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It is stressful knowing that you owe back taxes, especially after the financial hardships that the pandemic brought during 2020. Tax resolution services can help you with the complicated task of tax preparation by resolving back taxes which you, your family, or your business should take advantage of in order to lessen the chances of mistakes. A tax lien on your bank account or your property is the most common tool used by the IRS to recoup back taxes that are owed. Keep reading to learn what you should know about your tax resolution options.
How to Know If You Are about to Be Levied
Before the IRS can perform any levy, they have to warn you that they are going to do so. The IRS will try to get in contact with you through several written notices. If you get a notice from the IRS, you can contest it. You can even appeal the notice. During the appeal process, the IRS cannot levy. Even if the levy happens and causes an economic hardship, you can set up an installment plan with the IRS. When this happens, the funds in your account are released, so you have access to them.
If you continue to ignore warnings from the IRS, the situation could escalate to where you receive phone calls. You may even receive an in-person visit from the IRS. When you receive communication from the IRS, do not stick your head in the sand. Talk to the authorities and work to resolve the issue.
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What Does a Tax Resolution Company Do?
An IRS tax resolution company can help you better understand the tax issues you are facing. You are hiring them to get a clear picture of your tax problem quickly and efficiently. The resolution company will speak on your family’s behalf and do their best to help you out depending on your specific situation. Tax resolution professionals know what is permitted on financial disclosures. They will look at your financial information and identify the type of tax resolution you qualify for. Your best bet may be an installment agreement. Trying to deal with old taxes and current taxes at the same time can feel frustrating. However, your representative will negotiate with the IRS. They will work to get you the lowest installment payments possible. They will do this by showing that you can’t afford to pay more.
Installment agreements can mean the difference between keeping a roof over your head or not being able to pay your mortgage. Installment agreements can mean the difference between keeping your business open or needing to close the doors.
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The IRS Is More Reasonable Than Most People Think
When the IRS initially makes contact, they know that you probably don’t have the money to pay what you owe. The IRS is like any business trying to collect money. They would prefer that you pay the money than not pay it. For this reason, the IRS is relatively reasonable. They are going to give you options. The options they provide will vary based on your current tax situation. If you are current and compliant, you have the most options available to you. Current and compliant means that you have filed all of your tax returns. To stay compliant, continue to file your tax returns.
If the IRS makes a payment agreement with you, make your payments on time. If you don’t, the payment agreement could be terminated. Therefore, it is important for you to work with a professional to make sure that your tax history is brought into compliance. From there, you can take steps moving forward. Be sure to do your best to move quickly so that the IRS can see that you are taking the necessary steps as fast as possible in order to finalize things.
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Once You Are Current, What Comes Next?
Once your taxes are current and compliant and the scope of your tax liability is known, you have overcome the biggest hurdle. Now, you need to determine whether you can repay what is owed. This is where the IRS is going to ask you to complete a financial disclosure. This lays out all of your income, expenses, and liabilities. It can be difficult for a person to make it through this step. There is a lot of forensic accounting that may need to be done. This is where tax resolution professionals can step in and help. This is especially useful if you are lost and do not know what steps to take next.
Conclusion for Your Tax Resolution Options
If you cannot afford to pay even the lowest installment agreement, you may qualify for an offer in compromise. The IRS will evaluate your situation and may determine that it is in the government’s and the taxpayers’ best interests to forgive the debt. The IRS does not do this out of the goodness of their heart. They do it because they want to promote future compliance.
