Tax Settlement | Tax Relief | Tax Solutions |IRS Back Tax Help
Tax solutions vary by individual. Each solution has it’s own set of pros and cons. The qualifications for back tax program are complex and often confusing. It is highly recommended, that once you get familiar with the tax resolutions available, you consult a back tax Pro. Ask A PRO
IRS back tax settlements generally refers to a resolution obtained that satisfies a back tax debt. Tax settlements are obtained by contacting the IRS via the taxpayer or some professional help. Professional help is recommended because of the complexity of documentation and processes.
Everyone should have a proper understanding of what IRS back tax help encompasses. Before trying to apply for a particular settlement, you should know the guidelines for qualification, the communication, & documentation process and your financial ability to follow through with it. Also, be prepared for this to take some time. In many cases, tax resolutions can take a year or more to complete. There is a lot of back and forth communication in longer cases. Read More about IRS Tax Settlement Options.
2. Filing Back Taxes Returns
Filing back taxes returns is a tax settlement where the taxpayer resolves their back tax issues through providing un-filed returns. In other cases, where a tax return WAS filed, amending a particular return might satisfy the back taxes that were perceived to be owed by the former return.
Take this advice: File your back taxes as soon as you can. The IRS is an entity with a lot of power to make your financial life difficult. As slow as the IRS is, they will eventually discover your tax debts and move to get them satisfied, with or without your participation.
3. IRS Payment Plan | IRS Installment Agreement
Installment agreements are part of the Fresh Start Initiative and IRS back tax help. They allow taxpayers to make small monthly payments against tax debts. Monthly payments are determined by the Internal Revenue Service after they complete their analysis of your financial situation.
This is the most common resolution taxpayers receive. There are a lot of factors that go into determining your monthly payment. Frankly, the factors are complex and confusing. If you are on a budget or owe a lot of back taxes to the IRS, you really should consult a tax professional. The monthly payment is a point of discussion with the IRS. If you don’t have the experience of having these conversations with the IRS, your monthly tax installment could be much higher. Conversely, if you BELIEVE you owe less than $5,000, you are probably better off saving money and working with the IRS yourself.
4. Non-Collectible Status (CNC) / Financial Hardship
Non-Collectible Status refers to a tax settlement, where the tax collection process is postponed indefinitely. You still owe the tax debt. However, the IRS believes you can’t both afford to pay taxes and reasonable living expenses.
There strict guidelines to qualifying for this type of tax relief. There are also different variations that account for penalties and interest. Again, unless you have a lot of time and tax professional friends. Get some professional help with this one.
5. IRS Penalty Abatement/Reduction (IRS Back Tax Help Program)
This refers to the mode through which penalties and interests accrued against you on filing your taxes late, are removed. While interest is usually not waived, there are a number of reason the IRS would accept, to waive or remove penalties.
The IRS generally will not abate fees and interest. I wouldn’t expect it to happen. If you have huge penalties added to your tax debt, I strongly advise getting help an tax expert.
6. Pay Your Back Taxes
Paying the back taxes that you owe, along with penalties & interest, is a tax settlement option.
Clearly, this is the easiest option. Just pay what you owe. However, if you owe a lot of back tax, you might want to have your tax returns reviewed by a professional. Having a review of your tax returns shouldn’t cost more than a couple hundred dollars. You may end up owing less than you think. Also, the right professional might evaluate your situation for an installment agreement.
7. Offer In Compromise (OIC) (IRS Back Tax Help Program)
Reaching an Offer In Compromise (LINK) with the IRS would result in your paying less back taxes than you owe. Payments on this type of tax resolution are either a lump sum or paid via an installment agreement.
The guidelines are strict and few will receive this settlement option. It is the holy grail of all tax settlement options out there. I have personally seen $50,000 in debt wiped to one payment of $500.00. Applying for an OIC is complex and in my opinion, requires professional help. Many of these applications go back and forth with the IRS for over a year. So be patient during this process.
8. 10 Year Statute of Limitations
According to the tax code, the IRS is limited to 10 years to collect back tax debt and the penalties & fees associated with it. The 10 year clock, usually starts close to the filing date of the tax return in question.
In other words, after 10 years from a specific date, your tax debt, along with penalties and interest, is wiped off your tax account. You will owe nothing. Keep in mind, there are things a taxpayer can do or “not do” that can extend start the clock over. If your debts are old and you owe a lot, talk to a tax pro to see if this can be factored into your back tax strategy.