Tax Solutions

Tax Solutions

Settling your tax debt the right way requires an evaluation of your specific issues to determine the right path forward. Dealing with the Internal Revenue Service (IRS) and state may be intimidating, stressful, and time-consuming. You need a tax solutions lawyer at TaxSmith who can relieve you of those worries and resolve your tax matter.

We not only want to eliminate your current tax problem but also establish a game plan so that you do not become a repeat client. TaxSmith has the experience to help you with your unresolved tax problems. The following are some options that taxpayers have with their tax debt:

Tax Return Preparation

You do not have to wait until a tax problem arises to contact TaxSmith. Staying current with your tax filings is one of the most important steps in working with the IRS and the state. We are here to prepare your tax return before you have a tax problem.

Whether or not you have any issues with the IRS, you are required to file taxes each year as a citizen in America. Often, the IRS will waive this obligation if your income falls into a certain category and is below a threshold amount, but even then, filing a tax return can be a good way to obtain a refund.

Filing a New Return

If you do have back tax debt, then filing new returns and staying current is essential when working on a tax resolution. Many offers in compromise, settlements, and other various deals with the IRS are denied because the taxpayer failed to remain current on their tax filings.

There are normally two deadlines each year for income tax filings, in April and October. If you filed an extension to file your returns by October, you do not have to wait until October to file. You can have these returns filed anytime between April and October. However, if you are late and miss the October filing deadline, then penalties and interest will accrue on your tax debt. Eventually, the IRS may file a substitute return for you.

If you need older years filed, TaxSmith can order your master file for each year. The statute of limitations for a refund is three years. However, to be compliant with the IRS and enter a resolution, the last 6 years of returns must be filed. Contact TaxSmith for all of your tax preparation needs now and in the future.

Installment Agreements

Many taxpayers cannot pay their debt in full, but do not qualify for an Offer in Compromise. In these cases, the IRS offers installment agreements. This allows taxpayers to make monthly payments based on their ability to pay until their debt is paid in full. In 2024, the IRS established 3.4 million new installment agreements with taxpayers.

TaxSmith professionals will negotiate affordable payment plans based on your budget and financial profile that will allow you to regain financial control and to avoid any IRS or state collection activity in the future.

Currently Non-Collectible

If a taxpayer cannot make monthly installment agreement payments and does not qualify for an Offer in Compromise, the IRS may consider a Currently Non-Collectible (CNC) status. If a taxpayer is placed in a CNC status, the IRS agrees that the taxpayer cannot make any payments on their debt at this time. If a taxpayer is placed in the CNC status, the statute of limitations continues to run, and the IRS will not pursue collection activities.

However, if the taxpayer’s financial status does improve substantially, the IRS can remove the CNC status and request additional financial information. This method of debt resolution is most effective if your financial difficulties are temporary and you can repay the full debt when your situation improves.

Offer in Compromise

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. If you qualify an Offer in Compromise (OIC) is frequently the ideal solution to resolving your delinquent tax debt.

The OIC was created by the IRS in 1992 by Section 1772 of the Tax Code. The two primary grounds for which an OIC can be successfully negotiated with the IRS are:

1. Doubt as to Collectibility, or the taxpayer is unable to pay the full burden
2. Doubt as to Liability, where the taxpayer contends that they do not owe the debt

A very small percentage of taxpayers qualify for an OIC, so pre-review is an important step before submitting an OIC to the IRS and having it rejected.

Penalty Abatement

Abatement of tax penalties means the IRS will eliminate certain penalties assessed on the tax debt if there is reasonable cause. However, the burden of proving reasonable cause lies with the taxpayer. The IRS abated nearly 6.5 million civil penalties in 2024.

TaxSmith has the experience and understanding of what the IRS will accept as a reasonable cause for the abatement. After reviewing your case, if we believe you have reasonable cause, we will present it in a well-documented format to the IRS for consideration.

Our Tax Solution Process at TaxSmith, LLC

When you work with our firm to resolve your tax issues, you can expect:

1. An immediate assessment of your needs and any urgent collection actions, like levies or seizures
2. A review of your records with the IRS and your financial information
3. A determination of your options for resolving your tax debt
4. The next steps to be compliant and get back in good standing
5. Our negotiation with the IRS and filing the right information for tax debt resolutions
6. A plan to remain compliant, adhere to the tax solution planned with the IRS, and avoid future issues

FAQs

Q: How Long Can the IRS Collect Back Taxes?

A: If you owe the IRS back taxes, the agency generally has ten years from the date the debt was assessed to collect it. However, there are many exceptions to this. If you did not file a tax return at all, the statute of limitations on collecting that debt does not begin until the return is filed. The ten-year statute of limitations, or collection statute expiration date, can also be extended or paused for many reasons.

Q: Does Hiring a Tax Attorney Stop IRS Collections Immediately?

A: No, hiring a tax attorney does not stop IRS collection immediately, but a tax attorney can begin working quickly to find the right method to pause most collection actions. If you enter into negotiations for an installment agreement or file for an offer in compromise, most collection actions pause, and an attorney can help you begin these or other processes. When you hire a tax solutions lawyer, they work directly with the IRS for you.

Q: Will I Still Get a Refund if I Owe Back Taxes?

A: You likely will not get a refund if you owe back taxes. When you file your tax return with back taxes, the money that would have been in your return will likely go to cover your tax debt. In 2024, the IRS collected nearly $3.2 billion from delinquent returns. If there is any remaining refund money after the tax debt is paid, you will receive the rest.

Q: Why Is It Important to Hire a Tax Solutions Lawyer?

A: It is important to hire a tax solutions lawyer if you have tax debt you owe, but you don’t have the financial ability to pay it. There may be other options to reduce the debt you owe the IRS or state tax agency, or options to give you more time to pay the debt. An attorney reviews what you qualify for and what is right for your situation. You may save money in the long term with an attorney’s help.

Reach Out to TaxSmith, LLC Today

If you need to find a solution for your IRS tax debt, get in touch with our attorneys.