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Welcome to our complimentary guide concerning IRS tax debt issues. This guide is not intended to provide a comprehensive overview of all forms of tax debt relief available, but rather gives a summary of each of the Tax Relief Solutions referenced on our website in the area titled “Frequently Asked Questions.” You may need help with an IRS debt problem not covered here in which case we advise you to take advantage of a free telephone consultation with one of our experienced and knowledgeable tax professionals.
Is help with back tax filings available?
Yes, in fact, if you have not filed either your personal or your business tax returns, it is quite a serious matter. The first step in addressing this tax problem is to immediately prepare and file the back tax returns. We realize that oftentimes there may be missing information making it difficult to assemble accurate tax returns. Our tax specialists are equipped to handle missing records and still provide you with valuable help in preparing your back tax returns. You may find yourself in a situation where the IRS has already filed “their version” of your tax returns for you. This is called an “SFR” or Substitute for Return. Clearly, the back tax filings completed by the IRS on your behalf will not attempt to identify any deductions you may be entitled to (beyond the standard deduction and one personal exemption). The IRS will be filing your back tax returns (SRFs) with the best interest of the federal government in mind. In fact, the IRS considers the non filing of tax returns so serious that it sometimes imposes penalties as high as 25% of the tax you owe. Additionally, all taxpayers should be aware that the failure to file tax returns may be construed as a criminal act by the IRS. Once you have addressed and completed the back tax return filing process with our tax advisors, you will likely realize that payment of the back taxes is a heavy burden when you are required to remain current on your taxes during this same time period. This is
another compelling reason to seek professional tax assistance. Back tax debt specialists are aware of the IRS relief programs available that may help relieve some of the hardship of paying your back taxes. Contact our tax advisors immediately so they can assist you with a tax relief strategy and stop your back tax debt problem from compounding over time!
What is an Offer in Compromise?
An Offer in Compromise is an out of court agreement between the IRS and the taxpayer that resolves the taxpayer's liability. The Internal Revenue Service has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances. These circumstances are: Doubt as to Liability - The IRS may also accept an offer in compromise when doubt exists that the amount of tax owed is correct. The taxpayer needs to explain why they believe that they do not owe the tax that they would like to compromise. Financial inability to pay will not be considered under this basis alone. Doubt as to Collectibility (most common) - Under this basis, there is doubt that the amount of tax owed can ever be paid back in full. In order to successfully negotiate this type of offer in compromise, the taxpayer must demonstrate through complete and thorough financial statements and supporting documentation that there are insufficient assets and income to pay the full amount of tax owed. Effective tax administration - Under the third basis for an offer in compromise, there is no doubt that the tax owed is correct and there are sufficient assets and income to pay the entire liability. However, the taxpayer believes that, due to exceptional circumstances, it would be unfair and inequitable to require full payment of the tax. The primary determinant on “doubt as to collectibility” is based on a taxpayer’s personal financial profile; including income, expenses, and assets. The IRS sets strict guidelines for income, allowable expenses (categorized as: Living, Housing, Transport), and available equity in owned assets. An additional benefit of submitting an OIC is that IRS Restructuring Act prohibits the IRS from collecting a tax liability by levy during the period in which the Offer is being processed, or 30 days following rejection of an offer, or during the appeal of an OIC. This window of non-collection is frequently a respite for our clients to avoid any IRS collection actions, thereby securing additional time for clients to pay and prevents the IRS from seizing any assets in the interim. If the offer in compromise is accepted, payment can be made via one of three options: 1) cash (within up to 90 days of acceptance); 2) short-term deferred payment plan (payable
within 24 months of acceptance); or 3) a long-term deferred payment plan (payable over the remaining time left on the collections statute). Once the offer in compromise is accepted, the taxpayer must remain in compliance with all filing and payment obligations, including staying current with quarterly estimated tax payments and not incurring any new tax debt, for five years or until the offer amount is paid, whichever is longer. Failure to abide by these terms may result in the default of the offer in compromise and the reinstatement of the original tax liability.
What is IRS Tax Penalty Abatement?
IRS tax penalty abatement refers to the reduction or the removal of tax penalties assessed by the IRS. Typically this occurs because you fell behind on your taxes and the IRS exercised their right to charge a penalty. When tax penalties and interest are assessed, the total tax you owe increases and so does the financial hardship you are undoubtedly already experiencing. However, there is professional help available for an IRS tax penalty problem. The IRS is willing to review information about the reasons you either did not file your taxes in a timely manner or underpaid your tax liability. Tax abatement advisors will review your situation, and if appropriate, will complete a Penalty Abatement Request on your behalf. In some cases, it is discovered that tax penalties were incorrectly assessed, and the taxpayer ends up owing no tax penalty at all. Even more encouraging is the fact that an expert tax advisor may be able to secure a refund for prior tax penalties remitted that were unfairly assessed by the IRS. The process to secure a tax penalty abatement requires that the proper forms be filed and specific procedures be followed. It can be challenging to have the tax penalties removed without professional tax assistance. Many states also offer tax penalty abatement programs so do seek help from a tax advisor about any state tax penalty problems you are facing.
What is an Installment Agreement?
An IRS installment agreement is essentially a monthly payment plan which allows you to pay off your past due tax liability “over time”. Once you have been approved for an installment agreement the IRS will no longer continue to pursue you with their collection efforts. However, receiving this form of tax relief requires that you remain current with all your future tax filings and all your future payment obligations.
How do I stop the IRS from garnishing my wages, levying, my bank account, or seizing my assets?
When you become client of Tax Defense Network the first step for us is to stop the IRS collection procedures. This means that all garnishing, levying, or seizures will be put in a hold status while we negotiate the best possible outcome on your behalf with the IRS. The collections hold will remain in affect for the entire length of the negotiation process which means your assets will be safe.
What is an Innocent Spouse Claim?
An Innocent Spouse claim allows you to seek relief from joint tax debt with your spouse. A joint tax debt is defined as a “debt that both you and your spouse owe” and is the direct result of filing/signing a joint tax return. In filing a joint tax return, you have both indicated responsibility for the taxes due on that return. A later divorce does not “make this responsibility go away” for tax returns filed jointly during the marriage. However, the IRS does recognize there may be extenuating circumstances related to the filing of a joint return that merit a review of the tax claim for Innocent Spouse Relief. There are three ways to quality for Innocent Spouse Relief and we recommend that an expert tax advisor review your unique tax situation to insure it is properly handled and that you are given your “best chance” to be granted this form of relief. If you do qualify, you may not have to pay all or even part of any income tax that may be owed from the filing of the joint return.
IRS Collections Action Continues to Increase
In September 2006, the IRS started to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between twenty-two and twenty-four percent of the amount collected. Opponents are also worried about the agencies' being paid on percent collected because it will encourage the collectors to use pressure tactics to collect the maximum amount. While collection agencies are a new twist they are hardly the worst case scenario. The IRS has the most powerful collection tactics at it’s disposal when they use wage garnishments, bank levies, and tax liens to seize the amount owed. On August 3, 2004 upon release of the 2004 Annual Report of the IRS Oversight Board, IRS Advisory Committee Chairman Roger Harris said he wants the IRS to "touch more people" through enforcement action. He said he believes that effort is justified based on the report, which claims one in five people "now believe that [tax] cheating is acceptable." This has added fuel to IRS Commissioner Mark Everson's quest to restore the IRS enforcement machine to what it was 10 years ago. Everson promised the Senate Finance Committee he would restore IRS enforcement to "historic levels." The number of taxpayers declared delinquent, and the number of enforced collection actions, are on the rise. In the 1990s, nearly five million citizens were added to the roles of delinquent taxpayers annually. That number began falling in 1997 and bottomed out in 2000, at about 4.1 million. By 2003, however, the number rose to 5.5 million delinquent taxpayers. Remember, this is the number of new delinquencies in just one year.
Though the number of collection actions, including liens, levies, and seizures, dropped after the 1998 IRS Restructuring Act, the number has risen steadily since the decline was arrested in 2000. The number of liens filed has increased by 227 percent since the low-water mark in 1999. The number of property seizures by the IRS has increased by 439 percent since 2000, and the number of wage and bank levies has skyrocketed by 665 percent since their low point in 2000. The agency has asked for more funding and manpower, and the Bush administration has accommodated those requests. In the IRS budget passed by the House Appropriations Committee on July 22, 2004 the IRS received $10.3 billion for 2005, $107 million more than the agency had in 2004. Statements made and actions taken by IRS Tax Commissioner Everson since taking office indicate he will be inclined to spend the money on hiring more tax collectors, implementing more audits, issuing more wage and bank levies, and other enforcement actions, rather than on taxpayer assistance or education. As a result, some Washington insiders have said of the commissioner, "enforcement seems to be his middle name."
Helpful IRS Phone Numbers
(888) 248-9058 Tax Defense Network, Inc.- Experienced Taxpayer Representation (877) 829-5500 Exempt Organization Help Line (888) 796-1074 Automated Extensions (866) 816-2065 Employer Identification Number Applications (800) 829-1954 Refund Hotline (800) 829-3676 Forms and Publications (or www.irs.gov ) (800) 555-4477 Electronic Federal Tax Payment System (EFTPS) Customer Service (800) 945-8400 Electronic Federal Tax Payment System (EFTPS) Enrollment Forms (800) 829-4477 Tele-Tax System (Recorded Tax Information)
This complimentary guide to tax issues provided courtesy of:
Tax Defense Network, Inc. has put together what many in the industry consider to be the best and most knowledgeable team of Tax Attorneys, ex-IRS Revenue Officers and IRS Licensed Enrolled Agents in the country. Our goal for you is simple: To get the Federal and State Income Tax Agencies off your back so you can go back to a normal life. And here is how we’re able to do that for you:
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By accepting cases nationwide. By hiring only seasoned, aggressive and professional Tax Specialists. By working hard to get you the best concessions the IRS is willing to give. We won’t stop until we feel we’ve obtained the IRS’s rock-bottom offer. By shouldering the burden of dealing with the IRS so you don’t have to. By working quickly and efficiently to end your IRS nightmare as quickly as possible. If your wages are being garnished, we will aggressively work to get the garnishment released so you can get your full paycheck back and get back to normal living.
By filing a Power of Attorney with the IRS so we will be able to deal with them on your behalf. Just this alone can give you peace of mind from unannounced visits to your home, stressful phone calls and threatening letters We are standing by to assist you but you have to make the first move. Speak to one of our Tax Professionals. Start Worrying Less and Living More.
Call 1-888-248-9058 to have any questions answered and for a free problem solving tax consultation. You can also visit us on the web at www.taxdefensenetwork.com