Taxes are not always simple to understand.
However, the IRS still expects each taxpayer to know their tax obligations and pay the accurate amounts.
For some, that does not happen. Fortunately, the IRS allows for tax debt resolutions as the last resort for taxpayers before it takes severe action, such as garnishing wages.
Below, we define IRS tax resolutions and provide examples of debt relief solutions.
What Is a Tax Resolution?
If the IRS has reason to believe that you are violating federal tax laws (e.g., underpaying taxes or underreporting income), it can take action against you.
A tax resolution is an agreeable solution between the IRS and a taxpayer.
Typically, a tax professional, such as a tax attorney or accountant, facilitates the conversation and resolution process between you and the IRS.
What Are Examples of Tax Debt Resolutions?
There are many different types of tax debt resolutions, but the one that’s right for you depends on your situation.
The tax attorneys at Blake Goodman, PC, Attorney, can evaluate your case and help determine which resolution might yield the best result.
Keep in mind that this list is not exhaustive, and our attorneys can work with you to come up with a creative solution.
Offer in Compromise (OIC)
If a taxpayer is unable to pay the full amount of taxes they owe, the IRS may agree to an OIC.
The IRS wants to see that the taxpayer has no other resources available and will consider their income, expenses, and asset equity (i.e., the worth of your assets).
The IRS continues to issue penalties and interest for each day that your taxes go unpaid.
However, you may qualify for penalty abatement if you can provide a “reasonable cause” for failure to pay your taxes on time or in the full amount.
Ultimately, the IRS wants to get paid, so they may allow you to pay the taxes you owe over an extended period of time. There is no cost for setting up a short-term payment plan (those paid in 180 days or less).
For long-term installment agreements, however, the IRS will issue setup fees depending on how you apply for the payment plan.
Currently Not Collectible (CNC) Status
As unforgiving as the IRS can seem, they will not make you choose between paying your taxes and affording basic necessities.
The IRS will put your account in CNC status and stop any tax collections during times of hardship. To qualify, you must provide documentation of your income and expenses.
See What Our Tax Attorneys Can Do for You!
Bankruptcy, foreclosure, and tax liens are all intimidating to think about. At Blake Goodman, PC, Attorney, we want to help you regain control of your finances and future.
Lead attorney Blake Goodman has over 30 years of legal experience. Combined with his experience as a Certified Public Accountant, he has helped thousands of clients through different types of bankruptcy cases.
Call our tax resolution lawyers at 808-528-4274 or contact us online to schedule a free consultation.