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Tax debt is one of the scariest kinds of financial problems because the IRS has almost unlimited power to collect your money. In addition to taking any tax refunds, they can also garnish your wages and even gain access to your assets such as your house and car. For this reason, contacting an IRS tax resolution specialist and figuring out a way forward is key. For many people, an offer in compromise can be a great way to reduce their tax burden.
But what exactly is this, and how can you qualify for this type of relief? And if you aren't eligible, are there other ways to get out of debt? The best thing to do when you find yourself in a precarious situation is to get in touch with a local Santa Ana, CA tax professional, but it's always good to know more about the options before you contact your specialist. Today, we will have a look at some of the possible ways forward for people with crippling tax debt.
In general, the IRS expects taxpayers to come up with the full amount they owe, and they believe that most people are able to pay this. Nevertheless, they recognize that there are certain special circumstances that should be taken into consideration. If you genuinely can't pay your debt without having to struggle financially, the IRS may offer a compromise and allow you to pay less than the original amount.
That way, they can still recuperate some of their losses, and you get some relief and can move forward with your life. Once you have filed all the relevant forms and they have been approved by the IRS, you will then either pay the remaining balance in a cash lump sum or in installments over several months or even years. In most cases, a part of your debt will need to be paid along with your application, so make sure you have at least 20% of the money at hand.
Not everyone is eligible for this type of compromise because the IRS aims to collect as much of the outstanding tax as possible. For this reason, they will refuse an OIC unless they believe that you genuinely won't be able to pay what you owe. To figure out your current ability to pay, they will take into consideration your income, your expenses, and whether you have any assets and equity that could go towards paying your taxes.
You should also note that people who haven't filed their taxes for previous years or made the required estimated payments won't be eligible. That's why it's so important to always file your return, even if you know that you're not able to pay the full balance. If you believe that you are up to date with your filing and that paying the debt would cause you or your family hardship, the IRS is likely to accept your application for OIC.
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As mentioned, an offer in compromise is only a possibility in certain exceptional circumstances, where the IRS believes that they won't receive all the money and would prefer to collect a smaller amount rather than nothing at all. Most people won't be eligible, particularly if they have a steady job and some assets that could be liquidated.
However, that doesn't mean you have to struggle. There are still many things that can be done to reduce your tax burden, and a competent IRS tax resolution specialist can help you to figure out which one best applies to your situation.
When you speak to your tax resolution specialist, they will let you know whether you are likely to be successful in applying for an OIC. If the answer is no, they might suggest that you ask the IRS for a payment plan. This agreement spreads out the tax burden over a longer period of time, so you can pay off the balance more slowly and without it causing hardship.
Your specialist will speak to you about your current expenses and how you could budget for the extra tax you have to pay. In most cases, there is a way to come up with a fair payment plan that allows you to keep paying for your life and satisfies the IRS's requirements at the same time.
In addition to the tax you owe, there might be some penalties for late filing or payment, and there will be interest on the outstanding balance. This can add to the burden on you, but in some cases, your specialist can help you to remove these punishments.
In particular, people who have never had an issue with the IRS before can get their penalties abated. You should always speak to your professional and ask about this, as it can make a big difference to your bottom line.
Sometimes, your tax burden isn't your fault, and it is actually your spouse who made a mistake. For example, they could have understated their income or listed private purchases as business expenses. If this happened without your knowledge, you might be eligible for innocent spouse relief because the IRS believes that you shouldn't have to pay for another person's mistakes if you weren't a part of the issue.
There are many ways for people with crippling tax debt to get relief. While an OIC might be the cleanest and easiest way to get out of the situation, not everyone is eligible, and there are a number of other ways you can reduce your burden. But if you've never had issues with the IRS before or you haven't paid much attention to your taxes recently, this situation can be very stressful, and it is often hard to know where to begin.
For most people, the easiest way out of such a situation is to speak to a competent and experienced tax resolution professional who has dealt with similar problems before. They'll know exactly what to do to help you regain control.
When you call your professional, they will invite you for an initial consultation, during which you discuss the situation and what has caused it. Taking all the various factors into consideration, they can then assess which of the above-mentioned measures might be the most appropriate way forward.
If you qualify for an OIC, your specialist will be able to help you file the various forms and make sure you complete everything correctly. There are a variety of requirements for this kind of program, so it's crucial that you get help from someone who knows how to make the application. By working with a professional, you have the greatest chance of success.
An offer in compromise is a great way to reduce tax debt because it allows you to pay less than the original amount. However, the requirements are strict, so many people don't qualify and need to look for another type of relief. Get in touch with us today at Tax Alliance in Santa Ana, CA to speak to a top IRS tax resolution specialist and figure out whether OIC is a valid option for you.
Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!
If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!
You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.
Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!
If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked! We help our clients nationwide!
You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.
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