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The phrase tax settlement usually refers to the process where taxpayers settle their back tax liabilities with the Internal Revenue Service (IRS). Specifically, taxpayers reach an agreement or settlement, with the IRS agreeing to pay their income tax debts in part or in full through one of the IRS back tax resolution programs. The IRS offers several different back tax resolution programs to taxpayers based on their individual financial situations. However, before the IRS will consider an offer to resolve back taxes, taxpayers must be fully compliant with their tax obligations. The exact tax obligations vary, but typically, taxpayers must have all past due tax returns filed, and they must remain compliant with ongoing payments. Click here for more information.
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OFFER IN COMPROMISE
This program was developed by congress to help collect large amounts of outstanding tax in a relatively short period of time. Their assumption was to offer taxpayers a one-time opportunity to eliminate their debt for a fraction of what was originally owed, thus closing millions of costly collection cases. While the program has been and continues to be modified, it remains the most effective means for both taxpayer and IRS to bring permanent resolution.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or 'compromise', federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:
- Doubt as to Liability: Doubt exists that the assessed tax is correct.
- Doubt as to Collectability: Doubt exists that you could ever pay the full amount of tax owed.
- Effective Tax Administration: There is no doubt the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable (source: IRS).
Qualifying for this program should be relatively straightforward: When there is a financial hardship and the amount owed exceeds one's ability to realistically pay off the debt in five years, the IRS is willing to settle for literally 'pennies on the dollar.' On average, the qualified taxpayer saves thousands of dollars, and the IRS, in turn, ends their costly collection process and gets a compliant taxpayer.
INSTALLMENT AGREEMENT
CURRENTLY NOT COLLECTIBLE
WAGE GARNISHMENT RELEASE
BANK LEVY RELEASE
BACK PAYROLL TAXES
Employers are required to withhold payroll taxes from their employees' paychecks and pay this tax to the IRS on their employees' behalf. The most common types of payroll taxes are 941 taxes and 940 taxes. When business owners are unable to avoid paying these taxes, a payroll tax liability is created. The IRS is persistent and aggressive in collecting payroll tax debt and does not allow payroll tax to be discharged in a bankruptcy, no matter how old the payroll tax liability is. When a taxpayer has a past due payroll tax debt, they must address the liability and find a solution if they are going to stay in business. Resolving a payroll tax issue requires that the delinquent business both maintain current compliance with their ongoing taxes and set up a plan to pay back or settle the overdue debt.
According to the IRS, approximately two million businesses owe almost $50 billion in payroll tax. The IRS is serious about collecting this debt from those businesses who owe it. The IRS has broad enforcement powers when it comes to collecting back taxes from an operating business. Businesses which have past due tax bills will likely find themselves facing aggressive IRS liens and levies, which can make it extremely difficult for a business to continue operating. If the taxes are not paid by the business, the IRS can assess civil penalties and charge the debt personally to the owners or individual responsible for paying the taxes. The IRS can take action against anyone who they feel may be responsible for the failure to pay the tax, even if they were not an officer or employee of the corporation which originally collected the payroll taxes.
A 940 or 941 tax debt can cause serious problems for an operating business. If your business is behind on these taxes and you would like to speak with someone about your options for resolving this debt, please contact Tax Settlement Center today!
INNOCENT SPOUSE
Not every marriage ends up 'happily ever after'. If one of the people in the relationship failed to pay their taxes, this can make a difficult situation even worse. While you were married, if you filed a Married Filing Jointly status and that return had an unpaid liability, the IRS sees the both taxpayers as 100% responsible for the tax liability.
To qualify as innocent for spouse relief, the taxpayer must often show that he or she was unaware that the taxes were owed or unpaid. The amount of relief granted from taxes, interest, and penalties varies on a case-by-case basis.
In some cases, however, one spouse may be found innocent of having to pay back the overdue taxes. There are several different methods that can be used to seek innocent spouse relief and it takes a professional to know which method is right for you.
Applying for and receiving innocent spouse relief is a complicated and time consuming process. The IRS reviews each case thoroughly, and it can take up to a year to make a decision on any particular innocent spouse case. Depending upon the circumstances of your situation, you may qualify to seek innocent spouse relief from the IRS. The first step in finding out how begins with a phone call.
If you feel that you should not be held responsible for a jointly held tax liability, please please contact us by filling out the form on this page or call one of our tax specialists at 877-540-1040.
Before embarking on the complicated procedure of injured spouse or innocent spouse tax relief, taxpayers should speak with a tax expert, like Tax Settlement Center, to get a full understanding of the complexities of this tax relief procedure.
If you have been assessed tax penalties by the IRS because you fell behind on your taxes, you may not have to pay all of them back to the IRS if you had a good reason for not filing or paying the tax in the first place. In fact, you may not even owe any tax penalties at all if they were assessed to you unfairly by the IRS. Unfortunately, when it comes to tax penalties, you are assumed guilty until you can show them that you do not deserve to be charged these excessive penalties. A penalty abatement request is the best way remove tax penalties from your debt. The Tax Settlement Center can assist you in preparing penalty abatement requests, and we have an excellent success rate. You may even get penalties you have already paid refunded back to you by the IRS.
When the IRS assesses penalties to taxpayers, those tax penalties are added automatically to the taxpayer's account by the IRS computer systems. Because of this, penalties are frequently added to the debt without taking the individuals circumstances into account. Even if you had an acceptable reason for not paying your taxes on time, it can be difficult to get tax penalties removed without professional help.
Many states also offer penalty abatement on state tax debts.
PROFESSIONAL TAX REPRESENTATION
When a case involves an operating business, aggressive IRS collections action (such as a bank or wage levy), or if a taxpayer has a complicated tax situation that needs extra attention, we always recommend that professional tax representation be used. Representation is also useful if a taxpayer does not have the time or desire to speak with the IRS on their own.
Professional tax representation is a very powerful tool you can use to 'even the odds' when you need help with the IRS. As you may have experienced, IRS agents can be very intimidating, even bullying, when they are making demands on you, the taxpayer. They tend to be less forceful and more reasonable when they must address themselves to a professional representative.
A good tax professional will know the ins and outs of the IRS bureaucracy. They will know all of the right questions to ask you and how to properly present your case to the IRS so that you get the results that you deserve. At Tax Settlement Center, we don't just have good tax professionals, we have the best tax professionals in the business. If you have a large or overdue tax bill, or need help dealing with the collection branch of the IRS, Tax Settlement Center can offer the best tax help available. Helping taxpayers arrange settlements with the IRS is our specialty; we do it every day and have worked with thousands of taxpayers.
You, as a taxpayer, probably do not know all the rules and formulas that are applicable to your situation. The IRS agent does, but usually only reveals the portion they want you to know, not the portion that would be helpful to you. The agent's job, after all, is to collect money from you, not be your friend! Even a friendly IRS agent is still an IRS collection agent, not a friend.
You need a friend in your corner. That friend is your professional representative. At Tax Settlement Center, our professionals deal with the IRS every day and can present your case to the IRS in its own terms with full knowledge of all the rules and regulations.
If you need tax help, please fill out the form on this page.
PROFESSIONAL CPA SERVICES
TAX RETURN
If you haven't filed all of your back tax returns, the IRS is going to want them filed before they will even consider resolving your case. They also have the option of filing the returns for you under the Substitute Filed Return (SFR) Program. This is the worst form of return preparation, as it allows for zero deductions and grossly inflates the back taxes you owe.
DOES THE IRS KEEP MY RETURN MONEY IF I AM LATE?
After three years, yes. There is a statute of limitations, or certain period of time allowed, by the federal government applied to receiving income tax refund money for a given year. That is three years from the due date of the tax return, not January 1st.
AN IRS LEVY
A levy gives the IRS the ability to attach all monies held by third parties. While a lien is security for a tax debt, a levy seizes (takes) property to partially or fully satisfy the tax.
A levy can be used to seize:
- Checking and savings accounts
- Wages, salary, commissions, and other income
- Value life insurance
- Property (i.e., your vehicle, boat, or house) Licenses and franchises
- Securities
- Contracts
- Promissory notes
- Account receivables
- State income tax refunds
- IRAs
- Social Security benefits and benefits under the bill of rights
- Retirement pensions to veterans
- Pensions and profit sharing plans (the IRS cannot force distribution from a pension plan if the employee can not obtain a lump sum payment)
The IRS may levy your assets in any order or sequence. If levied, assets do not fully discharge your taxes; other assets can be levied until your tax is fully paid. T.S.C. can convince the IRS to release its levy by negotiating certain agreements.