When it comes to taxes, most people want to be able to take care of the problem quickly and easily.
After all, the process of tax return preparation is a stressful one, especially if you don’t have a good grasp of the law. And with the vast number of tax laws that are out there, it can be very difficult to figure out what your specific situation is.
The idea of having to deal with a complicated tax issue for a long period of time can be frustrating and overwhelming. You need to find out what you owe and what you can expect from the IRS.
You also need to understand how the IRS is going to collect your taxes and how they are going to enforce your obligation.
The term “back tax relief” is a well-known term in the world of taxes. This is a legal provision that allows people to get back their tax money that was paid to the IRS.
Back tax relief is a great way for individuals who have issues with their back taxes to be able to deal with them quickly and easily.
If you’re an individual taxpayer or the owner of a business, you may have fallen behind on your tax filing. Whether this is due to a financial hardship or other circumstances, there may be solutions available for you via back tax relief.
The government has ways to assist individuals and businesses so they can relieve their tax obligations.
What is Back Tax Relief?
Back tax relief is a type of government program for individuals or businesses that are behind on their taxes or at a disadvantage. The program intends to reduce the sum paid by said individuals or businesses. It can be through a universal tax cut or a catered program to benefit a specific tax group.
The people who are filing for tax debt relief must show proof that they are eligible to file for this type of relief. It is possible for the IRS to grant this type of relief to some people, but not all people who have been paying their taxes on time will be able to file for this type of relief.
Tax debt relief can help
individuals or businesses catch up on the tax balances that they owe. This is especially for those who cannot afford to pay off their
debts in a single lump sum.
Tax debt relief may be beneficial for a variety of reasons. If you have been behind on your taxes, it may be wise to seek out this type of relief from the IRS.
Tax debt relief is especially beneficial if you have been behind on your taxes for a long period of time or you’ve received multiple notices from the IRS about unpaid taxes. Tax debt relief will allow you to deal with these issues quickly and easily so you can get back on track with your financial obligations.
Why You Might Need Tax Relief
There are many reasons why you might need tax relief. Perhaps you’ve been in a situation where you can’t afford to pay off your taxes in a single lump sum. Or maybe you’ve been paying your taxes on time, but the IRS has recently sent you a letter that they want more money from you.
Perhaps there is another reason why you might need tax relief. Maybe the IRS has contacted you and demanded that they get more money from you. Tax debt relief may be beneficial for any of these situations.
Some people may need tax relief because they have lost their job or business. They might have been unable to pay their taxes as they were dealing with this type of situation, but they were able to manage to pay them once things got back on track again.
Another example of when people might need tax relief is if they have received multiple notices from the IRS about unpaid taxes or if the IRS has started levying on a portion of their wages because of late payments for their taxes.
Tax debt relief will allow them to take care of these issues quickly and easily so they can get back on track with their financial obligations. They will also be able to avoid additional financial difficulties as a result of having unpaid taxes, such as how unpaid taxes can affect your credit poorly.
How Does It Work?
If you have debt for federal taxes or taxes in general, you can initiate claim tax relief in several ways. To help an individual or business catch up on their back taxes, they may receive tax deductions, credits, exclusions, or forgiveness.
By
reducing the tax liability of those affected by back taxes, the relief programs aim to make it easier to catch up. This way, it’s not necessary to go further into debt.
The following tax relief strategies work in different ways.
Tax deductions
A taxpayer can choose to use legal tax deductions to reduce their tax liability. For example, many taxpayers choose to use mortgage interest deductions.
Credits
Also called a tax incentive, credits can reimburse taxpayers for expenses the government sees as worthwhile.
Tax exclusions
Certain types of income can be tax free, which effectively reduces the amount of taxable income a taxpayer has to claim.
Forgiveness
Tax forgiveness programs reduce the amount of back taxes an individual pays. Usually, forgiveness reduces payments to a fraction of the original cost.
How/Where to Apply for Back Tax Relief
If you’re seeking tax forgiveness, like the Fresh Start program, you’ll want to visit the IRS website to look through the tax relief services they have.
IRS Payment Plans
If you need a tax payment plan, you can go to the IRS website for a listing of options. Some of the payment options are good for a specific amount of time, while others last indefinitely. You can also contact your local IRS office and ask about available payment plans.
The person at the IRS office will be able to answer your questions about tax debt relief options and can help you determine which one is best for you.
Short-Term Payment Plan
The IRS offers short–term payment plans for people who need to catch up on their back taxes. The IRS will set up a payment plan for you and pay the tax bill on a regular basis.
This can be an option if you have been behind on your taxes for a short period of time. The IRS will also offer you the opportunity to reduce your payments to a smaller amount than the amount that you owe, if that’s what’s best for you.
It is important to note that these payment plans can last only 120 days. It costs $0 to apply online, with no additional costs. You can qualify for a maximum of $100,000 in combined tax, interest, and penalties.
Long-Term Payment Plan
If you need a long-term payment plan, you can apply for one at the IRS website. This is an option that has a length period of over 120 days. The IRS will set up a payment plan for you and pay the tax bill on a regular basis.
This can be an option if you have been behind on your taxes for a long period of time. The IRS will also offer you the opportunity to reduce your payments to a smaller amount than the amount that you owe, if that’s what’s best for you.
Unlike short-term payment plans, however, it has some additional costs for the application. If you are withdrawing automatic payments, you would be charged $31 if applying online and $107 if applying via phone. If you are paying through a different method, it would cost $149 to apply online and $225 by phone, mail, or in person.
Additionally, long-term payment plans offer only $50,000 in combined tax, interest, and penalties.
Offers in Compromise
If you need to catch up on your back taxes, the IRS offers offers in compromise.
Check out the information available for Offer in Compromise solutions. The program requires certain forms (
Form 656 and Form 656-B for reference) and qualifications for approval.
You will be required to submit information about your finances and the tax debt that you owe.
How to apply for an OIC
You can refer to the linked forms above for the full details. However, here are some general things to know.
First of all, it will cost you $205 to apply, and this is non-refundable. However, low-income taxpayers do have the option to try to get it waived. You will also need to make non-refundable advance payments.
There are some qualifications you would have to fulfill to get approved. For one, you can’t be in an open bankruptcy proceeding. You also have to have your tax returns up to date.
To make sure you qualify and to make the application process smoother, you can hire the help of a tax professional, though this is optional. If everything goes through and you manage to file in your application, though, the IRS will immediately halt any collections.
If the IRS agrees with your OIC
If the IRS determines that you have sufficient information to reach a settlement, they will issue a notice of proposed settlement and ask for comments from you. If you agree with the proposed settlement, you will receive a notice of acceptance.
In the case where you are paying in five or fewer monthly installments, the first monthly installment will be 20% of your offering. In the case where you are paying in six or more monthly installments, that first monthly installment will be 20% of your offering.
Do not forget that some of the details about your offer of compromise could be made public. This is because the IRS also maintains public inspection files for offers of compromise. These files may include the taxpayer’s name, city, state, zip code, liability amount, and offer terms.
If the IRS rejects your OIC
If not, you will receive a notice of disagreement and be given another opportunity to submit additional information. You can reapply for an OIC after 30 days.
Final Thoughts
Whether you need tax relief or not, it is important to know that there are various options available to you. You can get back tax relief and receive some assistance from the IRS in paying off your debt. This will help relieve your financial burdens and get you back on track with your finances.
If you are behind on tax filing or tax payments, it’s important to take the right steps toward relief. For one, if you’re late to file, you need to file your back taxes with the correct forms for the correct year. You must file 2017 taxes with 2017 forms and so on.
The government has various programs to help people catch up on their back taxes. If you are behind on your taxes, it’s important to know about the options available to you. The IRS will be able to help you decide which one is best for you.
It will also help to speak with a tax professional for some tax advice to see what you can do about your current tax obligation. You might qualify for tax breaks you were previously unaware of.
