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It is surprisingly easy to get behind on tax payments, whether you are an individual or part of a company. If you miss one or two payments due to an unexpected drop in income and then accrue interest on those missed payments, then before too much time has passed, you can find yourself in major debt to the IRS. This can be stressful because if your debt goes unpaid long enough, you could have property seized or face the possibility of losing your job.
Fortunately, the IRS understands that most people do not accumulate tax debt intentionally and have put debt relief programs in place. They offer debt relief, including creating payment plans and having some penalties eliminated to make your overall debt lower, through various forgiveness programs. A skilled tax debt attorney can help you understand the severity of your tax debt and work to get you the relief you deserve.
Each year, the IRS calculates a specific amount of money that each taxpayer owes them. This amount is determined based on factors such as their regular income, whether they are married and file with their spouse, and who they claim as a dependent on their tax return. If the IRS determines that the amount of taxes that someone paid does not match the amount they calculated, then that person will owe a tax debt.
This could happen because of a simple mistake, like typing or writing an income incorrectly, or something larger, like forgetting to file a tax return or pay what is owed. If an individual owes a tax debt and it is not addressed correctly, then they run the risk of their debt increasing through fees, interest, and other penalties. For some people, their tax debt can become overwhelming if it is not paid, but thankfully the IRS offers several debt relief opportunities.
Tax debt is a scary thing and can impact nearly every area of your life, including levies on your wages, assets being seized to pay debts, and possibly losing your job. Fortunately, the IRS provides debt relief opportunities through forgiveness programs like Fresh Start. This program has four ways to minimize or eliminate tax debt.
The IRS offers several relief opportunities for those facing major tax debt. An accomplished tax debt attorney will help you find any mistakes you made and petition the IRS for debt relief.
It can be easy to miss a few tax payments because of an unexpected medical expense and suddenly find yourself with major tax debt on top of medical bills. If you have a steady job that will allow you to pay your debt gradually, you could create a monthly payment plan with the IRS. You may have lost your job and have no assets, so it is impossible to pay your tax debt. In these circumstances, you can petition for your accounts to be flagged as Currently Not Collectible, which stops the IRS from collecting any debt from you until you are steadily employed and stable.
Many people have made a simple mistake, like mistyping their income or doing incorrect math on a tax return, and are now facing significant tax debt. The Fresh Start program is an initiative the IRS launched in 2011 that offers relief for these people. Those who qualify for this program could find tax relief by having penalties that have built up over time eliminated completely.
Any time that you owe money to the IRS for your taxes, you have incurred what is known as a tax debt. There are many ways that you could accrue a tax debt. In some cases, people forget to file their tax returns or pay the taxes they owe, which will create a tax debt. Other times, there is a mistake made on your tax forms which could cause you to pay less than you should have, so you will be informed that you owe a debt. In these situations, there are opportunities for relief from the IRS.
You need relief from your tax debt, but you have no idea whether or not you qualify for the Fresh Start program. The IRS has laid out specific qualifications that must be met for each type of tax relief. If you want to create an Offer in Compromise, you will have to show that the amount you owe is not correct, prove that your combined assets and income cannot pay the debt, or there is economic hardship at play because of something like a long-term illness.
When you are in debt, regardless of where it comes from, it is scary because it could mean that you are unable to pay bills, which can lead to you losing housing or not being able to pay for necessities. Tax debt can be particularly scary because, if you are unable to pay it, the debt will build over time. Someone who owes $10,000 to the IRS because they did not report some income will accrue an additional $600 in penalties if they do not pay within a year. If you are in need of tax debt relief, an experienced tax attorney from TaxSmith, LLC can help you understand what options are available for you, assess whether or not you qualify for tax debt relief, and assist you as you apply. Contact our office today to get started.
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