Landmark Tax Group

Tax Tips

10 Ways to Deal with Tax Debt

Dealing with the IRS can be stressful and intimidating. They have the power to seize your assets, garnish your wages, and put a lien on your property in order to retrieve the money that is owed to them. Many taxpayers turn to professional tax services to represent them and maximize their chances of winning a tax settlement. The IRS will find you, so do communicate with them and they should be more than willing to work with you. Here are several ways to help you resolve your tax debt issues.

1. Installment Agreement

Taxpayers that are unable to pay their tax debts immediately can make monthly payments. You can reduce or eliminate your penalties and interest as long as you pay your debt in full. To be eligible to apply online, individual taxpayers must owe $50,000 or less in combined individual income tax, penalties and interest, and have filed all required returns. A business taxpayer must owe $25,000 or less in payroll taxes and have filed all required returns. If you don’t qualify for an online payment agreement, you can still apply by completing the necessary forms and mailing them in.

Make sure you read and understand your agreement to avoid default. Future tax refunds will be applied to your tax debt until it is paid in full. Always pay your minimum monthly payment when it is due. Tax returns must be filed in a timely manner and taxes must be paid in full and on time.

2. Offer in Compromise
A qualified tax resolution specialist can help you determine if this program is suitable for your situation. This program reduces your tax debt to the IRS by allowing you to pay in one lump sum or a short term payment plan. This plan is great for taxpayers that owe more than they can afford. The IRS will allow you to pay a smaller negotiated amount as a final payment.

3. Currently Not Collectible

A taxpayer must show proof that there is no future possibility for payment. If the IRS declares you “Currently Not Collectible,” you can file a collection appeal and stop an IRS lien, levy, seizure or the denial or termination of an installment agreement.

4. File For Bankruptcy

Under Chapter 7 or Chapter 13 of the Bankruptcy Code, income tax debts may be eligible for discharge. Chapter 7 provides all allowable debts to be discharged and Chapter 13 allows for a payment plan for some of the debts while discharging the remainder of debts. Only file for bankruptcy if you meet the requirements and you have weighed the pros and cons. A bankruptcy can remain on your credit for up to 10 years.

5. Release Wage Garnishments

The IRS can garnish your wages, salary, or federal payments until your tax debt is paid off. If you can’t afford to pay your necessary living expenses, you can try and negotiate for a release or modification of your wage garnishment.

6. Release from Levying Your Bank Account

A bank levy issued by the IRS can take cash from your savings and checking accounts to collect on unpaid tax debts. If you can get a release from the bank levy it could help you in using one of the other IRS programs by freeing up money. This will allow you to apply for an installment plan or pay a smaller sum rather than the entire debt.

7. Innocent Spouse Tax Relief

You can inherit your spouse’s tax debt, but if you can show proof that you fall within the IRS guidelines for innocent spouse tax relief, you may be able to release yourself from your spouse’s tax debts.

8. Statute of Limitations

The IRS has 10 years to collect any taxes, penalties, and interest from the date of assessment. Having this in mind, gives you the opportunity to file a collection appeal to stop a levy, lien, seizure or the denial or termination of an installment agreement.

9. Filing Late Tax Returns and Amended Returns

Legally, you can still apply for any tax deduction you are entitled to in order to reduce your tax debt even if you are filing late, or discover the deduction late. This can require the assistance of a tax professional such as a CPA, Enrolled Agent, or tax attorney.

10. Hire A Professional

We, at Landmark Tax Group, have seasoned tax relief experts that can help you strategize and come up with the best possible solutions in resolving your tax debt. We assess which programs you may qualify for and negotiate on your behalf while giving you peace of mind.

Beware of tax scam companies that promise to save you “pennies on the dollar.” These companies can cause you to incur extra penalties and fees leaving you deeper in debt.

“You appear to have moved mountains.  I could not have done any of this without you.  My sincere thanks.” – Patricia C.
(More Client Testimonials)

Contact us now at 1-714-382-6780 for a FREE, no-obligation consultation with our CPAs, Enrolled Agents, and former IRS Agents.   


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