I’m In Tax Trouble, What Are My Options?
I’m
In Tax Trouble, What Are My Options?
A letter from the IRS is rarely a good thing. One of the worst
missives to get from the tax man is the CP90 – Final Notice Before Levy. It is a final warning shot to scare you into
paying up and should not be ignored.
After an IRS final notice, you could:
●
Pay in full - but if you could afford to do that,
you probably already would have done so.
●
Sign on for an installment agreement on your own,
with penalties and interest so excessive it will never end.
●
Ignore them and wait for terrible consequences
like garnished wages and tax liens. Don’t do this, ever.
●
Contact your tax resolution professional to see
what your resolution options are.
The CP90 intends to intimidate you into calling so the IRS can take as
much as possible from you even if it leaves you in dire financial straits,
unable to pay your bills or support your family.
A better option is to work with a certified tax resolution expert that
can negotiate on your behalf for better results. A tax expert can pursue
resolutions that would be difficult (if not impossible) to negotiate on your
own. Below is a look at four options to deal with tax debt.
Offer
in Compromise (OIC)
An offer in compromise (OIC) is an agreement between a taxpayer and
the Internal Revenue Service that settles a taxpayer's tax liabilities for less
than the full amount owed. It can be far more reasonable than an IRS
installment agreement, but you have to see if you qualify based on your unique
financial situation and specific case.
Installment
Agreement (IA) or Partial Payment Installment Agreement (PPIA)
These are well-structured installment agreements that can slash
penalties by 50%. The IA is an agreement to pay what’s owed in full while a
PPIA lets you pay a reduced amount. These agreements generally run 6-72 months,
Penalty
Abatement (PA)
This agreement strips away penalties tacked onto your tax balance.
Penalties include failure-to-file, failure-to-pay, and failure-to-deposit (for business owners). If
you’ve never had a penalty before, a first-time abatement (FTA) penalty waiver
may apply. Otherwise, your tax relief consultant can fight for a reasonable
cause abatement if any of the following apply:
●
Illness, death, or incapacitation of the taxpayer
or their immediate family
●
Fire, casualty, natural disaster, etc. affecting
the taxpayer
●
Inability to obtain records and documents
Currently
Not Collectible (CNC)
In cases of extreme financial hardship, your tax rep can argue that
you can’t afford to pay anything. With this option, your tax debt goes on the
back burner, and you make no monthly payments although penalty and interest keep
accruing. The big advantage of CNC is that the 10-year statute of limitations on collection keeps ticking so you might be able
to ride it out and pay nothing on the tax debt.
If you’ve received an IRS final notice or threatening letter, don’t
ignore it. Instead, contact us to speak with a tax resolution specialist to get
the IRS off your back for good.
Blessings!
Len Nelms, CPA
o.470-305-1233
c.770-851-5207
len@fairtaxsolutions.com
Blessings!
Len Nelms, CPA
o.470-305-1233
c.770-851-5207
len@fairtaxsolutions.com
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