Million of taxpayers could not pay their taxes or failed to file their tax returns. The number increases every year. Some taxpayers incorrectly filed their return. The Internal Revenue, in many cases, would send them a letter. Unfortunately, many taxpayers ignore the letters to their detriment. Even worse, some taxpayers know the content of the letters very late when they seek professional help because they did not open the letters. If you are afraid to open the letter, contact a tax resolution professional, as early as possible, who could relieve the stress by opening the letter, explaining the content, and discussing a resolution option.

The Internal Revenue Service Commissioner estimates that taxpayers owe $1 trillion per year. The IRS has several means available to enforce tax filing compliance and payments of taxes due. The penalty for late filing or failure to file is much higher for business tax returns. Pay as much as you could, as soon as possible, to lower the penalty and interest. The IRS could be lenient in certain cases. The Service, in fact, advises taxpayers to borrow money to pay a tax due because for some taxpayers the interest imposed by the IRS could be higher.

Many taxpayers inquire if they could call the IRS to offer to pay less than the amount due. The answer is NO. To pay less than what is owed, taxpayers have to qualify for an offer in compromise (OIC).

There are many ways to resolve a tax debt. However, a taxpayer needs to be in compliance for the past 6 years to obtain an abatement, an installment agreement, and an offer in compromise.

  • Some taxpayers could be qualified for an abatement (FTA) of the penalty.
  • Some taxpayers could use the reasonable cause exception to get relief from tax debt.
  • Taxpayers could also request for Currently Not Collectible (CNC) status when the payment of the tax due would cause a significant financial hardship on the family.
  • Taxpayers could request an installment agreement (IA). An installment agreement is easily approved and could be modified based on changing financial circumstances.
  • Taxpayers could apply for an offer in compromise (OIC) if they meet certain requirements.

An Offer in Compromise is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. It is not suitable to every taxpayer. It is a long process because it requires a thorough review of taxpayers’ financial documents. Generally, more offers in compromise are rejected by the IRS than those accepted. A taxpayer’s unique facts and circumstances are taken into account to qualify for an offer in compromise. The Internal Revenue Service will look at the taxpayer’s ability to pay, income, expenses, and asset equity.

NEVER ignore a tax due letter, regardless of your financial situation. Seek the guidance of a tax resolution professional who is qualified to represent you before the IRS.

Remember that taxpayers might not be able to obtain a passport or travel when they owe over $50,000 because under current law, enacted in 2015, this is information could be reported to the Department of State.

  Hiring a tax resolution expert is the best action a taxpayer could take in a tax matter before the IRS or a state tax authority. 

We offer FREE initial consultation!!!

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