| Most citizens in the US comply with the tax authorities | | | | tax attorney is invaluable for their experience in |
| on a voluntary basis. They file their tax returns and | | | | preparing applications and negotiating with the IRS. |
| pay whatever is due in order to keep the country | | | | They may also be required for an appeal if your case |
| strong and financially stable. | | | | is rejected. |
| The most common reason for failing to keep to the | | | | Nine times out of ten, a tax professional is worth more |
| tax rules is a lack of information. And in most cases | | | | than their fee, because the IRS will take advantage of |
| the IRS will take steps to help the taxpayer comply | | | | someone who isn't entirely sure of the process. |
| with all the relevant rules. | | | | There are three main categories that can be used to |
| But if can happen that you get into a position where | | | | justify reducing an overdue tax account.a) If there's |
| you owe the IRS an amount of money that you can't | | | | doubt whether the tax is dueb) If there's doubt |
| pay. For example, your tax returns might have been | | | | whether the full amount of tax will ever be paidc) The |
| incorrect for a number of years, meaning that you've | | | | tax assessment is correct, but due to certain |
| paid less tax than is due. If that happens over a | | | | circumstances (eg financial hardship) the taxpayer |
| number of years, the outstanding amount can be | | | | can't pay |
| substantial when penalties and interest are taken into | | | | If you go for the third option (financial hardship), your |
| account. | | | | OIC application should be successful if you can show |
| Well, the good news is that there are IRS debt relief | | | | that the amount of tax owed is more than you could |
| options that can help people or businesses in your | | | | pay off in 5 years. |
| position. | | | | Once an application is made, the IRS looks at all the |
| IRS Debt Relief 1) IRS Tax Relief Settlement: This will | | | | payment options open to the taxpayer in relation to |
| allow a taxpayer to settle their debts for a percentage | | | | the state of their personal finances and takes a |
| of the amount owed, depending upon their age, assets | | | | decision; Would they rather have part of the tax debt |
| and personal budget. | | | | or none of it? Their decision is largely based on their |
| IRS Debt Relief 2) Offer In Compromise: This scheme | | | | evaluation of whether the taxpayer will ever be in a |
| was developed by Congress to allow taxpayers a | | | | position to pay the full amount. |
| one time only chance to clear their debt to the IRS for | | | | The IRS then make an offer to the taxpayer - An |
| a fraction of the actual amount due. The IRS will look | | | | amount that they think the taxpayer can reasonably |
| at your case and will, according to certain guidelines, | | | | be expected to pay in light of their financial situation. |
| agree to settle your debt for a certain amount. | | | | IRS Debt Relief 3) Payment Plan: In some cases, the |
| However, as you would imagine, there are certain | | | | IRS will give taxpayers time to pay their tax debt |
| obstacles that must be overcome before your tax | | | | when they are convinced that they can't settle their |
| debt is reduced. | | | | liability in one payment. |
| Tax legislation gives the IRS power to settle federal | | | | If you are unable to pay your tax liability, your account |
| tax liabilities for less than the true amount when the | | | | can be flagged "not currently collectible". This means |
| taxpayer can show exceptional circumstances. For | | | | that the IRS will not pursue collection until you are in a |
| example, if they can show that tax collection would be | | | | position to accept a payment plan or an Offer in |
| unfair, inequitable or impose financial hardship. | | | | Compromise is made. |
| The main problem with this scheme is that it's | | | | IRS Debt Relief 4) Penalty Abatement: If you can't pay |
| extremely popular. In fact so many unsuitable cases | | | | your outstanding tax debt due to certain |
| were submitted that the IRS, in an attempt to | | | | circumstances that are out of your control, it's possible |
| discourage OICs, started to investigate each case | | | | to challenge the interest and penalties that have been |
| closely. However, since the early 1990s, due to a | | | | added to your account. This will help to reduce the size |
| mounting backlog of uncollected taxes, the IRS has | | | | of your tax liability.a) Statutory Exceptions - Tax code |
| eased their requirements in order to settle more cases. | | | | changes from minor to majorb) Hardship beyond the |
| In fact, the OIC scheme is one of the most powerful | | | | taxpayer's control - eg bad tax advice, fire, flood, |
| IRS debt relief tools available to taxpayers. Millions of | | | | natural disaster etcc) IRS errors/mistakesd) |
| dollars have been saved by taxpayers who have | | | | Reasonable cause - Death, serious illness, ignorance of |
| used the Offer in Compromise scheme. However, | | | | the law etc |
| before you think that this is the answer to all your | | | | Again, due to the complexity of this scheme, it's |
| problems, let me warn you that the IRS settles less | | | | advisable to appoint an experienced tax advisor. |
| than one percent of tax debts through the OIS | | | | Applications for penalty abatement have to be |
| scheme. | | | | extremely specific and comply with all the IRS rules |
| You can submit your own OIC application, but due to | | | | and regulations. |
| the complexity it's best to secure professional help. A | | | | |