Tax Resolution

Do Tax Resolution Services Really Work?

While there are many companies out there advertising themselves as tax resolution services, only experienced, qualified companies will be able to help you. In order to make sure you are hiring a good company, make sure they are qualified, reputable companies. These are the only tax resolution providers that will be able to represent you with the IRS. 

Tax problems occur when you have unpaid taxes. Typically, the IRS or state will wait a bit for those with back tax problems to pay their taxes. However, if taxpayers avoid the payment of their back taxes for too long, they can face a bank levy or a tax lien on their property. 

With a bank levy, the agency demands that the taxpayer’s bank turns over the unpaid taxes from their account. Depending on the circumstances, this can be devastating for taxpayers. 

That’s why it’s important to recognize the probable signs that you’re about to be levied. In order to protect yourself and prevent harsh consequences, you will need to know when a levy is likely. This is where reliable Tax Resolution Services comes to play.

Before you are levied, the IRS or state must give you notice, which typically happens through written communication. Once you receive these notices, you have the ability to appeal in order to prevent the levy. 

However, if you are unable to prevent the levy, you can work out a payment plan with the agency and have the levy removed before any money is taken out of your bank account. 

The worst thing to do if you receive notices of a potential levy is to ignore them. When you ignore the tax authorities, they can send your case to collections and even pay you a visit! With open communication, you will most likely be able to avoid harsh penalties and reduce the amount of financial hardship you experience. 

Working with Tax Authorities

In most cases, the IRS will work with taxpayers to help them get caught up on their taxes, as long as they are current and compliant. That means the taxpayer has filed all of their past tax returns. 

When the taxpayer has all of their tax returns filed, the IRS will usually work out a payment arrangement. The arrangement must continue to be paid on time in order to keep the agreement in good standing. By filing all tax returns and paying arranged payments on time, taxpayers are able to work towards the repayment of their back taxes. 

In order to determine the taxpayer’s ability to pay what they owe, they will have to complete financial disclosure. This disclosure will lay out all of their income, expenses, assets, and liabilities, and will give the IRS a look into their repayment capabilities. 

Using Tax Resolution Services

Completing the financial disclosure can be tricky and confusing. With the help of tax resolution services, taxpayers have someone to walk them through the process, giving them guidance every step of the way.

With tax resolution services, you are hiring a professional to represent you with the IRS. Dealing with tax agents can be hard, confusing, and even embarrassing. Determining all of your financial details for the financial disclosure can be difficult. With a tax resolution professional, you will have someone to walk you through the process and make sure everything is done right.

Another benefit of tax resolution services is the qualification for an offer in compromise. If the taxpayer is in a situation where the lowest payment arrangement still poses financial hardships, their tax resolution representative can help them get an offer in compromise. This is a situation where an agreement is made between the taxpayer and the IRS to settle for less than owed. When this happens, the IRS forgives the debt with the understanding that the taxpayer must remain current and compliant going forward, for the next five years. 

Using tax resolution services can also help eliminate penalties that occurred. A tax resolution representative will be able to communicate the taxpayer’s situation to show that they had reasonable cause for not filing or paying their taxes. When the case is made well, the IRS or state may erase any penalties. 

How Much Do Tax Resolution Services Cost?

Tax resolution services’ prices vary depending on the overall needs of each client. However, there are average costs that you can expect when using tax resolution services. 

Setting up an installment arrangement costs on average $2,500-$3,500, for personal taxes, and a bit more for businesses. 

Partial payment installment agreements cost $3,500-$5,000 on average.  

Penalty abatement can be included with an installment agreement or can be used on its own. Costs average $250-$1,000.

An offer in compromise costs $4,000-$7,500 on average. 

How Do I Get My IRS Debt Forgiven?

A qualified tax resolution representative will be able to pursue an offer in compromise for you. The OIC is a settlement agreement that allows you to pay less, or even nothing, in order to settle your back taxes. Your tax resolution representative can appeal to the IRS for an offer in compromise. If they can prove that paying the back taxes poses an extreme financial hardship, you may be able to have your debt forgiven. 

Is There One-Time Tax Forgiveness?

The IRS offers one-time tax forgiveness in certain circumstances. 

Reasonable cause is for those who have done everything they can to meet their tax obligation but are still unable to pay for reasons they cannot control, such as health-related circumstances or Acts of God. 

Administrative waiver and first-time penalty abatement are for those who experienced some sort of disruption in their taxes that caused them to have more taxes than they could afford. This tends to be for those who have been in good standing for years, always paying their taxes, and then had an issue come up which changed their taxes drastically. 

Statutory exceptions are for those who requested advice from the IRS and received poor advice that led to the tax penalty. 

Who Is Exempt From Paying Income Tax?

There are certain groups of people who are exempt from paying income tax. These include:

  1. Single people, under age 65, with an income of less than $12,400.
  2. Married people, under 65, with an income of less than $24,800.
  3. Heads of households, under 65, making less than $18,650.
  4. Heads of households, over 65, making less than $20,300.
  5. Over 65, with an income of less than $14,050.
  6. Married filing jointly, over 65, with an income of less than $27,400.
  7. Qualifying widows
  8. Self-employed making less than $400.
  9. Dependents
  10. Certain disabled people. 

What Happens If You Don’t File Taxes For 5 years?

Failing to file your taxes is a crime. If you don’t file taxes for an extended period of time, you can face up to five years in prison and penalties of up to $250,000.