by Renee Lawson | Apr 21, 2025 | Tax Preparation, Tax Resolution
If you owe taxes to the IRS and can’t pay the full amount, it’s important not to panic. Tax debt is a serious issue, but it’s one thing that can be resolved with the right approach and a clear plan. Ignoring the problem won’t make it go away; in fact, it will likely make things worse. At Action Tax Relief we spend all day every day dealing with tax debt. Here’s what you should do right away to tackle your tax debt head-on and avoid further complications.
Step 1: Don’t Ignore IRS Notices
The first step is to open and carefully read any correspondence you receive from the IRS. These notices will detail the amount you owe, including penalties and interest, and provide deadlines for action. Ignoring these letters can result in escalated collection efforts, such as wage garnishments, bank levies, or tax liens.
Step 2: Assess Your Financial Situation
Before taking any action, take a close look at your finances. Ask yourself:
- How much can I realistically afford to pay right now?
- Are there any assets I could sell or liquidate to cover the debt?
- What are my monthly income and essential expenses?
Understanding your financial position is crucial for determining which resolution options are viable for you. Keep in mind that the IRS will also request this information if you negotiate a payment plan or other arrangement.
Step 3: File Your Tax Returns
If you have unfiled tax returns, file them as soon as possible. The IRS requires all past-due returns to be filed before it will consider any resolution options. Additionally, filing can help you avoid additional penalties for failure to file, which can add up quickly.
Even if you can’t pay what you owe, filing your tax return shows good faith and may prevent the IRS from escalating collection actions.
Step 4: Explore Payment Options
The IRS understands that not everyone can pay their tax debt in full immediately. That’s why they offer several payment options designed to make it easier for taxpayers to meet their obligations. Here are some of the most common options:
Installment Agreements
An installment agreement allows you to pay your tax debt over time through manageable monthly payments. There are two main types:
- Short-Term Payment Plans: For debts that can be paid off within 180 days.
- Long-Term Payment Plans: For larger debts requiring extended repayment periods.
Both options require you to provide detailed financial information to the IRS, including income, expenses, and assets.
Offer in Compromise (OIC)
An Offer in Compromise allows you to settle your tax debt for less than the full amount owed. This option is typically available to taxpayers who can demonstrate that paying the full amount would cause financial hardship.
While an OIC can be an excellent solution for eligible taxpayers, it’s important to note that the application process is complex. Working with a tax resolution professional can significantly improve your chances of approval.
Temporary Delay in Collection
If you’re experiencing extreme financial hardship, the IRS may temporarily delay collection efforts. While this doesn’t erase your debt, it provides breathing room to get your finances in order.
Step 5: Communicate with the IRS
Proactively communicating with the IRS can prevent your situation from escalating. Reach out to discuss your options and let them know if you’re unable to pay in full. Be honest and cooperative; the IRS is more likely to work with you if you demonstrate good faith.
If the idea of speaking with the IRS feels intimidating, consider hiring a tax resolution professional to represent you. This ensures that your rights are protected and that you have an experienced advocate handling the process on your behalf.
Step 6: Avoid Additional Penalties
Failing to address your tax debt can result in additional penalties and interest, which increase the total amount you owe. To avoid further financial strain:
- Pay What You Can: Even partial payments can reduce your debt and limit interest accrual.
- Stay Current: File all future tax returns on time and pay any new taxes owed promptly.
Step 7: Protect Your Assets
If your tax debt remains unresolved, the IRS may take enforcement actions, such as filing a tax lien, garnishing your wages, or seizing your bank accounts. To protect your assets, address your tax debt as soon as possible and consider professional help.
Step 8: Seek Professional Assistance
Dealing with tax debt can be overwhelming, but you don’t have to face it alone. A tax resolution professional can:
- Analyze Your Situation: Evaluate your financial circumstances and determine the best course of action.
- Negotiate with the IRS: Secure a payment plan or settlement that works for you.
- Ensure Compliance: Help you file all required returns and stay on track moving forward.
Hiring a professional not only saves you time and stress but also increases your chances of a successful resolution.
Conclusion
If you’re struggling to pay your tax debt, taking prompt and informed action is essential. By understanding your options, communicating with the IRS, and seeking professional assistance, you can resolve your tax issues and move forward with confidence.
Remember, you don’t have to navigate this process alone. At Action Tax Relief, we’re here to help you every step of the way. Call us at 937-268-2737 or visit www.ActionTaxRelief.com to take the first step toward financial freedom today.
by Renee Lawson | Apr 7, 2025 | Tax Preparation, Tax Resolution
Dealing with a tax debt can be a stressful experience, especially when you’re unsure how long the IRS has to collect what you owe. Fortunately, the IRS is bound by a statute of limitations, which limits the amount of time they have to pursue collection on a tax debt. Understanding this timeline is crucial for taxpayers facing collection efforts or seeking a resolution.
In this blog post, we’ll explore the statute of limitations on tax debt, exceptions to the rule, and how you can take steps to resolve your tax issues effectively. If you’re struggling with tax debt, Action Tax Relief is here to help.
What Is the IRS Statute of Limitations on Tax Collection?
The statute of limitations for IRS tax collection is generally 10 years. This means the IRS has 10 years from the date the tax debt was assessed to collect the outstanding balance. Once this period expires, the IRS can no longer legally pursue collection, and the debt is effectively erased.
Key Points About the 10-Year Rule:
- The 10-year clock starts on the date the IRS officially assesses the tax.
- This date is typically when you file your return, or if you fail to file, when the IRS prepares a substitute return on your behalf.
- Penalties and interest accrue during the 10-year period, potentially increasing the amount owed significantly.
It’s important to note that while the statute of limitations is a powerful protection for taxpayers, the IRS will use every tool at its disposal to collect the debt within this time frame.
Exceptions to the 10-Year Rule
There are several scenarios in which the statute of limitations may be extended or paused, giving the IRS more time to collect. These include:
Filing for Bankruptcy
If you file for bankruptcy, the statute of limitations is temporarily suspended during the period your case is pending. Once the bankruptcy process concludes, the IRS will resume its collection efforts, and the 10-year clock will pick up where it left off.
Submitting an Offer in Compromise (OIC)
When you submit an Offer in Compromise, the statute of limitations is paused while the IRS reviews your application. If your OIC is rejected, the clock resumes. However, if your offer is accepted, your debt will be settled, and the statute becomes irrelevant.
Leaving the Country
If you leave the United States for an extended period, the statute of limitations may be suspended. The IRS considers absences from the country as interruptions to the collection timeline, ensuring they have ample opportunity to pursue the debt upon your return.
Entering into an Installment Agreement
While an installment agreement doesn’t pause the statute of limitations, it can impact how quickly the IRS pursues collection. By entering into a payment plan, you demonstrate good faith in resolving the debt, potentially preventing aggressive enforcement actions.
What Happens After the Statute of Limitations Expires?
Once the 10-year period expires, the IRS can no longer legally enforce collection of the debt. However, the expiration of the statute doesn’t automatically remove the debt from your account. The IRS may file a Notice of Federal Tax Lien, which can remain on your credit report until you take action to address it.
Steps to Address Expired Tax Debt:
- Verify the Statute of Limitations: Confirm the assessment date and calculate whether the 10-year period has passed. A tax resolution professional can help with this process.
- Request a Transcript: Obtain your IRS account transcript to review all relevant dates and ensure accuracy.
- Take Action to Remove Liens: If a lien remains after the statute expires, work with the IRS to have it released.
How to Resolve Tax Debt Before the Statute Expires
Waiting for the statute of limitations to run out may seem like an appealing option, but it’s not always the best course of action. The IRS has powerful tools at its disposal, including wage garnishments, bank levies, and property seizures, to collect debts before the statute expires. Taking proactive steps to resolve your debt can save you from financial hardship and stress.
Options for Resolving Tax Debt:
- Installment Agreements: Spread your payments over time with a manageable monthly plan.
- Offer in Compromise: Settle your debt for less than the full amount owed.
- Currently Not Collectible Status: Temporarily halt collection efforts if you’re experiencing financial hardship.
Each option has its own eligibility requirements and benefits. A tax resolution professional can help you determine the best strategy for your situation.
Why Professional Help Matters
Navigating IRS rules and regulations can be complex, especially when dealing with tax debt and the statute of limitations. A tax resolution company can:
- Analyze your financial situation to identify the best resolution options.
- Communicate with the IRS on your behalf to negotiate favorable terms.
- Ensure compliance with all filing and payment requirements.
Protect Yourself from Future Tax Issues
Once you’ve resolved your tax debt, it’s essential to stay compliant with all future tax obligations. Here are some tips to avoid falling into debt again:
- File on Time: Always file your tax returns by the deadline to avoid penalties.
- Make Estimated Payments: If you’re self-employed or have irregular income, make quarterly estimated payments to stay on track.
- Keep Accurate Records: Maintain organized records of your income, expenses, and deductions.
Conclusion
Understanding the IRS statute of limitations on tax debt is a critical step in managing your financial future. While the 10-year rule provides a clear timeline, exceptions and complexities can arise. Taking proactive steps to resolve your tax debt not only prevents enforcement actions but also provides peace of mind.
At Action Tax Relief, we’re committed to helping taxpayers like you overcome IRS challenges and achieve financial freedom. Call us today at 937-268-2737 or visit www.ActionTaxRelief.com to schedule a consultation. Don’t wait—take control of your tax situation now.
by Renee Lawson | Mar 24, 2025 | Tax Preparation, Tax Resolution
Dealing with the IRS can feel overwhelming, especially if you owe more than you can pay upfront. Thankfully, the IRS offers payment plans to help taxpayers settle their debts over time. By understanding the process and knowing how to negotiate effectively, you can take control of your tax situation and reduce stress. At Action Tax Relief, we specialize in helping clients like you navigate the IRS payment plan process. Here’s a step-by-step guide to get you started.
Step 1: Understand Your Tax Debt
Before you can negotiate a payment plan, you need to have a clear understanding of your tax liability. Here’s what to do:
- Review IRS Notices: Carefully read all correspondence from the IRS to determine how much you owe, including penalties and interest.
- Confirm the Amount: Cross-check the IRS’s numbers with your own records to ensure there are no discrepancies.
- Know Your Deadlines: The IRS provides deadlines for resolving your tax debt, so act quickly to avoid additional penalties.
Step 2: Explore Your Payment Plan Options
The IRS offers several payment plan options depending on your financial situation and the amount you owe. These include:
- Short-Term Payment Plan: For debts you can pay off within 180 days.
- Long-Term Installment Agreement: For larger debts that require more time to repay.
- Direct Debit Installment Agreement: Payments are automatically withdrawn from your bank account, which can simplify the process and reduce the risk of default.
Each option has its own eligibility criteria, fees, and benefits. Consulting with a tax resolution professional can help you determine which plan is best for your needs.
Step 3: Gather Necessary Documents
To negotiate effectively, you’ll need to provide the IRS with detailed financial information. Be prepared to gather the following:
- Income Statements: Pay stubs, 1099s, or other proof of income.
- Expense Documentation: Monthly bills, rent or mortgage statements, utility bills, and other necessary expenses.
- Asset Information: Details about your bank accounts, retirement accounts, and property.
- Tax Returns: Ensure your past tax returns are filed, as the IRS typically requires this before approving a payment plan.
Step 4: Determine What You Can Afford
Before negotiating, assess your finances to determine how much you can reasonably afford to pay each month. The IRS will require you to submit Form 433-A or 433-F, which details your income, expenses, and assets. Be realistic about your budget to avoid defaulting on your payments.
Step 5: Contact the IRS
Once you’re prepared, it’s time to contact the IRS to initiate the negotiation process. You can do this by:
- Calling the IRS: Use the phone number provided on your IRS notice.
- Applying Online: For certain payment plans, you can apply directly on the IRS website.
- Submitting Forms by Mail: If required, complete and mail the appropriate forms to the IRS.
While it’s possible to handle this on your own, working with a professional can make the process smoother and increase your chances of approval.
Step 6: Negotiate Terms
During your discussion with the IRS, be prepared to negotiate terms that work for both parties. Key points to consider include:
- Monthly Payment Amount: Offer an amount you can afford, based on your financial analysis.
- Payment Timeline: Discuss how long you’ll need to pay off the debt.
- Interest and Penalties: In some cases, the IRS may reduce or waive penalties if you demonstrate financial hardship.
Be polite and honest throughout the negotiation process. The IRS is more likely to work with you if you’re cooperative and transparent.
Step 7: Finalize the Agreement
Once you’ve agreed on a payment plan, the IRS will provide written confirmation of the terms. Review this document carefully and keep a copy for your records. It’s crucial to:
- Make Payments on Time: Missing payments can void the agreement and result in enforced collection actions.
- Monitor Your Account: Regularly check your account to ensure payments are applied correctly.
- Communicate Changes: If your financial situation changes, notify the IRS immediately to discuss modifying your payment plan.
Step 8: Stay Compliant
To maintain your payment plan, you must stay compliant with all IRS requirements. This includes filing future tax returns on time and paying any new taxes owed. Falling out of compliance can result in the termination of your agreement.
Common Challenges and How to Overcome Them
Negotiating with the IRS isn’t always straightforward. Here are some common challenges and how to address them:
- High Monthly Payments: If the IRS proposes a payment amount you can’t afford, provide additional financial documentation to support your case.
- Rejected Applications: If your payment plan request is denied, work with a tax resolution expert to explore alternative solutions.
- Enforced Collections: If the IRS has already initiated wage garnishments or bank levies, act quickly to negotiate a payment plan and stop these actions.
Conclusion
Negotiating a payment plan with the IRS can feel daunting, but it’s a manageable process if you take the right steps. By understanding your options, gathering the necessary documentation, and approaching the IRS with a clear plan, you can resolve your tax debt and regain control of your finances.
At Action Tax Relief, we’re here to help every step of the way. Whether you’re starting the negotiation process or need assistance with an existing plan, our team has the knowledge and expertise to ensure a successful outcome. Call us at 937-268-2737 or visit www.actiontaxrelief.com to get started today.
by Renee Lawson | Mar 10, 2025 | Tax Preparation, Tax Resolution
An IRS tax lien is one of the most serious financial consequences of unpaid taxes. It can affect your credit, limit your financial freedom, and create a sense of uncertainty about your future. If you’ve received notice of a tax lien or are concerned about the possibility, understanding the process and your options is crucial. At Action Tax Relief, we help taxpayers navigate complex situations like these and find solutions that work for their unique circumstances.
What Is an IRS Tax Lien?
A tax lien is the government’s legal claim against your property—including real estate, personal belongings, and financial assets—when you fail to pay a tax debt. The lien ensures the IRS gets first priority over other creditors if you sell or refinance your assets.
How Tax Liens Work
- Notice and Demand for Payment: The IRS will send you a bill outlining the amount owed. This is the first step in the lien process.
- Failure to Pay: If you don’t pay the tax debt by the deadline, the IRS files a public document called a Notice of Federal Tax Lien.
- Impact on Assets: The lien attaches to all your current and future assets, significantly affecting your financial stability.
How a Tax Lien Affects You
The repercussions of a tax lien can be far-reaching:
- Credit Score Damage: Tax liens can appear on your credit report, making it harder to secure loans or credit lines.
- Asset Restrictions: Selling or refinancing property becomes difficult, as the lien ensures the IRS is paid first.
- Business Impacts: If you own a business, the lien may attach to its assets, jeopardizing operations.
Ignoring a tax lien will not make it disappear. In fact, the longer you wait to address it, the worse the consequences become.
How to Remove an IRS Tax Lien
Removing a tax lien is possible, but it requires understanding your options and acting decisively. Here are some common ways to address a lien:
1. Pay the Tax Debt in Full
The most straightforward way to remove a lien is to pay off your tax debt completely. Once the debt is paid, the IRS will release the lien within 30 days. While this may not be feasible for everyone, it’s the quickest route to resolution.
2. Set Up an Installment Agreement
If you can’t pay the debt in full, an installment agreement allows you to make monthly payments over time. While the lien remains in place until the debt is paid off, the agreement prevents further collection actions.
3. Apply for an Offer in Compromise (OIC)
An Offer in Compromise lets you settle your tax debt for less than you owe. If the IRS accepts your OIC, they will release the lien once the agreed-upon amount is paid. Keep in mind that not everyone qualifies for this program.
4. Request a Discharge of Property
If you need to sell or refinance a specific asset, you can request a discharge of property from the lien. This removes the lien from that particular asset, allowing the transaction to proceed.
5. Subordination
Subordination doesn’t remove the lien but allows other creditors to take priority over the IRS. This can make it easier to secure a loan or mortgage.
6. Withdrawal of the Lien
In some cases, you may qualify for a withdrawal, which removes the public Notice of Federal Tax Lien. This option is available if you’ve paid your debt in full or are on a direct debit installment agreement.
How to Prevent a Tax Lien
The best way to deal with a tax lien is to prevent one from being filed in the first place. Here are some tips:
- File Your Taxes on Time: Even if you can’t pay, filing on time helps avoid additional penalties.
- Communicate with the IRS: If you’re struggling to pay, reach out to the IRS to discuss payment options.
- Seek Professional Help: Working with a tax resolution expert can help you address your debt before it escalates.
Why Professional Help Matters
Navigating tax liens and IRS procedures can be overwhelming. A tax resolution professional has the experience and knowledge to:
- Negotiate with the IRS: They can help you secure favorable terms for payment plans or settlements.
- Protect Your Assets: An expert can advise on the best strategies to prevent asset seizures or other enforcement actions.
- Save Time and Stress: Dealing with the IRS can be time-consuming and frustrating. Let a professional handle the process for you.
Common Myths About IRS Tax Liens
There’s a lot of misinformation about tax liens, which can lead to unnecessary panic or inaction. Let’s debunk some common myths:
- Myth: A Tax Lien Means You’ll Lose Your Property Immediately. Truth: A lien is a claim, not a seizure. While it’s serious, you won’t lose your property unless the IRS enforces the lien through a levy.
- Myth: You Can’t Do Anything Once a Lien Is Filed. Truth: There are several ways to address and even remove a lien, as discussed above.
- Myth: Tax Liens Disappear Over Time. Truth: Liens remain in place until the debt is paid or the statute of limitations expires, which can take up to 10 years or more.
Take Action Today
If you’re dealing with an IRS tax lien or want to prevent one, the time to act is now. Ignoring the issue will only make it worse, but with the right help, you can resolve your tax problems and move forward with confidence.
At Action Tax Relief, we’re here to provide the guidance and support you need. Call us at 937-268-2737 or visit www.ActionTaxRelief.com to schedule a free consultation. Let us help you take control of your tax situation and protect what matters most.
by Renee Lawson | Jan 27, 2025 | Tax Preparation, Tax Resolution
Dealing with tax debt can be a stressful experience, especially when the IRS begins to take aggressive collection actions. One of the most concerning possibilities is the seizure of your assets.
If you owe significant back taxes and have not made arrangements to pay, you may wonder: Can the IRS really take my property?
The answer is yes, but there are safeguards and options available to help you avoid this situation. In this article, we’ll explain how asset seizure works, the process the IRS follows, and the steps you can take to protect your assets and resolve your tax debt before it escalates to this point.
Understanding IRS Asset Seizure
The IRS has the legal right to seize property in order to satisfy unpaid tax debt, but they do not do so lightly. Asset seizure is one of the last steps the IRS takes after other collection efforts have failed.
Typically, the IRS will first issue a series of notices demanding payment. If you fail to respond or make arrangements to pay, then they may begin more aggressive actions, such as filing liens, garnishing wages, or levying your assets.
Types of Assets the IRS Can Seize
The IRS can seize various types of assets, including:
- Bank Accounts
If you have unpaid taxes and your case reaches the point of asset seizure, the IRS can levy your bank accounts, meaning they can take money directly from your accounts to cover your debt. This can leave you with little access to funds for everyday expenses.
- Wages
The IRS can also garnish your wages, taking a portion of your paycheck directly from your employer to satisfy your tax debt. This can significantly impact your ability to meet your financial obligations.
- Real Estate (Homes)
In some cases, the IRS can place a tax lien on your property, which means they have a legal claim on your property until your debt is paid. If you continue to ignore the debt, the IRS may initiate the seizure of your home or other real estate assets.
- Vehicles
The IRS can seize vehicles, including cars, trucks, and boats, to cover unpaid taxes. After seizing the vehicle, they will sell it at auction to recoup some of the debt.
- Other Personal Property
The IRS may also seize other valuable personal property, such as jewelry, collectibles, or business assets, to help satisfy the tax debt.
How the IRS Seizes Assets
Asset seizure is not an immediate process. The IRS must follow specific procedures before seizing any property. Here’s a generic outline of the typical process:
- Notice of Debt
If you owe taxes and have not made arrangements to pay, the IRS will send you a series of notices warning you of the outstanding debt. These notices typically start with a simple request for payment but escalate to more formal warnings, such as the Final Notice of Intent to Levy. If you receive this notice, the IRS is informing you that they intend to take collection actions.
- Levy and Seizure
If you do not respond or pay the taxes owed, the IRS may proceed with a levy, which allows them to seize assets. The IRS is required to send a final notice of levy at least 30 days before they take action. This is when the IRS will begin contacting your bank or employer to start garnishing your wages or bank accounts.
- Seizing Property
If the IRS is unable to recover sufficient funds through levies or garnishments, they may move to seize your assets. Before taking property, the IRS will usually notify you in writing. They will also send an official notice of seizure if they plan to auction your property.
- Auctioning Your Property
After the IRS seizes your assets, they will sell them at an auction to recover the unpaid tax debt. The proceeds from the sale are used to cover the amount you owe. If the sale exceeds your tax debt, you may be entitled to a refund.
How to Prevent IRS Asset Seizure
The risk of asset seizure can be avoided by addressing your tax debt before it reaches this stage. Here are steps you can take to protect your property and resolve your tax issues:
- File and Pay on Time
The best way to avoid asset seizure is to file your tax returns on time and pay the taxes you owe. If you are unable to pay the full amount, the IRS offers options like installment agreements and Offer in Compromise (OIC) to make your debt more manageable.
- Set Up a Payment Plan
If you cannot afford to pay your tax debt all at once, you can set up a payment plan with the IRS. An installment agreement allows you to make monthly payments toward your tax debt over time. This arrangement can help you avoid collection actions, including asset seizure, as long as you keep up with your payments.
- Negotiate an Offer in Compromise
If you owe a substantial amount of taxes and cannot pay in full, an Offer in Compromise (OIC) might be an option. This program allows you to settle your tax debt for less than the full amount owed. However, qualifying for an OIC can be challenging, and the IRS carefully reviews your financial situation to determine if you qualify. A tax relief professional can help you navigate this process and increase your chances of success.
- File for Currently Not Collectible Status
If you are facing financial hardship and cannot afford to pay your taxes, you may qualify for Currently Not Collectible (CNC) status. This status temporarily halts IRS collection actions, including asset seizures. While your debt remains, CNC status gives you a break and allows you to improve your financial situation.
- Appeal the Seizure
If the IRS has already issued a notice of seizure, you have the right to appeal. If you can demonstrate that the seizure would cause undue financial hardship or that you were not properly notified, you may be able to halt the seizure process. Working with a tax relief professional can help ensure that your appeal is properly filed.
How a Tax Relief Professional Can Help
If you are facing the threat of IRS asset seizure, a tax relief professional can be your advocate in negotiating with the IRS and finding a solution. Here’s how a tax resolution expert can help:
- Negotiation: A tax relief professional can help you negotiate a payment plan or offer in compromise with the IRS, preventing the need for asset seizure.
- Representation: They can represent you in IRS hearings or appeals and communicate with the IRS on your behalf, taking the stress out of the process.
- Guidance: Tax resolution professionals will guide you through the steps to apply for Currently Not Collectible status or to challenge the seizure if necessary.
- Prevention: A tax relief expert can help you take the necessary steps to resolve your debt early, reducing the chances of escalation to asset seizure.
Take Action Today
If you’re at risk of losing your assets to the IRS, it’s important to take immediate action. Ignoring the situation will only make things worse, leading to asset seizure and financial hardship.
By working with tax relief professionals like the ones at Action Tax Relief, you can take steps to resolve your tax debt, protect your property, and avoid further collection actions.
Reach out to Action Tax Relief today at 937-268-2737 to discuss your options and begin the process of safeguarding your assets and your financial future.
by Renee Lawson | Jan 6, 2025 | Tax Preparation, Tax Resolution
The new year is here, and with it comes a fresh start for everyone—especially if you’re facing tax debt. If you owe $10,000 or more in back taxes, the beginning of the year is a great time to take a step back, assess your tax situation, and develop a plan to resolve your debt.
Ignoring tax issues may seem like an easier option, but the longer you wait, the more penalties and interest can add up. In this article, we’ll explain how starting the year with a clear plan in place can help you regain control of your finances and reduce the chances of your tax debt escalating.
Assess Your Current Tax Situation
If you’re carrying tax debt into the new year, the first step is to fully understand the extent of the debt. This includes knowing how much exactly you owe, any interest or penalties that have accumulated, and whether any collection actions have been taken against you by the IRS. The IRS may have already issued you warnings or collection notices, or they may be gearing up to take more aggressive steps if you don’t take any action.
Start by gathering all of your tax documents, including any IRS notices you’ve received, tax returns from previous years, and any statements regarding unpaid taxes. A clear understanding of your current tax status will help you know where you stand and what needs to be done.
Address Your Tax Debt Early
One of the most common mistakes taxpayers make is waiting too long to address their tax debt. The longer you ignore the issue, the higher the chances are of IRS collection actions like wage garnishments, bank levies, or tax liens.
These actions can significantly damage your financial situation and credit score, making it even harder to get back on track. Now that it’s a new year, you have a fresh opportunity to take control!
By addressing your tax debt early in the year, you give yourself more time to work with the IRS on finding a manageable solution. This could include setting up a payment plan, requesting penalty relief, or negotiating a settlement through programs like the Offer in Compromise (OIC).
Explore Your Tax Resolution Options
When it comes to resolving tax debt, there are several options available depending on your financial situation. Here are a few of the most common tax resolution options:
1. Installment Agreements
If you can’t pay your tax debt in full right away, the IRS allows you to set up an installment agreement. This is a monthly payment plan that spreads out the cost of your debt over time, often making it more manageable. The IRS offers different types of payment plans, including short-term and long-term options, depending on how much you owe and your ability to pay.
2. Offer in Compromise (OIC)
If you owe a substantial amount in taxes and are unable to pay it all, you may be eligible for an Offer in Compromise. This program allows you to settle your tax debt for less than the total amount owed, but qualifying for it can be challenging. The IRS looks at your income, expenses, and assets to determine whether you’re eligible. A tax resolution professional can help you assess your eligibility and guide you through the application process.
3. Penalty Abatement
In some cases, the IRS will reduce or eliminate penalties if there is reasonable cause for your failure to pay or file your taxes. If you can show that your inability to pay was due to circumstances beyond your control, such as medical emergencies or a job loss, you may be able to have penalties reduced or waived. A tax relief professional can help you present your case to the IRS and increase your chances of having penalties removed.
4. Currently Not Collectible Status
If you are facing significant financial hardship, the IRS may place your account in Currently Not Collectible (CNC) status. This means that the IRS will temporarily stop all collection activities, such as garnishments or levies, for a set period. While this status does not completely eliminate your debt, it provides some immediate relief and gives you a little more time to stabilize your finances before addressing the debt again.
Seek Professional Help to Navigate the Process
The process to resolving tax debt can be complicated, and dealing with the IRS on your own can be overwhelming. Tax relief professionals like the ones at Action Tax Relief can help you navigate the various programs available to you and negotiate with the IRS on your behalf. They can also provide expert advice on the best strategy based on your unique financial situation.
Since they handle all the communication with the IRS, you don’t have to deal with the stress of trying to manage the situation alone. They will help ensure that you meet all deadlines, file all necessary paperwork, and protect your rights as a taxpayer.
Planning for the Future
Once your current tax debt is resolved, it’s important to implement strategies to avoid future tax problems. A tax relief professional can help you with tax planning to ensure you stay on track with your obligations moving forward. This may include budgeting for future taxes, keeping better records of your income and expenses, and making timely quarterly tax payments to avoid underpayment penalties.
Starting the year with a clear tax resolution plan can set you up for financial success in the months ahead. Addressing your back taxes now can reduce the stress and burden of dealing with the IRS later on, and it allows you to move forward with a clean slate.
Take Action Now
If you owe $10,000 or more in taxes, don’t wait until the IRS escalates collection actions. Start the year off right by seeking professional help to resolve your tax debt and find a manageable solution.
Tax relief professionals like the ones at Action Tax Reliefcan help you understand your options and work with the IRS to find the best outcome for your financial situation.
The sooner you take action, the sooner you can get back to focusing on your life and your business without the looming threat of IRS actions. Contact Action Tax Relief today at 937-268-2737 to discuss your options and take the first step toward resolving your tax debt.
