If you have back tax problems, don’t ignore them. If IRS is contacting you, they won’t go away. If it’s a matter of writing a check that you owe, and you have the money to pay, then do it. Otherwise, you may need the services of a tax relief company, or perhaps an attorney or accountant that specializes in tax relief.
Federal Income Tax System
The federal income tax system is pay-as-you-go. If you earn wages reported by a W-2 form, and you have enough withheld from your paycheck, then you probably pay enough estimated tax throughout the year.
If you have other income or you are self-employed, you may be required to make estimated tax payments. Estimates are generally paid in four quarterly installments.
How do people get in a tax debt situation where they require tax relief? Sometimes people don’t understand the estimated tax requirement. Sometimes tax-payers are strapped for cash and simply don’t make the estimated federal and/or state tax payments. Sometimes a business doesn’t make their payroll tax deposit. Or, the deposit goes to the wrong account (happens more often that you might think).
Suddenly you’re getting demand letters and then bank levies from the IRS or your state tax board, with penalties and interest piling on.
As the world’s largest collection agency, of course IRS prefers you to work directly with their agency. And sometimes it is simple matter you can work through yourself. For example, if you don’t have the money to pay income tax that you owe, you can apply for an installment program when you file your return.
But IRS applies pressure tactics. Agents will ask for information on employment, bank accounts, properties owned, automobiles and any other assets. If you don’t pay up, the IRS can threaten to seize just about any assets they want to settle tax debt.
Tax Relief Companies – Good and Bad
You may have seen ads by tax relief companies promising help for taxpayers in distress. Some tax relief companies provide solid assistance and a support barrier between the IRS. Others are preying on the desperate and make promises they can’t keep.
If you owe back taxes, IRS offers several tax relief programs to help you get caught up. However, most taxpayers don’t qualify for many of the tax relief programs commonly advertised, such as the Offer In Compromise (OIC).
Have you heard that if you don’t pay your income taxes, you can settle with the IRS for pennies on the dollar? Less than 20% of those who owe back taxes get tax relief under the OIC, because you must exhaust all other options before IRS will consider it. Yet tax relief companies often make this promise.
Before deciding if you want or need someone who specializes in tax debt relief to represent you, check out the information at Consumer.FTC.gov for some guidelines and options.
Tax Debt Relief Attorneys
If you’re stuck in a cycle of back tax debt accumulation, fear and overwhelm create a continual stress that prevents you from enjoying your daily life. When you need help with IRS problems, sometimes the best choice is to work with a tax attorney.
Yes, it may cost some money, maybe big money. But the benefits are manifest:
- One of the main reasons is for the experience they bring in dealing with the IRS. When you hire a good tax attorney or tax resolution firm, they will handle all communications with IRS. You won’t have to face the upsetting and stressful phone calls and letters.
- Good tax attorneys are certified professionals in the line with all sorts of expert strategies for working with IRS.
- A tax attorney will help you with any unfiled tax returns, sometimes as far back as ten years. IRS requires you to be in compliance before accepting any negotiations to solve your tax liability.
- A good attorney or tax resolution firm will analyze your financial profile and let you know upfront about options available to you, where you fit in, and whether you qualify for tax relief programs such as the OIC.
- A tax attorney can help remove a bank levy.
- A tax attorney can help release wage garnishments.
- A tax debt relief attorney can help protect you from tactics, such as threatening property seizures, designed to scare you into complying with their demands.
When facing IRS threats over your back taxes, you can feel terrified by the threat of tax laws. If your tax debt problem is big enough, it’s worth getting some help and support as a barrier, rather than work with IRS directly. If you decide to choose a tax debt relief firm or tax resolution attorney, you should research the reputation of any candidates. Two places to check:
Better Business Bureau – www.bbb.org/us/Find-Business-Reviews
Complaints.com – www.complaintsboard.com