Tax Debt Settlement: When to Call a Professional
According to a recent study, the total amount of debt owed by Americans equals $11.85 trillion. While personal debt can be stressful, tax debt owed to the federal government can be equally if not more overwhelming. If you find that you owe tax money to the government, you are not alone. Each year, an estimated 17 percent of federal taxes go unpaid.
Individuals can owe money to the IRS for a number of reasons such as claiming too many exemptions on their employee withholding forms, failing to file tax returns, under-reporting income and several other errors. Unpaid taxes can be at the federal, state and/or local level and lead to accumulated interest and penalties on a regular basis. If tax debt goes unpaid for an extended period of time, you can face serious consequences ranging from tax liens against your property and possessions to jail time.
If you owe tax money but are unable to pay, debt settlement may be an option for you. Debt settlement for taxes is known as an offer in compromise. An offer in compromise allows you to negotiate your debt with the IRS. Much like debt settlement, this type of agreement allows you to have some of you tax debt forgiven leaving you only to pay the agreed upon amount. While this may seem like a quick and easy fix, it’s important to note that an offer in compromise not only has stringent requirements, but if granted, may become a matter of public record.
Here are 3 ways to know when it’s time to call a professional to help you with your tax debt:
1 – You Want to Apply for an Offer in Compromise
If you think you’re eligible for an offer in compromise, it’s a good idea to consider working with a professional. As we previously mentioned, the qualifications to receive an offer in compromise are stringent. You need to meet income and asset guidelines and submit to thorough scrutiny of your finances and possessions. If you make too much money or have too many assets, you may not be eligible for an offer in compromise.
A professional understands the offer in compromise process and can help determine if you will qualify. If you do qualify, a professional can you help you with filing the application, collecting all necessary payments and communicating with the IRS on your behalf.
2 – You Want to Hide from the IRS
If you’ve reached a point where you feel in over your head and you just want to escape from the IRS, it’s time to contact a professional. One of the most important parts of handling your back taxes is to be proactive. As much as you want to, it is never advised to ignore or hide from the IRS. If you know you’re unable to pay and you contact the IRS, you may be surprised at how willing they are to work with you.
A tax professional understands how the IRS works and what options are available to you based on your current situation and the amount owed. If a payment plan, also known as an installment agreement, is available to you, a professional will act as the liaison between you and the IRS to arrange the installment agreement.
Similar to the offer in compromise, a tax professional is familiar with the installment agreement criteria and can determine if you qualify. A professional will take over communication for you and negotiate a monthly payment amount on your behalf. You may also be eligible to have certain penalties and interest removed from your tax liability. A professional will review your tax transcripts to identify if these exist and if so, submit a request to remove them.
3 – You Want a Fresh Start
If you owe a significant amount in back taxes, the idea of a fresh start can seem unattainable but it may not be . The IRS offers a program called the Fresh Start Initiative to help struggling taxpayers who owe taxes. The program offers penalty relief, installment agreements and offer in compromises. If you think you might qualify for the program, you should contact a tax debt professional.
While this program is a great option for individuals, it can be difficult to understand the provisions of the program alone. A professional understands the application process and will handle the legalities around it. When you apply for the government programs, it’s very easy to make a mistake. A professional will help with the paperwork and application, which takes significant pressure off you. Finally, a professional will handle all communication with the IRS leaving you free to focus on a fresh start.
Why Work with a Debt Professional?
Working with a tax debt professional is a big decision. Before you consider working with a professional, do your homework. Thoroughly research the company and read consumer reviews. Unfortunately, tax scams exist and the last thing you want is to do is lose thousands of dollars that could be put towards your tax debt reduction.
At Landmark Tax Group, we’ve helped several individuals face their issues with tax debt and together, we’ve worked with them to create solutions. Here’s what Bruce, one of our recent clients had to say about our services:
“Wow! Amazing news. We thank you deeply for bringing your expert insights, negotiating skills, and patience to bear on our problem–which to us seemed like some imminent doom–and for reaching such a good solution. Your personable professionalism gave us hope from the start. We felt very good in relying on you completely.”
– Bruce B.
If you feel like Bruce and think your problem seems filled with doom, contact us today at 1 (714) 382-6780 for a FREE and CONFIDENTIAL consultation with our CPAs and former IRS Agents.
We look forward to serving you.
More Tax Tips
As Featured In