We’ve all been here: opening up envelopes from the IRS before or after tax season with that rising sense of anxiety. You know that your tax situation is far from perfect; in fact, it’s not even in the ballpark of perfect. Unfortunately, you find yourself at a standstill, as you have no idea how to tackle this giant issue.
Being behind on your taxes can no doubt be scary, frustrating, leave you feeling helpless. The good news? You do have options for successfully addressing your tax situation, no matter how severe you feel it may be.
Here is an overview of the best solutions for your taxes in 2019 and beyond.
Tax Solutions Can Include Going on a Payment Plan With the IRS
Negotiating a payment plan with the IRS can be one of the best solutions for problems with taxes available to you depending on your particular situation. With this solution, you can pay off your tax debt completely in monthly installments based on an agreed monthly amount. The size of each installment payment will depend on the amount owed and the period of time you’re allowed to pay off your debt.
Let’s say that you simply can’t afford the monthly payment amount to fully pay off your tax debt. In this situation, the IRS will allow you to enter into an agreement to make partial payments. Your monthly payment amount under this agreement will depend on how capable you are of making payments based on financials you provide to the IRS.
A tax attorney who has extensive experience in dealing with the IRS can help you to set up a payment schedule with this federal agency. Your attorney can take a look at your tax debt amount and then figure out the lowest monthly payment total that the government will be willing to take from you. Note, though, that if you have no cash available after you cover your regular expenses, you won’t be able to negotiate an IRS payment plan. Instead, you may want to consider getting on a financial hardship (“not collectible status”) or submitting an offer in compromise (“OIC”)…(more on this next).
Tax Solutions Include Making an Offer in Compromise
An OIC is where you settle the tax debt you owe for less than the owed amount. You can achieve this in a couple of ways.
The first option is to offer to pay the IRS a lower, agreed-upon tax debt amount in five months or less. This settlement amount is calculated over a 12-month period. To get your offer approved, you have to first submit a down payment of 20% along with the offer to the federal government. If you choose this route, it’s paramount that you have an attorney help you to draft your offer to increase your chances of getting it approved.
The second option is to offer the IRS periodic tax payments. In this scenario, you will have to complete your periodic payments in 6 to 24 months. With this option your settlement amount is increased as the time to pay is increased. It is a great option for taxpayers that cannot afford to pay within 5 or fewer months. As with the first option, you’ll have to provide a down payment of 20% with your offer.
Tax Solutions Include Pursuing a Not-Collectible Status
Perhaps you end up striking an installment agreement with the IRS but later find yourself in a position where you can’t keep paying off your tax debt. If you’re ready for a break from this liability, you have the option of pursuing the IRS’s currently not collectible, or CNC, status.
You can be given this status if the IRS examines your financial situation and decides that you indeed cannot keep paying off your tax debt. Once you receive this status, the IRS will immediately suspend the collection activities it has taken against you. Then, if you become more financially stable in the future, your CNC status will be moved, in which case you can resume paying off your debt. Note, though, that while you are on CNC status, the interest and penalties associated with your tax debt will keep accruing.
Tax Solutions Include Removing Penalties/Interest
You might be in a situation where you have not paid any penalties related to your tax debt or even the tax debt itself yet. You may receive relief from interest/penalties through an abatement. To receive an abatement, however, you’ll have to demonstrate reasonable cause for your failure to comply with tax debt and penalty payment requirements.
Tax penalties can become hefty burdens relatively quickly, so removing penalties/interest if you can is always a good idea. An attorney can help you through the process of making a formal request for a penalty abatement.
Taxe Solutions for Those Whose Spouses Are the Ones Facing Tax Trouble
Perhaps your spouse is the one facing a large amount in back taxes. Fortunately, solutions for problems with taxes exist for individuals in your situation—specifically, you can be absolved of your spouse’s debt if you can provide a reasonable cause of your innocence in the situation. In other words, you must demonstrate that you weren’t aware of any misinformation that your spouse provided in your previous joint tax returns.
If you are getting divorced or have already obtained a divorce from your spouse, this can help your case with the IRS when it comes to receiving relief for innocent spouses. An attorney can look at all of the circumstances surrounding your prior joint return filings and then create the most personally favorable tax solution for you.
Start Pursuing the Best Tax Solutions for Your Situation Today!
If you are facing serious tax problems, you may understandably be nervous about what will happen to you both financially and legally. However, you don’t have to face these issues alone.
At Delia Law, we have extensive experience with helping people to successfully resolve their tax issues in a number of ways. We can work with you by examining your circumstances and pointing you to the best solutions for your taxes and problems related to them.
Get in touch with us today to learn more about how we can help you to combat your tax issues once and for all.