How to Handle IRS or State Back Tax Issues

IRS Tax Relief

You know what they say about death and taxes. How long can you delay the inevitable and hold off paying the IRS what they are due without serious repercussions? It is time to request IRS tax relief when the burden of late payments and owed back tax becomes unmanageable. The IRS is not the enemy and needs its fair share of compensation. Partner with them to address outstanding IRS issues like back taxes and get the tax relief necessary to begin planning for your future again.

Options for Taxpayers

The IRS has a number of options available for tax relief. Select the one that best suits your specific situation. Choices include:

  • The IRS Installment Agreement. This may be the best option for a number of reasons. The IRS views the taxpayer as compliant, lowers the number and frequency of IRS letters and phone calls, and reflect the good intent of the taxpayer. It can be used as a solution in the short-term, while still considering other possible methods. This solution is flexible and is available at all times, appeasing the IRS. Taxpayers will continue to have to track payments, accrue interest, and it can take longer to pay off the full amount.
  • Filing of an amended tax return or one after the deadline. When no returns were filed, it is possible to file a return after the deadline. An amended tax return can potentially reduce taxpayer liability, as when liabilities were originally overstated. If for some reason, the taxpayer were not able to file a return, the IRS could file a substitute for the return with the minimal deductions and exemptions necessary for compliance. This is another way to reduce a direct reduction in liability. Filing later can work to your benefit when a tax refund is received after being withheld. A 3 year limitation law applies to any refund claim and can be applied to any owed balance. This option decreases tax liability and reduces possible penalties and interest. It does acquire tax code information and has an issued statute of limitations.
  • The Offer in Compromise (OIC). This is that “pennies on the dollar” much touted in advertisements. The taxpayer’s expenses, income, equity and assets are weighed against their outstanding debt to come to an agreement. Candidates best suited are those with higher liability and lower paying ability. Potential candidates for the program should have no felonious returns, have prepared every estimated tax deposit and payments, and cannot be bankrupt. The OIC program allows taxpayers to retain certain assets, suspends the majority of collection actions, and reduces the debt through settlement. In this program, the taxpayer must deposit higher payments initially, follows strict measures against noncompliance, even 5 years after the program, may be required to liquidate assets, may take years to complete.

The IRS can take steps to initiate actions against taxpayers with substantial amounts in back taxes that take no measures to pay on the amount owed. Within a ten year window, the IRS can potentially:

  • File a Notice of Federal Tax Lien on property.
  • Serve a Notice of Levy on the property.
  • Use a levy for the purposes of collecting back taxes.

Work with credit counselors to review your situation with you and come to a decision on the best approach for IRS tax relief.

Last modified: January 4, 2018

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