How To Get Rid Of Back Taxes

Get An Irs Payment Plan

The IRS has provisions for businesses that need more time to settle their tax debts. However, it is important to note that effecting any payment plan doesnt exempt you from any interest or penalties they will accumulate for the outstanding amount. Tax debt advisors can help you create a regular repayment schedule while minimizing the impact of interests and penalties.With this option, note that any tax debt above $25,000 must be paid through automated withdrawals from a checking account. There are additional fees should you choose to pay using credit or debit cards, usually 2 percent of the installment amount or $2-$4.

How To Get Rid Of A Tax Lien

Tax liens result from unpaid back taxes and allow the government to claim your assets. Once filed, a tax lien can make it difficult for you to buy, sell, or refinance your property or use it as collateral.

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State and federal governments have no problem letting you know if you owe money in back taxes. If you fail to pay your delinquent taxes after receiving those notices, the IRS or your state government may choose to place a lien on your assets.

Essentially, a lien is a legal claim to those assets to satisfy your debt. The lien is publicly recorded and can have many far-reaching impacts, so youll want to get rid of it as soon as possible. Today, lets dive a bit into a tax liens potential effects and how to go about removing it.

In this article:

• How to avoid a tax lien in the future

Pay Back Taxes With A Loan Credit Card Or Another Form Of Financing

Your final option is to pay off your back taxes with a loan a personal loan, a 401k loan, a home equity loan, etc. You can also use credit cards and lines of credit.

The advantage of these is that youre able to settle your debt in full, without any harsh consequences like liens or asset seizure. On the downside, though, youre just replacing one debt with another and often, it may come with a higher interest rate, too.

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Irs Help For Taxpayers

If you owe taxes, but cant pay the IRS in full, consider submitting an Installment Agreement Request with your return. In certain situations, the IRS cant deny a request for an installment agreement if you owe less than $10,000. That said, you should still pay as much as you can with the return. You will be charged interest and possibly a late payment penalty on any tax not paid by its due date, even if your request for an installment agreement is approved. You can avoid IRS collection notices and actions, like a Notice of Federal Tax Lien or an IRS levy, by establishing an installment agreement upfront and making your installment payments.

If you owe back taxes, there are several IRS tax relief programs to help, including the agencys Fresh Start initiative:

• An Installment Agreement is generally available to people who can’t pay their tax debt in full at one time. The program allows people to make smaller monthly payments until the entire debt is satisfied.
• Under its Fresh Start initiative, the IRS raised the threshold for streamlined installment agreements from $25,000 to $50,000 in tax debt, and the maximum repayment term from five to six years. Taxpayers who owe less than $50,000 may apply online with the IRS and dont have to complete an IRS Collection Information Statement .

We Know How The Irs Works

As former Senior IRS Collection Agents, Landmark Tax Groups professionals know how the IRS works AND how to protect you and your assets. Get step-by-step guidance that will answer all of your questions on having your IRS tax debt expire by .

If you would like us to review YOUR IRS tax case, contact Landmark Tax Group right now for an expert consultation!

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Ask For Penalty Abatement

If you had a good reason why you didnt file or didnt pay what you owed when you filed, then you can apply for penalty abatement. This doesnt reduce the back taxes you owe, but it minimizes the penalties applied to that debt. The IRS will either reduce or remove penalties if youre approved for penalty abatement.

In order to be approved, you must prove you had reasonable cause not to file or pay on time. Unfortunately simply not having income available does not count. You have to go through a major event, like a natural disaster or death in the family to qualify.

Why Its Important To Remove A Tax Lien

As mentioned above, youll want to remove a tax lien as soon as possible if you have any plans to borrow money, open new credit-based accounts, sell an asset, or refinance a loan. It is also important to remove a tax lien before it turns into a levy.

A tax lien is the governments legal claim to your assets a tax levy is when they take action. When a levy occurs, the federal or state government can step in and seize your assets in order to satisfy your outstanding debt. The following are some examples of what that might include.

• Garnishing a portion of your wages
• Seizing and selling your personal property, such as a vehicle or boat
• Seizing and selling your real estate property, such as your home or business
• Freezing and/or seizing funds from a bank or other financial account that you own
• Seizing rental income owed to you
• Withdrawing and seizing the cash value of your life insurance policy

If you want to stop tax liens from being placed on your property, you need to take action quickly. If a lien has already been filed, its important to remove it before it turns into a levy.

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Problems With Tax Relief Companies And Representatives

The IRS Office of Professional Responsibility targets questionable practices in the tax debt resolution industry. Report problems to the IRS on Form 14157, Complaint: Tax Return Preparer. The IRS Return Preparer Office will process the complaint and, if appropriate, submit it to the IRS Office of Professional Responsibility for investigation.

Behavior warranting a complaint to the IRS includes companies or individuals that:

• promise that you will get relief from tax liabilities
• misrepresent how long it will take to process a debt relief request application or
• omit relevant asset information on financial statements submitted to the IRS.

You also may file a complaint with the FTC online or by phone: call 1-877-FTC-HELP. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

How A Lien Affects You

• Assets A lien attaches to all of your assets and to future assets acquired during the duration of the lien.
• Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
• Business The lien attaches to all business property and to all rights to business property, including accounts receivable.
• Bankruptcy If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.

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Figure Out Exactly How Much You Owe

The first thing you need to do is figure out exactly how much you owe. Just like paying off your car or preparing for student loan repayment, you need to know where you stand to figure out how to put a plan in place and get your debt paid off as quickly as possible.

How to Get Rid of Your Back Taxes

Gather all the documentation you have regarding your tax debt, which may include tax returns from past years and letters from the IRS. Your previous tax returns will tell you how much your tax bill was for that yearthis is the starting point. Keep in mind that if you havent yet filed for one or more tax years, you need to do so ASAP.

Once you have your tax bill, youll then need to calculate the interest and penalties that you owe on top of that. The IRS lays out the interest rates and penalties for not filing or paying your taxes, which you can use to calculate how much you owe.

Collection Process For Delinquent Taxes

Taxpayers are required to meet certain obligations under Michigan law. You are responsible for filing your tax returns on time with correct payments and ensuring that your returns are correct no matter who prepares them. Remember, you are responsible for the information in your return.

The following information will provide an overview of the Collection Process for Delinquent Taxes.

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How To Find Out How Much You Owe The Irs

The IRS allows you to make an online account to view what you owe. You can also use your account to apply for a tax payment plan as one of your debt relief options. Setting up this account can be a little overwhelming due to the breadth of information the IRS requires. If youre unsure about how to make first contact with the IRS, you can bring in a tax pro with experience in this arena to help you get it done.

Select A Payment Option

Your initial payment varies based on your offer and the payment option you choose:

• Lump Sum Cash: Submit an initial payment of 20% of the total offer amount with your application. If we accept your offer, you’ll receive written confirmation. You must pay any remaining balance due on the offer in five or fewer payments.
• Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If IRS accepts your offer, continue to pay monthly until it is paid in full.

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Should I Hire A Tax Relief Company

Tax relief companies typically offer to help taxpayers in distress. Some of them can be helpful if youre confused about the process or need help filling out forms. But remember:

• The IRS rejects most applications for offers in compromise.

• If a tax relief company loses or delays your application, youre still on the hook for your tax debt, interest and penalties with the IRS.

• You may have to pay an upfront fee to the tax relief company, and it may be a percentage of the tax you owe. That fee may be higher than what you end up saving on your tax bill if the IRS accepts your offer in compromise .

• Tread carefully, the Federal Trade Commission warns there are some bad actors out there. “The truth is that most taxpayers don’t qualify for the programs these fraudsters hawk, their companies don’t settle the tax debt, and in many cases don’t even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don’t provide refunds, and leave people even further in debt,” it says.

Some tax relief companies will charge you a fee to determine how much you owe the IRS, set up a payment plan or see if you qualify for an offer in compromise. But these and other things you can do yourself for free:

Should You Deal With The Irs On Your Own Or Should You Hire Someone To Do It For You

Dealing with the IRS is complicated, time-consuming, and difficult. Youâll have to gather documents, discuss your account with an IRS agent, and sort through your options to decide whatâs best for you. You’ll have to decide if you want to deal with the IRS on your own or hire someone to deal with the IRS for you. If you’re overwhelmed and believe you can’t handle dealing with the IRS on your own, you may want to seek the help of a tax professional. Note that there are pitfalls youâll want to avoid on your journey to tax relief.

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How Long Does It Take To Remove A Federal Tax Lien

How long it takes for your federal tax lien to be removed depends on how the debt is managed or satisfied.

• If you pay off your delinquent balance or submit a bond guaranteeing payment of the debt, your federal tax lien will be removed within 30 days.
• If you establish a qualifying payment plan and make on-time payments for at least three months, you may be able to request a withdrawal of your Notice of Federal Lien.
• If the debt remains unpaid, the IRS can pursue collection of the balance for a minimum of 10 years plus 30 days from the date that the tax liability was assessed.

Always File Your Return

Helpful as it is for the IRS to offer more options for struggling taxpayers, you have to do your bit, too.

First of all: If, come the tax filing deadline, you owe the IRS an amount that you cannot pay in one lump sum, it is important to file the return anyway, says Lawrence Brown, an attorney in the office of Brown P.C. in Fort Worth, Texas.

“This will reduce some of the penalties,” he explains. “Occasionally clients tell us that they did not file a return because they were unable to pay the tax due. This usually causes them to pay penalties that are significantly greater than they would have paid had they at least filed the return.”

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What Other Options Are There

There are several. One is to have a tax relief professional negotiate with the IRS a potential reduction in the total tax debt. Another is to have that tax expert establish with the IRS an installment payment plan that is financially feasible and that takes advantage of the CSED. A third is to have the tax relief professional present a hardship case to the IRS. During that process, a tax professional can request that the IRS stop collection procedures ranging from liens on property to garnishment of wages. Being in debt to the IRS does not mean being in continual financial distress. There are proven ways to manage IRS tax debt. However, a common error for those unable or unwilling to pay their taxes is to simply do nothing. Research and experience both show people who consult with a tax relief expert early on have fewer financial, business and personal repercussions. Fortunately, most tax relief professionals like Landmark Tax Group provide confidential consultations prior to full-on representation. During the consultation, a tax debtor and tax professional can together understand the scope of the tax problem, discuss the precise options available, and determine how to best resolve the matter together.

Is It Possible To Discharge Tax Debt Through Bankruptcy

Although most tax debts cant be eliminated in bankruptcy, it is possible to discharge eligible tax debt in a Chapter 7 bankruptcy.

In order to have your tax debt discharged in Chapter 7, you must meet all of the following conditions:

• The tax debt you owe is for income taxes. All other taxes, like payroll taxes or fraud penalties, cant be eliminated in bankruptcy.
• The tax return you filed isnt fraudulent and you didnt willfully attempt to evade paying your taxes.
• The tax debt is at least three years old. The due date on your tax return must be expired for at least three years before you can file for bankruptcy.
• You filed a tax return for the debt you want to discharge at least two years before filing for bankruptcy.
• The IRS must assess your income tax debt at least 240 days before you file your bankruptcy petition, or not at all. This time limit can be extended if the IRS suspended collection activity due to an offer in compromise or a previous bankruptcy filing.

Some jurisdictions have additional requirements, which is why you should consult with a knowledgeable bankruptcy lawyer to discuss all of your options under the law.

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Tax Returns And Chapter 13 Bankruptcy

You must be up to date on your tax returns before filing a Chapter 13 case, but the rules allow you a little wiggle room. You’ll provide copies of the returns for the previous four tax years to the Chapter 13 trustee before the 341 meeting of creditors .

If you’re not required to file a return, your trustee might ask for a letter, an affidavit, or a certification explaining why. Sometimes local courts will impose additional rules for documents in their districts.

If you owe the IRS a return but don’t file it before your 341 meeting of creditors, things can happen to derail your case.

• A motion. The trustee will file a motion giving you a brief period to provide your returns. If you miss the deadline, the court can automatically dismiss your case, leaving you no chance to plead your case to the judge.
• A substitute return. The IRS might file a “best estimate” claim based on your past income. The problem? IRS estimates are almost always higher than what you’d owe after filing a proper return.

How To Get Rid Of Your Back Taxes

What does owing back taxes really mean for your finances? Nobody wants to get a letter from the IRS about back taxes, but trying to close your eyes until it all goes away will make things much worse. As a taxpayer, you should know that the IRS offers many tax relief options that will get you on the road to back tax forgiveness.

Dont let the burden of owing the IRS money stifle your financial plans or peace of mind for one more day. The first step in figuring out how to get rid of back taxes is finding out how much you owe the IRS.

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