Posts Tagged ‘Tax Resolution’
8 critical considerations for selecting IRS tax professional for tax debt relief
8 critical considerations for selecting IRS tax professional for tax debt relief
Not Every IRS Tax Professional is Alike When Needing Tax Debt Relief
Choosing the IRS tax professional for tax debt relief is as confusing as reading an IRS tax transcript.
When you are ready to use successful and valuable methods of resolving your problematic tax matter, hire an IRS tax professional to advocate and guide you. You can use these tactics to find best tax debt relief companies for your needs.
Here are 8 critical considerations for selecting an IRS tax professional for tax debt relief.
EXPERIENCE IN IRS TAX DEBT RELIEF SERVICES
As you search for the best tax debt relief companies to take your case, you want to look for those that have years' worth of experience in the industry.
You do not want a novice CPA firm or IRS tax professional to gain experience at the expense of your case. You need a tax expert who has been in the tax debt relief industry for several years if not longer.
This amount of experience benefits you because you get a tax professional who has more than likely handled cases just like yours or perhaps even cases that were more complicated.
This individual also will know how the current tax laws apply to your case and will use them to your advantage when dealing with the IRS.
LENGTH OF TIME DOING TAX DEBT RELIEF
We tie the experience that a tax resolution firm can offer to you to how long it has been in business. The industry standard for determining whether a firm has experience is if it has been in business for at least five years. Depending on the experience you are looking for, hire a company that has been in business for longer than five years.
The time an IRS tax relief professional has been in business also correlates with how experienced the staff is to assist clients like you with their tax matters. You may ask the firm you are interested in hiring, how long it has operated. A newer company may lack the experience needed to resolve your complex tax case to your satisfaction.
WHEN FINDING THE BEST TAX DEBT RELIEF COMPANIES QUALIFICATIONS ARE CRITICAL
As a client, you want the staff of an IRS tax relief professional to assist you to your satisfaction.
You should look for tax resolution companies that use people who are Certified Public Accountants (CPA) or licensed as an Enrolled Agent (EA) or certified as tax attorneys as one of these are the only IRS tax professional that can represent you before the IRS.
They should also belong to professional organizations like the American Society of Tax Problem Solvers or the American Institute of Certified Public Accountants. Tax attorneys should be members of their state bar.
TAX DEBT RELIEF COMPANY REVIEWS
As a potential client, you may look for an IRS tax relief professional reviews before engaging its services.
Getting behind on your taxes can have serious financial repercussions, such as asset seizures and wage garnishment.
The good news is that there are a number of tax relief firms that might be able to assist you in working out a tax debt settlement with the IRS for less than what you owe.
The credibility of the entire tax debt relief industry has been damaged, however, as a result of numerous tax debt relief organizations taking advantage of desperate people by employing dubious methods.
The good news is that there are numerous trustworthy IRS tax debt relief organizations accessible to assist in reducing the burden of tax debt. Finding reputable, experienced tax relief providers that provide the services you require for a cost you can afford is the challenging part.
THE BEST TAX DEBT RELIEF COMPANIES OFFER NO GUARANTEE
Some firms offer guaranteed satisfaction. In reality, a tax resolution company cannot guarantee the outcome of your case or that you will get the resolution you want from the IRS.
A good firm will tell you upfront that the outcome of your case will depend on factors like:
-How much you owe to the IRS
-The age of your debt
-Any penalties and interest you owe
-If the IRS has moved to garnish your wages or seize your assets
-Whether the case is resolvable with an Offer in Compromise, installment agreement, or other payment option.
These factors make it challenging for any firm to guarantee how your case will be solved.
As a client, you want to hire a tax professional who will offer you personalized service. You want to say informed and in charge of your case as it unfolds.
Personalized service allows you to meet face-to-face with the person handling your tax situation, so you know the most intimate details of it well before you meet with the IRS in an audit or court hearing. You also want to know that the tax professional handling your case will answer your phone calls and emails whenever you have questions or concerns.
YOUR ROLE IN THE TAX RESOLUTION CASE
Finally, you want to find out what your role will be in your own tax resolution case. You should find out what the company expects from you from Day One so you can act and prepare accordingly.
You can find out these details by insisting on speaking with the professional representing you before you put him or her on retainer. You should ask how you can say proactive in your IRS tax debt case and how you can say informed as the case gets underway.
These criteria allow you to search for and find a tax professional or tax resolution firm that is qualified to handle your tax debt case. You will retain representation to guide and advise you as you approach the IRS. You also may get the desired outcome of your tax debt situation.
The Top Myths regarding Tax Pros can be found here myths.
For more information regarding IRS tax relief visit KeithJonesCPA.com.
(CSED) Collection Statute Expiration
Do federal tax liens expire?
The answer is yes! The Collection Statute Expiration Date (CSED) marks the end of the collection period, the time period established by law for the IRS to collect taxes. The CSED is normally ten years from the date of the assessment.
The Collection Statute Expires After 10 Years.
The collection period, which refers to the time period allowed by law for the IRS to collect taxes, expires on the Collection Statute Expiration Date (CSED). The CSED is typically ten years from the date of the assessment..
Tax assessments that have a specific Collection Statute Expiration Date include, but are not restricted to:
- Original tax assessments from voluntarily filed returns
- Tax assessments arising from amended return filings
- Substitute for Return tax assessments made by the IRS
- Audit assessments
- Civil penalty assessments
The IRS’s Time to Collect can be Suspended and/or Extended.
Certain circumstances have the potential to delay or lengthen the original ten-year CSED.
In general, when the IRS is unable to collect tax, the CSED or Collection Statute Expiration Date is suspended. The term it is suspended for extends the time the IRS has to collect. In other words, you have a maximum of ten years to collect after the first ten years. Although there are rare exceptions, the IRS typically refrains from taking levy action while the collection period is stopped.
In contrast, the collection period is tolled when the IRS is allowed by law to add additional time to the initial ten-year collection period. The IRS is allowed to continue collecting when the collection period is extended.
Typical Events That May Have an Impact on the CSED
The CSED is impacted by a number of statutes. The completion of the collection period may be tolled by more than one action. The time for multiple events is not added more than once where one event may overlap another one because overlapping conditions take place simultaneously.
The initial ten-year collection period is postponed or put on hold during the time that you are filing an Installment Agreement (IA). Until an IA may be reviewed, established, or the request is withdrawn or rejected, an IA request is usually in the pending status.
The collection period is suspended for 30 days if the proposed IA is denied. Similar to this, the running of the collection period is halted for 30 days if you fall behind on your IA payments and the IRS decides to terminate the IA.
Last but not least, the collection period is suspended from the time it begins to run until the day the appealed decision becomes final if you use your right to appeal either an IA rejection or termination. Please see Topic 202.
The running of the collection period is stopped while your bankruptcy is still pending if you file for bankruptcy. A bankruptcy is often considered pending from the moment a petition is filed until it is discharged, dismissed, or closed. Upon the conclusion of the bankruptcy, the collecting time is further extended for a further 6 months. Check out Publication 908.
The collection period is suspended if you submit an Offer in Compromise (OIC), from the time it is pending to the time it is accepted, returned, withdrew, or refused. If your Offer is turned down, the collection period will be postponed for an additional 30 days and for the duration of the appeal process if you decide to appeal the denial. Please see Topic 204.
When the IRS receives a request for a Collection Due Process (CDP) hearing, the collection period is put on hold until either the taxpayer withdraws the request or the CDP determination is final, including any court appeals. The collecting period is extended to 90 days from the date of the final determination if there are less than 90 days until the CSED at the time the determination becomes final. Please consult Publication 1660.
If you submit an innocent spouse claim, only the running of the requesting spouse's collection period is suspended from the date the innocent spouse claim was submitted until the earlier of the dates a waiver is submitted, the 90-day petitioning tax court deadline expires, or, if tax court is requested, the date the tax court decision becomes final, plus, in each case, the collection period is extended by an additional 60 days. Observe Topic 205.
The IRS is prohibited from starting an administrative or judicial collection process for the assessed debt once a particular collection period has passed.
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3 Bona Fide IRS Collection Alternatives to Solve Back Taxes
There are three main IRS collection alternatives taxpayers use to solve back taxes: Installment Agreement, Currently Not Collectible and Offer-in-Compromise.
IRS collection alternatives if you cannot pay the back taxes
We know the story: things are tight financially, so you either (1) do not file the tax return, or (2) file the return but don’t pay the balance due. But do not worry, you tell yourself, next year will be better.
Now it is 2-3 years later and a letter arrives from the IRS, and the threats start, and maybe it has even gotten to the point of actual levy and seizure activity.
Now the IRS is wreaking havoc on your financial life and you simply do not know what to do.
We know. We have helped many clients through that exact scenario. Fear not, there is a light at the end of the tunnel.
The most commonly used alternatives are extensions of time to pay and streamlined installment agreements. That’s because most individual taxpayers just need a few weeks to get the funds to pay their tax bill, or they can pay monthly.
As it turns out the IRS is usually only too happy to work with taxpayers, but there are some ground rule you need to be aware of and a roadmap to follow.
1. Tax Compliance
The first step in resolving your tax issue is to get into “tax Compliance.” Compliance means that you have filed all tax returns due for the last 6 years and have made your current tax payments. Once you are in tax compliance we can now work on resolving the back-tax issue.
2. Collection Alternatives
There are three main collection alternatives to resolve a back-tax debt: Installment Agreement, Uncollectable Status, and Offer-in-Compromise.
An installment agreement is an agreement to pay the taxes back over time. There are three variations of the installment agreement: Regular, Streamlined, and Partial-Pay.
Which type of agreement works best for you will depend upon your personal circumstances and is something we can help you address when you are ready.
Uncollectable status is when the IRS determines that you are unable to make current tax payments.
When a taxpayer is deemed uncollectable the IRS may still file a Notice of Federal Tax Lien to secure its position in the taxpayer’s assets but will not otherwise take enforcement action to seize (or levy) the taxpayer’s assets or income streams.
If you cannot pay the IRS, you can request currently not collectible (CNC) status, which strictly limits allowable expenses to necessary living expenses limited by IRS collection financial standards. CNC status is usually temporary; the IRS uses manual and automated procedures to determine whether your client’s financial situation has improved.
For CNC arrangements, the IRS will file a tax lien if more than $10,000 is owed. To request a CNC arrangement, you must contact the IRS by phone, in writing, or in person.
An Offer-in-Compromise is an agreement where the IRS agrees to accept less than the total amount owed to it and the taxpayer agrees to pay the amount negotiated, as well as maintain his or her tax compliance for 5 years following the acceptance of the Offer-in-Compromise (“Offer”).
The basis for an Offer is a formula referred to as “Reasonable Collection Potential” or “RCP.” RCP is effectively the net equity in assets plus the taxpayer’s excess future income for 12 or 24 months, depending upon how the Offer is structured.
There can be significant planning done to help a taxpayer maximize the potential for the Offer acceptance.
If you or someone you know has an issue with paying their federal taxes and needs help to end their IRS nightmare, please contact us by either phone at 844-888-1040.
12 Ways for IRS Back Tax Relief with IRS Fresh Start program
Americans who are struggling financially and find it impossible to make tax payments the IRS fresh start program.
How to Get IRS Back Tax Relief
Has the pandemic caused created you to fall behind on filing your federal income tax year return or paying your federal IRS tax liabilities? If it has, you are not the only one looking for IRS back tax relief.
More than 22 million taxpayers in the United States had either failed to file a current tax return or are behind in paying their IRS taxes due and that was before the pandemic hit.
This relief ranged from postponing certain installment payments related to Installment Agreements and Offers in Compromise to the collection and limiting certain enforcement actions.
Past-Due tax returns were still due and the IRS "continued its work to secure unfiled tax returns" but told taxpayers' in an official statement that they "should file any delinquent 2018 return (and their 2019 return) on or before July 15, 2020" thus moving the April 15th deadline and extending the filing season.
Mission-critical functions continued with certain IRS services such as live assistance on telephones, processing paper tax returns, and responding to correspondence were and still are extremely limited.
Current year Tax return bills did not go away and unpaid taxes for prior years still accrued penalties and interest.
If things have been tight financially, it can be easy to ignore the task of filing and paying your federal taxes to the IRS. Some might think that they can get caught up “next year” when things get better.
However, unfortunately, for many their financial hardship won't get better and they will skip tax filing again. And maybe again allowing the situation to snowball.
Initially, one might think they have gotten away with not paying the IRS, but eventually, the IRS will catch up with you. While procrastinating, the penalties and interest build-up to a dollar amount that is way more than what would have been owed if the returns were filed and the taxes were paid on time.
What Can The IRS Do If You Fail To Get IRS Back Tax Relief?
Internal Revenue Service Restructuring and Reform Act of 1998 was a landmark law that put respect for the individual taxpayer back into the system. It forced the IRS to more fully communicate with the public and grant taxpayers "due process" rights.
But make no mistake about it, the IRS is not a joke and has almost unlimited power. They can take away your car, your house, garnish wages, clean out your bank account and retirement fund, as well as restrict your travel by seizing your passport.
They will take anything of value – jewelry, precious family heirlooms, artwork, your gun collection, even garnish part of your social security earnings.
By then, the penalties and interest will be so high that it will feel like an impossible situation to get out of.
Did you know that some of IRS debt may not be forgiven if one declares bankruptcy? This is correct.
Just the anxiety alone is not worth getting behind on your taxes. Especially at a time when everyone needs to keep their stress level low and their immune system in tip-top shape to fight the coronavirus.
For some, the added stress could cause a more severe illness. And that's the last thing that is needed because in a worst-case scenario, that can lead to lost wages and hospital bills on top of your IRS debt.
Save Your Marriage With IRS Back Tax Relief
You owe it to yourself and your loved ones to begin the journey of coming clean with the IRS. A huge burden will be lifted from your shoulders and you will feel enormous relief when you take the first step toward getting your IRS issues resolved.
Sleep at night with IRS Fresh Start Program
So, let's see if we can begin to relieve some of that anxiety. We will take a look at all of the steps and options that you have when you get behind in filing or paying your federal income taxes to the IRS.
Facts about IRS Back Tax Relief or Tax Debt Resolution
Here are some facts about resolving your debt with the IRS.
1. The IRS wants to work with taxpayers and grant IRS back tax relief The IRS is actually on your side, in a way. The agency is typically eager and happy to collect old debts. It truly wants to work with taxpayers, but there are many, many rules you need to know about and a process to follow.
2. Only 3 types of professionals can represent you before the IRS.
While you can represent yourself in front of the IRS. It might not be the best idea, especially if your debt is very high or you've ignored the situation for a long time.
There are only three types of professionals that can represent your case at the IRS:
1) CPAs, Certified Public Accountants. But be careful: not all CPAs are experienced in IRS representation.
2) EAs, Enrolled Agents. Again, make sure the EA has experience representing clients to the IRS.
3) Attorneys. Same story as above. Not all attorneys are tax attorneys, and even not all tax attorneys have a bustling representation practice.
A great question to ask anyone you are looking to hire is “What is your offer-in-compromise acceptance rate?” 3. You'll probably need to get your bookkeeping caught up.
If you're behind on your taxes, it can often follow that you are behind on your bookkeeping as well. Anyone you hire is going to need good numbers in order to work with you, so a good first step is to catch up on your bookkeeping.
Often, tax resolution professionals provide bookkeeping catch-up services. They'll do the minimum you need in order to get you or your business in compliance.
4. You will probably need to open all of your IRS mail.
Yep, we know you. It's sitting in a stack somewhere in your home. If you haven't opened the mail, start opening it up.
It's helpful for tax professionals to know what type of notice you received. In most cases, tax resolution specialists will know the letter by form number, and that will give them an idea of where to start with your case.
Please note: The IRS will never send you an email about any of the above situations. They always send physical letters. If you get an email, it's a scam.
The Internal Revenue Service, state tax agencies, and local entities will send a letter if one of the following happens:
- You miss a deadline for filing payroll tax reports.
- You miss a deadline for filing your personal or corporate income tax returns.
- You miss a deadline for paying the tax due from your personal or corporate income tax returns.
- You miss a deadline for filing and/or paying corporate franchise tax due.
- An amount paid is short or over what the IRS or another tax agency calculates as due.
- The agency notices a discrepancy on any of your tax returns and needs an explanation.
- You have been selected for an audit.
- You fail to respond to previous correspondence.
Getting into Compliance for IRS Back Tax Relief
Here is what you need to do to get into “compliance” with the IRS. You can't have any debt forgiven until you get into compliance.
5. You should almost always file your past due tax returns, but there are some exceptions and filing needs to be done carefully so additional debt is not triggered.
Before any debt can be forgiven, the taxpayer needs to get into compliance.
This means all past-due returns must be filed. You don't have to pay off all your debt at this time; we'll talk about what you need to pay in the next item.
However, there are a couple of really big “ifs” when it comes to this step. In rare situations, filing can trigger more debt. Also, filing a particular way can also trigger more debt.
That's why it just makes sense to get a tax resolution professional involved in every step of this process, so they can keep you out of more trouble than you're already in.
6. Pay your current taxes.
While you don't have to pay all of your old IRS debt, you do have to be paying your current taxes. This is part of getting into compliance. You need to be able to show IRS that you can pay your taxes that are current.
This means that if you have a job as an employee, withholding is being withheld from your current paychecks. Or, if you're an entrepreneur taking draws, that you are currently making your estimated tax payments.
Paying Off Your IRS Debt: Options for IRS Back Tax Relief
Here are the options you have for paying off your IRS debt.
7. Pay off the entire amount, including penalties and interest.
If you can afford to, just pay it off. You will save on legal fees, but if you're a first-time offender, you may be paying penalties and interest that you might have gotten out of if you hired someone.
8. If the IRS has made an error, get the error corrected.
For this you need a Tax Resolution Professional – they can get into the RIS files and find what they have on you. It can be scary to talk to an IRS person directly.
Review return for errors, amend return, file paper return to IRS.
IRS errors usually refer to when the IRS files a return on your behalf (called a "Substitute For Return" or SFR) and only uses the info they have on hand. Therefore, no deductions are used.
9. Spouse issue You may also have a special situation with your spouse if they promised to file and did not or they do not file correctly, or they don't pay.
As a business or an individual taxpayer, you may receive a penalty on top of what you owe to the IRS. It allows compliant taxpayers to request abatement or remove certain penalties.
A penalty abatement is a tax problem resolution designed to fully eliminate or lessen the degree of IRS penalties.
The IRS penalties can roll out penalties that range from imprisonment to civil fines.
Those fines can be over 25 percent of the total owed to the IRS.
If you have tried applying for an offer in compromise and it was rejected, penalty abatement is the next best tax problem resolution to consider.
You can use it when negotiating repayment method terms or an installment agreement.
There are several types of installment agreements:
- In Business; and
11. Understand RCP: Reasonable Collection Potential One of the key concepts in getting IRS back tax relief can be Reasonable Collection Potential or RCP.
It is the basis for making an offer to the IRS as to what you can pay.
RCP is a complicated formula based on the assets and income you currently have.
A tax representation professional can work with you to create a personal budget that can be used to present an offer to the IRS.
We will discuss offers a little later in this article.
When good, hard work is performed to create the budget, the taxpayer's chances of getting their offer accepted by the IRS improve.