Four Smart and Effective Ways in Which You Can Get Tax Debt Relief

Today I have a special treat for you; Angela Brown is my guest blogger, providing solid information on IRS debt issues. Angela can be reached via the link in her bio.

Author Bio: Angela Brown is a contributory writer associated with a US-based debt consolidation non profit community and has written several articles for various financial websites. She holds her expertise in the Debt industry and has made significant contribution through her various articles.

4 Smart and effective ways in which you can get tax debt relief

If you have incurred a huge amount of taxes, it can soon get stressful for you to handle. It is not that you are the only person who has incurred tax debts with the IRS. There are many people who could not pay their taxes and have accumulated a huge list of tax debts. If you owe a huge amount of tax debts, your primary aim should be to pay them back and become debt free. But what would you do if you’re unable to pay off your debts on your own? Is there any solution to your IRS tax debt problem? Well, if these are the questions that are bothering you, you must read this article to gain some knowledge on paying back your IRS tax debts.

1. Request for extension of limit: If your personal finances are in a state of haywire and you’re unsure about whether or not you will be able to pay your taxes, then you must request the IRS to extend the time limit of your debt repayment period. But always make sure that you apply for this request before the last date of payment or else your request might be rejected. The extensions may vary from 30 days to 120 days according to the kind of financial condition you are in.
2. Penalty abatement: As you default on your IRS tax payments, there are various penalty fees that are added to your already existing tax amount. This may add up your tax to a huge amount and if you think that there is any mistake in the penalties that are added, you can legally request the IRS to remove them. However, before you ask for penalty abatement, make sure that you have all the documents at your hand so that you can give a proof of the suggested mistakes.
3. Request for installment agreements: If your total tax amount is large and you are finding it difficult to pay it off at once, make sure that you ask the IRS to allow you to pay in installments. With an affordable installment agreement, you can pay off your taxes without straining your wallet. Let the IRS devise a payment plan according to which you can repay your debts affordably and become debt free.
4. Offer-in-compromise: Offer in compromise is very much similar to a debt settlement policy that a consumer carries out with a creditor. The only difference is that this request is made to the IRS instead of a debt settlement company. This is a formal agreement where the tax payer offers to pay off an amount that is within his financial affordability. The IRS will accept your request only after reviewing your financial situation and checking whether or not you’re really able to pay off your debts.

Thus, if you’ve incurred huge amount of IRS tax debts and are looking for smart ways to becoming debt free, follow the ways mentioned above. Pay off your IRS tax debts and secure your financial life.

When To Say When

I'm late today because I just got back from Atlanta. Forgive me.

Today's topic: How far should you push back on an IRS assessment? There is no hard and fast rule, but there are guidelines. If the assessment is small, it could cost more to fight than to pay. In my opinion, cutting off your nose to spite your face is foolish and a waste of time. This is the first consideration when dealing with an IRS assessment.

When the assessment is meaningful, you have a tough decision to make. If the assessment is due to an audit, appeals is your first defense. Every audit in my office ends up in appeals if the IRS assesses additional taxes, unless it is really small. Auditors look at verifiable facts only. They will deny any deduction due to lost receipts, etc. In most cases, it all comes back in appeals. Even if you played fast and loose, appeals frequently reduces the assessment, depending on the circumstances.

Appeals usually gives you about as much as you'll get in tax court. However, if they don't give that much, file with the tax court. The IRS has people that will work hard to get you off the tax court calendar. Be reasonable when filing, but don't rule out this powerful tool.

Sometimes it makes sense to file for abatement. If a large part of the assessment is penalties, abatement can help. Unfortunately, it is an all or none proposition; you either get full abatement or none. Fortunately, a lot of abatement requests are granted.

A Due Process Hearing is another option if you feel the IRS took an incorrect position. This requires its own post at a future date. Stay tuned.

And, of course, the Offer in Compromise. You see the ads on TV about IRS debt; that is what they are talking about. I recommend a competent local accountant instead of the TV guys. The TV guys charge a lot, tell you the offer will fly when they haven't followed the formula the IRS will accept, and have a low success rate. Your friendly accountant should have experience in Offers in Compromise and should have a reasonable fee.

It must be noted that federal taxes due have a statute of limitation of 10 years. That means the IRS gets 10 years to swing at you after you file your tax return or the due date of the return, whichever is later. If you own real estate, the IRS will attach it and the statute is less a tool for you.

The Offer in Compromise, tax court filings, and Due Process Hearings stop the statute of limitation clock while your request is considered. If you are approaching the 10 years and don't own real estate, you may wish to sit tight for the tax to expire instead. The clock restarts after the IRS rules on your request.

It is a good idea to get an experienced accountant on your side when dealing with these issues. At least now you can discuss your options with your accountant from a position of knowledge.

Good luck.