Tax Resolution

Tax Resolution Strategies

1. Installment Agreement (Payment Plan)

• What It Is: This allows taxpayers to pay their tax debt over time through monthly payments.
• Eligibility: Most taxpayers who cannot pay their tax bill in full are eligible to request an installment agreement with the IRS.
• Benefits: It spreads the tax liability over time, reducing financial strain. You can avoid severe penalties like wage garnishment or bank levies.
• Types:
  • Short-Term Payment Plan: For smaller debts, typically under $10,000, which can be paid off within 120 days.
  • Long-Term Installment Agreement: For larger debts that require more time to pay off.

2. Offer in Compromise (OIC)

• What It Is: The IRS may agree to settle your tax debt for less than the full amount owed if paying the full amount would cause financial hardship.
• Eligibility: You must demonstrate that you cannot pay the full tax liability, either in a lump sum or through an installment agreement, and that doing so would create financial hardship.
• Benefits: Reduces your total tax liability and helps you avoid further penalties and interest.
• Process: Taxpayers need to submit detailed financial information for the IRS to review their ability to pay, using forms like Form 656.

3. Currently Not Collectible (CNC) Status

• What It Is: If you're facing financial hardship and cannot pay your tax debt, the IRS may temporarily delay collection efforts by marking your account as "Currently Not Collectible."
• Eligibility: You must prove that paying the tax would prevent you from covering basic living expenses.
• Benefits: It temporarily halts IRS collection activities (such as wage garnishment and bank levies) until your financial situation improves.

4. Innocent Spouse Relief

• What It Is: This relieves one spouse from the tax liability if their partner made errors or omitted income on a jointly filed tax return, and the other spouse was unaware of the mistake.
• Eligibility: You must demonstrate that you were not involved in the error and did not benefit from the underreported income.
• Benefits: Removes the innocent spouse from joint liability, protecting them from collection actions and penalties.

5. Penalty Abatement

• What It Is: If you can show reasonable cause (such as serious illness, natural disaster, or reliance on incorrect professional advice) for failing to file or pay taxes on time, you may request a reduction or removal of penalties.
• Eligibility: You need to prove that circumstances beyond your control prevented timely tax compliance.
• Benefits: Reduces the overall amount you owe by eliminating penalties, though interest may still apply.

6. Appealing IRS Decisions

• What It Is: If you disagree with the IRS’s determination (for example, after an audit), you can file an appeal.
• Eligibility: You must submit a written request for appeal, typically within 30 days of receiving the IRS’s notice.
• Benefits: The IRS Office of Appeals provides an impartial review, giving you a chance to resolve the dispute without litigation.

7. Filing Delinquent Tax Returns

• What It Is: If you haven’t filed tax returns for previous years, the first step is to file all delinquent returns to avoid additional penalties.
• Benefits: Filing past returns helps you avoid further penalties and opens up potential negotiation opportunities with the IRS.

8. Tax Lien Withdrawal

• What It Is: If the IRS has placed a lien on your property due to unpaid taxes, you can request a lien withdrawal once you've paid or entered into a payment plan.
• Eligibility: Typically available to those who have set up an installment agreement or paid off their tax debt in full.
• Benefits: Removes the lien, improving your credit score and preventing the IRS from seizing your assets.

9. Partial Payment Installment Agreement (PPIA)

• What It Is: Allows you to make monthly payments toward your tax debt, but at a reduced amount based on your financial situation. The IRS agrees to forgive part of the debt after a certain period if full payment is not feasible.
• Eligibility: You need to provide detailed financial information demonstrating that you cannot pay the full tax debt but can make partial payments.
• Benefits: Lowers your total liability over time and avoids more aggressive collection efforts.

10. Payroll Tax Resolution

• What It Is: For businesses with payroll tax liabilities, resolving these debts typically involves negotiating payment plans and preventing further accumulation of unpaid payroll taxes.
• Benefits: Helps prevent legal action, penalties, and the closure of the business by keeping payroll taxes up to date.

Conclusion:

Tax resolution is a vital process for individuals or businesses facing tax issues such as unpaid taxes, penalties, or tax disputes. By using strategies like installment agreements, Offers in Compromise, penalty abatement, or appealing IRS decisions, taxpayers can settle their debts and prevent aggressive collection actions. Timely resolution helps reduce financial stress, avoid legal consequences, and put you back on track toward financial stability.

If you need help navigating a specific tax resolution option or would like guidance with your tax situation, feel free to ask!

For further questions, please contact +1 (408) 829-9362