use the Offer in Compromise (OIC) to pay less than what you originally owed to the IRS. Under the Fresh Start Program, the IRS shows more flexibility in OIC. There are three types of OIC available to taxpayers:
- Doubt as to Collectability: This is the most common type of OIC, in which you cannot pay off your back taxes even if you sold your assets and/or paid in installment prior to the end of the collection time period (which normally is 10 years from the time of the tax assessment.)
- Doubt as to Liability: the IRS allows you to dispute the liability amount. Here you must submit documentation to support your legitimate position. Filing this OIC usually results in e "mini audit" of the taxpayer by the IRS.
- Effective Tax Administration: In this case you can pay of your tax and you do not dispute the amount you owe, but have exceptional circumstances, such as if the collection could cause significant economic hardship or long-term illness.
We Can Help
If you are behind your taxes and you do not know how to pay off your taxes, we can help you protect your credit score and avoid the IRS lien and levy, make the IRS forgive some or all of the penalties they imposed on you, put you on an installment agreement with a reasonable monthly payment where you feel comfortable and it does not make financial hardship for you, and finally we try get an offer in compromise and have the IRS forgive some of your taxes. Please contact us for a first time free consultation