While taxes are something you deal with every year, they can still fall to the wayside. Either that, or events beyond your control can cause your tax bill to skyrocket out of your financial hands. Either way, you may need tax debt relief help from us here at Anthem. First, let’s break down just what tax debt relief is.
Tax Debt Relief Table Of Contents
- Understanding Tax Debt Relief
- Qualifying for Tax Debt Relief
- The Benefit Tax Debt Relief Help Provides
- What is a garnishment levy?
- What is an installment agreement with the IRS?
- Do I qualify for an Offer in Compromise?
- How Penalty Abatement Works?
- How does IRS Fresh Start program work?
- Frequently Asked Tax Debt Relief Questions
Understanding Tax Debt Relief
Essentially, tax debt relief is incentives and programs designed by the IRS to lower a taxpayer or business owner’s tax bill. Examples include tax credits and other temporary incentives, allowable deductions for pension contributions and tax debt forgiveness and the removal of any tax liens. Your specific tax situation will determine the best form of tax debt relief for you. It’s important to bear in mind the fact that the IRS does not openly promote tax debt relief. That’s why it’s good to seek out a reputable tax service to explore your tax debt relief options and determine which is best for you.
Qualifying for Tax Debt Relief
Trying to catch up on your IRS payments can leave you in a financial crunch, and you can experience a great deal of stress, as well. Besides an unexpectedly high tax bill, a natural disaster may have recently swept through your area, making it challenging for you to successfully file your taxes and pay your tax bill. You may also be going through a financial hardship which can allow you to qualify for relief. There are many different situations that could qualify you for tax debt relief.
The Benefit Tax Debt Relief Help Provides
Sure, IRS tax debt relief can lower your tax bill, but let’s dive a bit deeper into its benefits. If you’re unable to pay your tax bill in full, the IRS can garnish your wages. You work hard for every penny you make, and having the IRS cut into your income can throw your budget, financial health, savings plans, retirement and more out of whack. With tax debt relief, you can put a stop to garnishments, getting the IRS out of your hair and bringing balance to your financial health at the same time.
It may be that instead of garnishing your wages, the IRS instead goes straight for the financial jugular and hits you with a bank levy. When that happens, the IRS siphons funds directly from your bank account. You may log into your account and discover your funds have been frozen and money sent to the IRS. Worse, you could discover your funds have been frozen while trying to make a purchase with your debit card, leaving you in quite the bind. Tax Debt relief takes care of the bank levy so you can bank, swipe and spend without worry.
What is a garnishment levy?
Having money removed from your bank account or your paycheck by IRS is not entirely new. This money is called ‘levy’ when it is removed from your bank account, and ‘wage garnishment’ if from your paycheck. When this happens, there are ways to go about it. You can ask the IRS to remove the levy, but you would need to enter into a payment agreement with the IRS or settle all your outstanding back taxes.
Paying the outstanding back taxes is not always possible, thus forcing you to settle for the payment plan agreement option. However, people looking to go for the payment plan agreement option are always worried about how long to complete the paperwork and have the IRS release the removed levy/garnishment or stop removing fresh charges.
Will the IRS will release your levy/garnishment immediately, once you have entered into simple payment agreements?
This will be possible if you haven’t secured a payment extension prior to the agreements. An extension request, when granted, could give you an additional 120 days. However, if you are being levied, the longest extension you can get to sort the balance, pay down the balance, or enter into payment agreement is just 60 days.
If your extension to pay is granted, proceed to demand the immediate release of your levy/garnishment. You can also request that your employer/bank/payer be furnished with the levy release when speaking to the IRS representative.
This means an immediate release of your levy/garnishment release can be arranged with the IRS, once you have met the terms of the extension-to-pay agreement.
Another way to push for an instant levy release is to call the IRS and ask for a simple monthly payment plan or a streamlined installment agreement. You can finetune and finalize the agreement on the phone with the IRS representative, while the levy release is faxed to your employer/payer/banker immediately.
In the case of a bank levy, the funds will undergo a 21-day freezing period in the bank before it is remitted to the IRS. Hence, you should try to remediate the problem as soon as possible by getting in touch with one of our tax experts, from here, we can set up an agreement as soon as possible. The bank levy will be released, and subsequently, your funds once you complete the simplified installment agreement or secure an extension to pay.
Complex payment agreements may delay the release of your levy by months
There are instances where the simplified installment agreement and the extension to pay will not work. Hence, the next move will be to request a more complex installment from the IRS. For this, the IRS will demand a lot of documentation on your financial situation to determine your qualification status. This, obviously, takes longer.
The same documentation conditions apply if you prefer one of IRS’ special programs designed for individuals with financial challenges. These programs include Offer In Compromise or Settlement, and Currently Not Collectible Status or Deferred Payment.
In either of these agreements, applicants must identify financial hardship as the main reason for demanding the release of the levy due. However, the levy will stay in place until the IRS completes the processing of the paperwork involved in the agreement. Most times, the IRS omits the request for release of the levy part in the agreement. Hence, be sure to demand the release of the levy once the agreement has been set up successfully. The ideal way of entering into an agreement with the IRS is via phone. Also, always provide follow-up documents immediately if there is a need for them.
If you are not ready to face the hassles involved in the rather complex process, a better option will be to work with our tax team. Our in-house tax-experts can help you to identify the best payment agreement for your case and file a request for levy release on your behalf at the IRS. Feel free to arrange a meeting or a free consultation with us here or putting a call through to 888-548-0478.
Garnishment and levy release is one type of tax debt relief Anthem Tax Services offers. Even if you don’t currently have a garnishment on your wages or a levy on your bank account, you could be a prime candidate for either in the future. If you are, our tax debt relief professionals can prevent that from happening in the first place. We can put a stop to garnishments and levies within 48 hours, as long as you’ve successfully filed all your tax returns.
What is an installment agreement with the IRS?
Taxpayers can pay off their tax debt to the Internal Revenue Service (IRS) via an installment payment system. Despite this, immediate payment is the best option, considering that it doesn’t attract interest and penalties, which could rise to 8-10% annually.
An installment agreement comes handy in cases where a one-off tax debt settlement is impossible. This alternative comes in four different forms;
- Non-streamlined payment
- Partial payment
- Streamlined payment
- Guaranteed payment
Guaranteed Installment Agreement
Here are the conditions an applicant for a guaranteed installment agreement must meet;
- Have a debt of less than $10,000, excluding penalties and interests;
- Must not be a party to an existing installment agreement, have the total owed taxes settled, and filed tax returns;
- Must be unable to settle the tax liability in the space of 120 days or when due;
- Must be ready to pay off the tax liability in the space of three years; and
- Must be ready to offer at least the minimum monthly payment, i.e., tax liability, penalties, and interests divided by 30;
This payment plan doesn’t allow the IRS to file a federal tax lien against the taxpayer.
Streamlined Installment Agreement
The qualification conditions for the guaranteed agreement and streamlined installment agreement are similar. However, the specific conditions for a streamlined installment agreement are as follows;
- The tax liability, penalties, and interest must not be more than $50,000;
- The balance is payable in the space of 72 months; and
- The planned payment is not less than the “minimum acceptable payment,” i.e., the amount greater of $35 or the minimum payment amount reached when the interest, penalties, and tax liability are combined and divided by 50.
A setup fee is compulsory and payable by the taxpayer. This will be used in setting up the installment agreement. Alternatively, a reduced fee can be paid for a direct debit installment agreement. Also, a different fee is payable for reinstating or restructuring an existing installment agreement. Lastly, the IRS does not file a federal tax lien.
Partial Payment Installment Agreement
With this agreement, taxpayers and the IRS can legally agree on the partial payment of tax liability. The first step is the completion of a financial statement by the taxpayer by using Form 433-F to report income and living expenses. The information submitted is reviewed and confirmed by the IRS. The IRS may demand more information from taxpayers who have assets that can be disposed of to offset a part of the tax debt. If the request for a partial payment installment arrangement is approved, the taxpayer will have to undergo a financial review once every two years. From the findings of the review, the IRS may increase the installment payment or terminate the agreement.
Non-Streamlined Installment Agreement
The non-streamlined agreement is ideal for taxpayers owing $50,000 or more and ready to pay monthly to the IRS. This agreement has no qualification conditions. Hence, the taxpayer must enter into negotiations with the IRS. Likewise, the taxpayer is expected to file Form 433-F, Collection Information Statement, through which they provide information about accounts, assets, living expenses, debts, income. The taxpayer can also propose an installment payment amount they can afford via the form.
After reviewing the information provided and the proposed payment plan, the IRS will either refuse or approve it. Conditions for refusal include the provision of false information, irrelevant living expenses, or failure to complete a previous installment arrangement.
If this doesn’t work, a taxpayer may consider filing an Offer in Compromise
How does a taxpayer make payments?
Here are the available payment methods for taxpayers looking to make installments;
- Online Payment Agreement (OPA)
- Credit cards
- Payroll deduction
- Electronic Federal Tax Payment System (EFTPS)
- Money order or check
Conditions for Revoking An Installment Agreement
The circumstances listed below may warrant the cancellation of an installment arrangement by the IRS;
- Missing a payment by the taxpayer;
- Failure of the taxpayer to pay taxes or file a tax return despite a valid agreement;
- Provision of false information on Form 433-F by the taxpayers;
- The review of an existing partial payment installment agreement that indicates a change in the financial position of the taxpayer.
Having Issues Paying Your Taxes? We can help
It’s never a good idea to approach complex financial decisions without sound advice from people who really understand the choices you’re weighing. That’s why we are here to give you the resources to reach the best possible understanding with the IRS. If you need help setting up an installment agreement for new or previous tax years, contact Anthem Tax Services today to find out how you can pay off your tax debt overtime.
Do I qualify for an Offer in Compromise?
When individuals and businesses do not have the ability to pay a tax debt, the offer in compromise is the IRS’s mechanism for reaching a settlement. It’s not universally approved and there are a lot of requirements that go into obtaining approval if you submit one, but the process is navigable with the right help and the right resources. It’s never necessary to deal with these things alone, so keep reading to learn how to get the help you need.
How to Get an Offer in Compromise Approved
The first required step to approval is making sure all your filings and payments on existing payment plans are up to date. If your tax paperwork is out of order, the IRS has no way of determining what your total tax obligations are, and without that, it can’t decide what percentage of that debt it expects to reasonably collect. While it’s not required, an optional first step that can help if you are working on ensuring all those filings are in order is hiring a tax professional. Once you make sure all your filings are up to date, you will also need to fulfill the following requirements:
- Form 433-A or 433-B must be submitted with all the supporting paperwork
- Form 656 must also be completed
- $186 nonrefundable fee
- Nonrefundable payments for each Form 656
The key to approval is properly documenting the assets and expenses you have that prevent you from paying the entire tax debt. You’ll also have to select whether you are opting for a lump sum payment or installments over time. If you opt for installments, you will need to make nonrefundable tax payments while waiting to learn if your offer is approved or not. If it is not approved, those payments will at least reduce the outstanding debt. Your tax professional may also be able to negotiate an offer in compromise the IRS will approve if they reject the first one. There is an appeal process that needs to be initiated within 30 days of a rejection to keep the process open.
Navigating the Repayment Process
If you’re going for an offer letter approval, you need to understand what that entails, because it will impact your company’s finances throughout the year and probably into the next tax year. Depending on how you structure your recovery from your current financial situation, it could impact your finances for longer. Remember, if you have a tax lien, it won’t go away until you’ve satisfied the repayment agreement in full. If you’re making installment payments, this needs to be accounted for.
You also need to be prepared to give up any tax return owed during the year your letter is accepted. That money will instead be applied toward your outstanding tax debts. It’s also important to realize certain information from the process will be available to the public via a report that can be requested.
Who Gets Approved When They Submit an Offer?
The offer in compromise is accepted by the IRS when the agency believes it represents the best chance of collecting the largest possible portion of the outstanding debt. The best way to determine what an appropriate offer will be is to work with a tax professional who understands the process and has a track record of getting approvals for clients. Without working with someone who has experience filing these letters for people with financial situations similar to yours, it’s hard to know what your chances of approval will look like. That means more than just finding a professional for advice, it means finding one whose service is built around people like you, whether it’s individuals, businesses, freelancers, or any other niche.
Other Important Information
If you do not currently have an outstanding federal tax lien, one may be filed as part of the review and approval process while you negotiate an offer. The payment and assessment process is also extended during the review period, and your nonrefundable payments take the place of any pre-existing installment plan you might have been paying toward. There’s also a self-help tool online that can help you better understand the process the IRS uses for evaluating these offer applications and deciding what to extend as a compromise.
The IRS will not approve offers if you are currently going through bankruptcy proceedings because your tax debt might fall under the purview of the judge ordering your debt restructuring and discharge. Make sure you handle any bankruptcy proceedings before you begin the process of reaching a compromise with the agency.
What to Expect if Your Offer Is Accepted
The acceptance of the offer isn’t the end of things, it’s the beginning of your opportunity to get some resolution. That means you’ll need to be sure to comply with all the stages of the repayment plan to avoid invalidating it. You also need to realize that the federal tax lien will remain until the payment plan is completed, so if it involves more than 12 installments, be ready to accommodate it in future financial planning.
Getting the Help You Deserve With Your Tax Debt
It’s never a good idea to approach complex financial decisions without sound advice from people who really understand the choices you’re weighing. That’s why tax professionals are there, to give you the resources to reach the best possible understanding with the IRS. If you need help negotiating and offer in compromise for the last tax year or for any preceding years, contact Anthem Tax Services today to find out how you can settle all your outstanding tax debt with one simple compromise.
How Penalty Abatement Works?
If the Internal Revenue Service has assessed a penalty against you for failure to comply with tax rules, you’re not alone. In 2012, the IRS assessed a total of $26.8 billion dollars in penalties against 37.9 million taxpayers. Sometimes circumstances prevent you from meeting your obligations to the IRS despite your best efforts. If that is the case, it may be possible for you to reduce or eliminate your tax penalty by requesting an IRS penalty abatement. The agency will consider your situation and, if it decides that you qualify, it may remove the tax penalty so that you are no longer responsible for paying it. In 2017, the IRS abated nearly one-third of all penalties assessed, totaling approximately $9 billion dollars.
Types of Tax Penalties
There are basically three types of assessments that are eligible for IRS penalty relief:
• Failure to deposit taxes
• Failure to pay a penalty
• Failure to file a tax return
The IRS is unlikely to charge a penalty against you if you make arrangements with the agency to meet your obligations. For example, if you filed for an extension on your tax return allowing you to submit it at a later date, that would not be a violation of IRS rules, so there should be no penalty. Similarly, if you enter into a plan with the IRS to pay your taxes in installments, that doesn’t qualify you for penalties as long as your payments are current. If you fall behind on your payments, however, the IRS could assess a failure-to-deposit penalty.
Statutory exceptions to penalties deal with specific circumstances. The example cited by the IRS is receiving written advice from the IRS that is incorrect. In other words, if it was the IRS’ fault that you failed to comply with the rules and incurred a penalty, the agency may remove the penalty if you can demonstrate that the advice you received was erroneous. To do this, you will have to submit the erroneous advice you received, your original written request for the advice, and any tax forms that relate to the incorrect advice and the penalty assessed. Other situations in which a statutory exception may apply include the following:
• You’re in a combat zone
• You’ve recently become disabled
• You’re newly retired
• You owe no tax liability for the preceding year
What is reasonable cause for IRS penalty abatement?
If a circumstance beyond your control prevented you from filing and/or paying taxes or penalties, the IRS may consider that a reasonable cause for penalty abatement. These circumstances include the following:
• Hospitalization, incarceration, or inpatient drug rehab
• Serious illness and/or death of a family member
• Fire or natural disaster
• Accidental destruction of records
A reasonable cause penalty abatement is relatively easier to obtain than other types of penalty relief. This is because, instead of feeding your information to a computer, your case will be assessed by an IRS employee.
However, you still have to demonstrate that you qualify. This means providing documented evidence of the circumstance, particularly in regard to the date(s) that it occurred. In addition, you must also be able to demonstrate through documentation that you made a good faith effort to meet your obligations in spite of the circumstance.
Though not impossible, it may be more difficult to receive a reasonable cause penalty abatement if you have past penalties on your record. The IRS may be reluctant to offer assistance if you have a history of violating the rules.
The IRS is clear that simple lack of funds is not enough to qualify for a reasonable cause abatement for a failure-to-deposit or failure-to-file penalty. However, these situations may qualify for a first-time penalty abatement.
How do I get a first time abatement penalty from the IRS??
The first-time penalty abatement is the most widely available type of administrative waiver. However, many qualifying taxpayers do not understand it and so fail to take advantage of it.
Basically, the IRS may waive an eligible tax penalty if it is the first they’ve ever assessed against you and you are otherwise in good standing with the IRS. In other words, if you haven’t had any tax penalties in the past and have a history of filing and paying your taxes on time, you may qualify for a first-time penalty abatement.
Estimated tax penalties do not count against you when requesting first-time penalty abatement, so if these are the only types of penalties you’ve incurred, you may still qualify. Similarly, if you have a history of making arrangements with the IRS to file or pay taxes after the due date, that should not count against you.
If your request for a first-time penalty abatement is rejected but you still believe you qualify, you should ask your assigned IRS agent to reconsider the assessment. This is because the IRS uses a decision-support software tool to decide who qualifies for this form of penalty relief, and it has a known history of inaccuracy.
Let Us Stand Up for You
How does IRS Fresh Start program work?
One of the biggest uncertainties faced by IRS debtors is if it is possible to pay these debts in full without costly penalties or interests. Fortunately, this is possible – all thanks to the IRS Fresh Start Program that allows you to pay off your debts conveniently.
Let’s look more into this program and see if it could help your tax debt situation.
Do I qualify for the IRS Fresh Start Program?
This is a specially-designed program that makes it possible for taxpayers to offset substantial tax debts conveniently. To ensure convenience, the payment is spread over six years – the entire tax debts would be paid off in full at the end of the six years. The debts are payable via monthly payments, which are pre-determined by the present income and the value of the taxpayer’s liquid assets. In addition to helping people pay off tax debts easily, the IRS Fresh Start Program ensures that such debts or the debtors are not subjected to interests, penalties, tax liens, seizure of assets, or wage garnishments.
You can initiate the Fresh Start repayment process once your IRS tax debt is up to $50,000, by choosing one of the three available repayment plans. Although the program was initiated in 2008, it was expanded in 2012 to help individual taxpayers or corporate tax-paying bodies with up to $50,000 tax debts.
The IRS Fresh Start Program also considers the difficulty that comes with tax debts repayment, for instance, unemployment. The IRS penalties can be waived for taxpayers who have been unemployed for over 30 days. Such individuals are also eligible to request a six-month extension to file and pay the owed taxes with zero IRS penalties.
As mentioned earlier, there are three repayment options under the IRS Fresh Start Program. These repayment plans are designed to allow the convenient pay off of tax debts, according to the laws. They also protect debtors from being subjected to other penalties and interests associated with the payment of these tax debts.
- Extended Installment Agreement
The number one repayment option is the Extended Installment Agreement, targeted at people that owe up to $50,000 to the IRS. Defaulting taxpayers can spread their payment over six years, without interests or penalties of any form. With this option, the IRS collection activities like the seizure of assets, tax liens, and wage garnishments will be put on hold. The Extended Installment Agreement is the most preferred among beneficiaries of the IRS Fresh Start program. The amount payable for each month will determine the income of the beneficiary, as well as their liquid assets value.
- Offer in Compromise (OIC)
The OIC is not as popular as the Extended Instalment Agreement. However, it is a viable repayment plan for taxpayers looking to pay off their IRS debts. What basically happens in an OIC is that the taxpayer settles the tax debt for less than the original debt. The settlement, in some cases, can be considerably lower than the initial value of the tax debt.
The chances of getting an OIC approved is higher if the taxpayer makes a reasonable offer to the IRS. Such a proposal must be a clear restriction of the current financial situation of the taxpayer. Hence, it is advisable to work with a tax professional, who will prepare and submit an acceptable offer to the IRS on behalf of the taxpayer. A great offer, coupled with a well-prepared financial report, will increase the chances of the IRS accepting the offer promptly.
- Tax Lien Withdrawal
This repayment option allows defaulters to pay off their tax debt completely via a direct debit repayment option. After setting up the direct debit repayment plan, the taxpayer can proceed to put a formal request (in writing) to withdraw the tax lien from their accounts. If the withdrawal is successful, such debts will not be reported to the three credit reporting agencies.
It is advisable to work with a competent tax professional to determine which repayment option under the IRS Fresh Start Scheme is best for you. You may also commission your tax professional to file the required IRS forms and handle the application and setup of the best repayment option for you.
How do you apply for the IRS Fresh Start Program?
The IRS has created easy-to-follow guidelines to apply for the IRS Fresh Start Program successfully. However, you must ensure that all your back and current tax returns are correctly filed; otherwise, you will be ineligible for the program. Likewise, prospective applicants must resolve to submit all of their future returns promptly, after their admission into the Fresh Start Program.
After filing your tax returns, you can proceed to the IRS website (IRS.gov) to officially enroll in the program. There is a dedicated Online Payment Agreement tool with which you can choose your most preferred repayment option. Prospective applicants can also apply by filling out and submitting the IRS Form 9465, obtainable on the same website.
You can save yourself the stress and complexity of the enrollment process by hiring Anthem Tax Services to assist you. Not only will we help file any back taxes you may have, but we will also determine the best repayment plan for you according to your situation and guide you to a successful application for the same. Our tax professionals know how to prepare and submit all the required information, including your income and asset value reports.
Your finances will ultimately get better if you can pay off your hefty tax debts. The IRS Fresh Start Program is a great avenue to settle your tax debts conveniently and at your speed. If you need help with the IRS Fresh Start Program, contact Anthem Tax Services for professional help in every aspect of the process – right from the application to the preparation and submission of your financial reports.