If you owe back taxes and it comes to resolving back taxes there are 5 common solutions. It is best that you learn all available options and see what fits your unique situation the best before deciding an action plan. Some important factors to consider before making your decision of what back tax settlement method to use are your back tax amount owed, tax debt amount, the greatest amount you can afford to pay, the amount of liquid assets you have, and if you would be able to pay amount in full if you just had more time. Below are the 5 most common ways to solving back taxes.Offer in Compromise
An offer in compromise is the method that allows individuals to settle IRS back taxes for less than the total amount originally owed. Whenever you hear the saying, "Settle for Pennies on the Dollar", this is the way that is used. It shouldn't come to a surprise that this is the hardest settlement to reach with the IRS. The IRS has strict requirements to qualify for an offer in compromise. The offer in compromise tries to find what amount would work best for both the IRS and for the individual. This means the IRS will only settle for less if you can prove it will cost them more to try to get the money from you. This is a good choice if your total assets is less than the amount of back taxes you owe.
Installment Agreement
This is the most common settlement method. You will be required to make monthly installment payments of a minimum amount. With an installment agreement you will end up paying more than the original amount owed because you will still have to make interest payments. An installment agreement should be used if you cannot pay of entire amount owed in full but have the means to pay off over time.
Delay the IRS
If you need to buy more time to pay the total amount due it can easily by done by using your understanding of the IRS system to your advantage. When the IRS realizes that you owe back taxes, they will begin their sending their automated notices. There are a series of letters that the IRS sends before it actually takes actions against individuals to collect. Typically the IRS sends an original assessment letter stating the amount of tax owed plus any interest and penalties then it will send a series of four CP Letters (Computer notice noted by number on top of letter). These notices go for 4-6 months before the IRS takes action without any action taken on your part. To get more time all you have to do is write a letter back to the IRS in response to the assessment notice or CP notices and simply explain that you cannot pay at the current time and say you would like a 45 day extension. Once the 45 days is up and you haven't done anything , it will just start up collection system where it left off and you will receive another letter and you can repeat the same process. You must settle your taxes before the IRS takes action against you.
Getting Currently Not Collectible Status
This way won't resolve your tax debts, but it temporarily stop collections. When you receive this status, the IRS will temporarily stop collection activities against you and they will require that you submit an updated financial statement every year to see if your situation has improved enough for them to go after you and collect. The statute of limitations is still running during this time and if 10 years passes, you will no longer be liable for those tax amounts.
Back Taxes Specialist
Tax specialists are many times the the most efficient way to settle tax debts. Tax experts have the highest success rate for getting offer in compromises settled and for the least amount of money. They also have the best methods for setting up installment agreements that work best for individuals that cannot pay, or finding other methods that would better suit the individuals for their particular situation. Most tax attorneys give you your likely outcome for no charge to try to get your business. It is best you get multiple quotes and find your best fit.
Every year thousands of people settle their unpaid back taxes with the IRS. Tax laws only continue to get more complex and this causes more people have problems with back taxes. Just knowing these options can help you save thousands when dealing with IRS issues, settle soon, prevent interest and penalties from building.
Source: http://www.ArticlePros.com/author.php?Manuel Davis Jr.
|
