If you have overdue or delinquent taxes, otherwise known as back taxes, you probably feel overwhelmed and confused about where to turn. Finding a solution for your tax issue is quickly becoming a priority.
The good news is, tax relief is available for Connecticut residents who have back taxes. An experienced tax relief program can help you settle your tax situation.
Finding professional tax relief is important when you have unpaid taxes. Take a look at the most common tax relief options available to Connecticut taxpayers:
Installment Plans
IRS installment plans are a great option for those who need more time to pay their tax bill. If you are approved for a payment plan, you will pay back your back taxes over an agreed-upon amount of time, along with any accrued penalties and interest.
There are two types of installment plans available to taxpayers; short-term installments and long-term installments.
Short-Term Installment Plan
Short-term payment plans last for 120 days, with the potential for extending to 180 days if the taxpayer requests by phone or mail. This option is available for those with a maximum of $100,000 in combined taxes, penalties, and interest.
Applying for a short-term installment is free and can be done online, by mail, phone, or in person.
Long-Term Installment Plan
Long-term installments last over 120 days. Eligible taxpayers have a maximum of $50,000 in combined taxes, penalties, and interest.
If the taxpayer will make their installment payments through automatic withdrawals, they will pay $31 for online applications or $107 to apply by mail, phone, or in person. Those who intend on making payments via another method will pay $149 to apply online and $225 to apply in a different manner. Low-income applicants may have fees waived or reduced.
Obtaining an IRS Installment Plan
If you obtain a payment plan to pay your tax bill, be aware that the plan does not stop penalties and interest from accruing. Interest and penalties are added on until your balance is paid in full.
It’s also important to know that if you owe $25,000 or more in back taxes, your payments must be made via automatic withdrawal from your bank. If you owe less and use a credit or debit card to make payments, you must pay a processing fee.
In order to qualify as a low-income applicant, your adjusted gross income will need to be at or below the federal poverty level by 250%. If you qualify, you may be eligible to have set-up and processing fees reduced or eliminated.
Offer-in-Compromise
Another option for tax relief is the offer-in-compromise or OIC. An offer-in-compromise allows you to settle back taxes for less than you owe on your tax bill. Taxpayers are only approved for this option if they can show that there is no way they will be able to pay their tax debt or if a financial hardship will be created by paying it.
Being approved for an OIC is not as common as approval for a payment plan. In fact, the IRS only approves half of the applications for this relief program. Before applying for an offer-in-compromise, you will want to check out other programs to discover if there is a better one for you.
Qualifying for an Offer-in-Compromise
When you apply for an offer-in-compromise, the IRS will look at your income, expenses, and assets in order to determine whether you qualify or not. You will need to pay a fee of $205 to apply, which can be waived for low-income applicants. In order to qualify, you must be current on your tax return filings and you may not be in the middle of bankruptcy proceedings.
After you file your application, the IRS will suspend collections, however, they have the ability to file a tax lien or keep one in place until the application is approved.
If the IRS determines that you qualify for an offer-in-compromise and your application is approved, you will need to make a first non-refundable payment. This must be either 20% of what you are going to pay in five or fewer installments, or the first monthly installment if you are paying in six or more installments.
Keep in mind that if you have any federal tax liens, they will remain until you have fulfilled your offer-in-compromise.
Applications that are denied can be appealed within 30 days.
Currently Not Collectible
If paying your tax bill would prevent you from being able to pay for your regular living expenses, you can apply for Currently Not Collectible status, or CNC. This relief program provides a pause in collection attempts while you are unable to pay.
When you apply for currently not collectible status, you may be required to prove your financial hardship with a collection information statement. In this statement, you will show your monthly income and expenses to prove that paying your taxes is not possible at the time.
If approved, your tax debt does not go away, it is simply paused until you no longer qualify for the program. The IRS will potentially review your case each year to determine whether or not your financial situation is better.
Hire a Tax Relief Company
If you have unpaid taxes, you don’t have to handle it on your own. A professional tax relief company will help you with your tax issues. They have knowledgeable tax experts who are experienced in tax relief and can give you the guidance and advice you need to make the best decisions for your situation. Tax relief experts will give you the information you need and help you effectively file the forms for your relief program application.
Here are some things to know if you decide to hire a tax relief company for your tax debt:
- You are still responsible for your taxes if there is a hold-up with the tax relief company filing your requests.
- You might have to pay upfront fees to the tax relief company which could prevent you from saving money.
- There are many fraudulent and ineffective tax relief companies out there. They do not have the experience, nor are their agents authorized to negotiate with the IRS on your behalf. These companies often tell their clients to apply for tax relief programs that they don’t qualify for and will not be approved for, wasting their clients’ time and money.
If you decide to work with a tax relief company, make sure the company has the experience and results to back them up.
IRS Tax Relief Network in Connecticut
Connecticut is a New England state with the highest median income in the United States. It is part of the tri-state area and has a high population while being the third smallest state by area.
If you are a resident of Connecticut that needs tax relief, you can contact the IRS Tax Relief Network. The IRS Tax Relief Network is a professional company with a team of qualified tax experts. They will help you find the relief program that is best for your situation.
