Tax Relief Services – How to Find the Right One?

tax relief services

Are you looking for the right tax relief services company? Among the pool of many, it is difficult to find yourself a company that is there to genuinely help you out with your tax issues. However, with the right knowledge and tips, you can weed out the scam artists and connect with the companies that offer legitimate taxation services. Here are some factors that will help you determine which tax relief service is right for you and how to choose one:

1. Offer in Compromise in Tax Relief Services

In your attempt to find out the best tax relief services, you might come across people who will promise you reduced owed amounts and guaranteed settlement through the OIC. If you see the firm guaranteeing you an offer in compromise settlement, it’s a red flag. There is no tax relief service that can guarantee you an OIC settlement. The IRS first assesses your eligibility for an OIC settlement and then decides if you deserve it or not. It doesn't hand out OIC to just anyone.

2. Interest and Penalties

Another red alert is when a tax relief service company tells you that by hiring them, your interest and penalties will be stopped. The truth is that as long as you have due balance, the interest will run. Yes, some penalties can get abated. But you have to know that just because you hired a professional tax relief service, you can’t stop paying or filing your taxes without facing the consequences. Genuine tax professionals claim to help you reduce your interest and penalties to the minimum, not to stop them.

3. The Person Working on Your Case

All the tax resolution firms are required to have licensed attorneys, CPAs, and Enrolled Agents (EAs). This should not be seen as a selling point. There are many firms that don’t get licensed tax professionals for the beginner’s stage. What you have to look out for is who is handling your case during the consultation and proposal stage.

4. Researching Before Hiring a Tax Relief Services

If the tax relief service is trying to get you to sign the power of attorney or work agreement or get you to pay the money in a hurry, be more careful. It might mean that they are hiding something. You need sufficient time to research the company before you make the payment. If the tax relief services have sent you a contract or proposal to start the work, make sure that they have added evidence of their personal license. Before agreeing to anything, take the time to research. It can protect you from untold frustrations and save you hundreds and thousands of dollars.

5. Multiple testimonials and reviews

Check out the tax relief services on the Better Business Bureau. They have the ability to track and report complaints from different verified customers. You can also check out online reviews and talk to other people who have used the same tax relief service. Taking recommendations from people you know and learning from their experiences is the best way to know about the tax relief services.

6. Promises - Tax Resolutions

While approaching a potential client, some sales consultants make big promises on behalf of the tax relief service. You should be skeptical of them. A tax relief company that can tell you ‘no’ when asked for guaranteed results shows signs of ethics, honesty, and knowledge. There is no tax expert that can guarantee to eliminate the majority of your tax debt. A good tax expert will spend a lot of time explaining why you are not eligible for a reduced settlement. 

The basic point is, it sounds too good to be true, it most probably is. You don’t want to work with a tax relief service that over-promises and under-delivers.

7. Flat-fee in Hiring a Tax Resolution Services

This is a major factor that you should take into consideration while selecting the right tax relief service for you. Look for any fixed hidden charges that you might need to pay later. Make sure that you pay close attention to the fine print in the work agreement. What you will see in the contract are a few sentences that state that the company has the right to charge more money from you.

8. Ethics and Character Tax Relief Services

This is a very simple factor. You can get an idea of their true character by knowing about their involvement with the community. For example, when they are working with charities, doing pro-bono work, and other acts of ethical behavior on a corporate level. These signs show that the organization works for the betterment of the community.

On that note, if any sales consultant is telling you or implying that they have some special connections with the IRS or they get preferential treatment from the Revenue Officers, you have to run the other way. Not only are they lying but are in direct violation of the guidelines issued by the US Department of Treasury. According to this, there are some legal issues associated with practicing before the IRS that include marketing practices. If the tax relief service is willing to bend the law for earning your business, their moral compass and ethical standards come into question.

When you are looking for a tax relief service, you might meet with many sales consultants. Some of them will claim that their company has been in business longer than they actually are. Then, there will be some who are bragging about their combined years of experience. This does not work in your favor at all. It is because you won’t have 20 people working on your case, just 1 or 2. To get an exact idea of how long the company has been around, you can check them on the BBB’s website. To get a precise date, you can check the website of the Secretary of State where the company is located.

Now that you know-how, you can find the best tax relief services for you. With just a little bit of knowledge and research, you can easily find out if the tax relief company is right for you. Make sure that you have a few conversations with them before you sign them on. Investing a small amount of time in finding the right service will ensure that you are in good hands.

IRS Hardship Program: How can it help you?

IRS hardship program

Are you behind on your taxes, and there is no way you can pay them off? Don’t worry! The IRS has got your covered. You might think that the IRS is the last place where you would seek help during a monetary crisis. However, the IRS offers a number of tax relief programs for taxpayers who are going through extreme economic hardship. One such option is the IRS hardship program

Under the IRS hardship program, a person might qualify for the ‘Currently Not Collectible’ status. Once you get this status, the IRS cannot take your property or paycheck for fulfilling the outstanding tax debt. Learn more about the IRS hardship programs from experienced tax resolution service providers. These professional experts can also help you get a payment plan with the IRS.

Reasons for which you can get the CNC status

There are a number of reasons for which you can get the CNC status through the IRS hardship program. The basic stipulation is that a person is qualified for the CNC status if the collection of the debt would create a financial crisis for them where they are not able to pay essential living expenses. However, you would have to prove your hardship to the IRS. For this, you will be submitting financial information using Form 433A/433F or Form 433B - the former is for self-employed or individual taxpayers while the latter is for partnerships and corporations. Through the Collection Information Statement and the supporting documents, the IRS will get the following information:

  • Everything you own, including bank accounts, real estate properties, investment portfolios, cars, motorcycles, trucks, boats, life insurance, retirement savings, etc.
  • Expense statements of the last 3 months
  • Income statements for the last 3 months
  • The market value of every asset you have
  • A three-month average of expenses and income on the basis of category

Under the IRS Hardship Program, the taxpayers also need to disclose sensitive financial information. This is why some taxpayers opt for an online payment agreement. The online payment agreements do not only have less disclosure but are also easier to qualify in comparison to the IRS Hardship Program.

Who is qualified for the IRS Hardship Program?

People who are in tax debt and have only the money for their basic living expenses and that of their family can qualify for the IRS Hardship Program. According to the information provided on the required forms, the IRS will determine if you are eligible for the program or not. 

As per the IRS Hardship Program rules, you must have:

  • Less than $84,000 annual income
  • Little to no money left after making the basic living expenses
  • Basic living expenses as per the guidelines of the IRS. The IRS has 4 categories that are considered to be allowable living expenses known as ‘collection financial standards’:
    • Food, housekeeping supplies, personal care products, clothing, and other miscellaneous items
    • Housing and utilities
    • Transportation
    • Out-of-pocket medical expenses

For analyzing these finances, you have to deduct the total allowable expenses from your monthly income. What you will get as a result will be the ‘disposable income’. This is what the IRS expects you to pay as taxes. If you have little to no disposable income, you can qualify for the IRS Hardship Program.

Another important thing that you need to know about the IRS Hardship Program is that it is only for small business owners and individual taxpayers, not for large-scale corporations. 

Rules of the IRS Hardship Program

Once you have been declared CNC under the IRS Hardship Program, no collection actions will be taken against you for collecting the tax debt. These collection actions include:

  • Tax Lien - Legal claim by the government on your property, including personal, real asset, and financial assets.
  • Tax Levy - Selling away your property for settling the outstanding debt. 
  • Garnished wages - Collecting a portion of your income until the debt is settled off.

All the rules of the IRS Hardship Program are applicable for 10 years which is also the duration the federal agency has for collecting back taxes. After 10 years, the statute of limitations is enforced. Every two years after declaring the CNC status, the IRS will be reviewing your information. They do this to check if you still are eligible for the IRS Hardship program. If they find that you are financially capable of paying your tax debt, they will revoke the IRS Hardship program and remove your CNC status. 

When you are in the IRS Hardship Program, the government won’t be seizing your property, wiping your account, or taking away your paycheck. But, this doesn’t mean that you are off the hook. The CNC status just stops the collection actions. The interests and penalties will still accrue on your debt. Here are some of the penalties you will be facing for not paying your taxes and late filing.

Penalties you will be facing for not paying your taxes and late filing

Failure to File

If you don’t file your returns by 15th April, the return due date or the extended date you receive after filing for an extension, you will be charged 5% of the unpaid tax every month for up to 5 months.

Failure to Pay

Not paying the taxes by the due date or the extended date can result in a penalty of 5% of the unpaid tax. In case of an approved installment period, you will be charged 0.25% of the debt. If you pay within 10 days after receiving the Notice of Intent to Levy, a penalty of 1% of the tax debt will be charged. For every month you don't pay the taxes, there will be a recurrent charge until the penalty reaches 25% of the debt or you pay off the debt.

Even if your account is currently under the IRS Hardship program, it doesn’t mean that your status won’t roll over automatically. The IRS considers your eligibility for the program separately. If possible, you should pay the new taxes immediately. It won’t have any effect on your CNC status from the past years. 

However, if you are not able to pay the new taxes also, you can request CNC status under the IRS Hardship Program for that year as well. With each year, it will become increasingly difficult to get that status. Also, the IRS will penalize you, and in the end, you might be forced to pay the debt using alternative payment methods like Installment Agreement or Offer in Compromise. If you are eligible for the IRS Hardship program, it is best that you hire professional experts. They will be advocating on your behalf and help you get the best tax relief option available.

Tax Relief Services During Coronavirus

Tax Relief Services

Getting tax relief services during a global pandemic can help. Fortunately, there's help with FinishLine Tax Solutions. If you owe back taxes and can't afford to pay them back, find a tax relief services professional. Dealing with back taxes can be hard, but it's especially hard during a global pandemic. Fortunately, the federal government continues to provide tax relief options for taxpayers seeking relief during the coronavirus. Even outside of a global pandemic, there are tax relief services available to taxpayers who owe more than they can pay. We'll share the various tax relief options that are available to you. Additionally, we'll touch on tax relief options that are available as a result of the COVID-19 pandemic.

What are tax relief services?

First, we want to tell you exactly what tax relief services are. If you owe more in taxes than you can pay, you may be eligible for tax relief services. But, the program you qualify for will depend on how much you owe. In other words, those owning more than $50,000 will be eligible for a different program than those owning $10,000. Fortunately, there are several tax relief programs available. Additionally, in light of the current COVID-19 pandemic, the federal government has offered even more tax relief programs.

How do tax relief services work?

Tax relief services are available to taxpayers when they owe more than they can pay. The IRS has several tax relief services that can help taxpayers in need. Enrolling in a tax relief plan enables you to break down your tax debt into payments. Similarly, there are relief programs that can reduce the amount of tax you have to pay to the government. Tax relief services will not clear out your entire tax bill. But it can save you a lot of money in the long run. Additionally, it can make paying what you owe the government a lot more manageable.

What is tax relief?

Tax relief is when you set up a payment plan or negotiate a settlement with the IRS. However, keep in mind that tax relief isn't about totally erasing your tax obligation. Instead, it makes it easier for you to pay back your tax debt. In some cases, you may be eligible for special tax relief options. For instance, if you've been involved in a natural disaster, you may be eligible for special tax relief programs. Additionally, there are special tax relief programs available in light of COVID-19, which we will discuss later.

What are my tax relief services options?

Depending on your tax situation, there are multiple options for tax relief services. Here are a few programs to consider. We will discuss these more in-depth further below.

  • Installment Agreement: This program allows you to pay back your debt in installments. In other words, you can pay down your debt in smaller payments. There are long-term and short-term Installment Agreement programs. Available.
  • Offer in Compromise: If your debt is more than you can handle, you may be eligible for an Offer in Compromise. Your eligibility for an Offer in Compromise will depend on a few things. In other words, the IRS will first consider your ability to pay, income, expenses, and assets first.
  • Penalty Abatement: When you owe tax debt, penalties can also add up. Fortunately, there are tax relief services that may help. In this case, the IRS forgives the penalties on your tax bill.

What is an Installment Agreement?

Another way to think of an Installment Agreement is a payment plan. In other words, you arrange with the IRS to pay back your tax debt in monthly installments. There are long-term payment plans and there are short-term payment plans.

  • A short-term payment plan is for those who owe a maximum of $100,000. This maximum amount includes taxes, penalties, and interest.
  • Long-term payment plans are for those who owe a maximum of $50,000. This maximum amount includes taxes, penalties, and interest.

An Installment Agreement can be a helpful tax relief plan for taxpayers. It enables you to negotiate an affordable monthly payment plan with the IRS. However, negotiating your monthly payment is a very important step. In other words, you'll want to work with a tax relief specialist on negotiating. A tax relief specialist can help you ensure you get an affordable monthly payment amount.

Offer in Compromise

An Offer in Compromise program can be a beneficial tax relief program. With an Offer in Compromise, you can often settle your tax debt for much less. In other words, the IRS will reduce some of your overall tax debt. But, it's important to note that not everyone will get approved for an Offer in Compromise. The IRS will require financial proof that you are unable to pay back your tax debt in full. In this case, a tax relief professional can help you negotiate your total settlement amount. For example, you don't want to come up with a number that's too low. In other words, you can run the risk of having the IRS deny your Offer in Compromise agreement amount if it's too low. Therefore, working with a tax relief professional can help you get the best deal.

Penalty Abatement

Another tax relief service is penalty abatement. In this case, you can get the IRS to release the penalties you have on your tax debt. However, it's important to note that a penalty abatement will not totally reduce your tax debt. In other words, you will still owe taxes with a penalty abatement. However, it's a tax relief program that can greatly reduce your overall tax debt.

Tax Relief for COVID-19 Pandemic

In light of the current COVID-19 pandemic, the federal government has announced several tax relief services. First, taxpayers now have until July 15 to file and pay back their taxes. This date was extended from the original tax deadline of April 15. However, it's not advisable to delay paying or filing taxes. Work with a tax relief specialist to pay back any debt you cannot afford to pay at once. In addition, the federal government has offered a federal stimulus check available to the majority of taxpayers. The stimulus check amount starts at $1,200 and decreases based on your total earnings. Furthermore, the IRS is making it possible to borrow up to $100,000 from your IRA. In addition, the federal government will allow you three years to pay this back. Furthermore, you get three years to pay off tax debt without consequences.

Need Tax Relief Services?

During these uncertain times, tax relief services can be of the utmost importance. If you have tax debt that you can't pay back, don't hesitate to call us. We can help you with tax relief options and more. Call FinishLine Tax Solutions for a free consultation at 855-950-2720.

Why Hire a Tax Attorney During A Global Pandemic

tax attorney

As so many tax laws are changing during the COVID-19 crisis, help from a tax attorney can be beneficial. In other words, you might have tax-related questions that a tax attorney can help with. Fortunately, the IRS has created a number of new measures to help taxpayers during the crisis. Unfortunately, these new tax laws and measures can be hard for the typical taxpayer to understand. However, the tax attorneys at FinishLine Tax Solutions are here to help with any COVID-19-related tax needs. But, how can a tax attorney help with COVID-19 related tax issues? In this blog, we’ll help you understand how and when you should consider hiring a tax attorney.

Do I Need A Tax Attorney To File Taxes?

If you need to file taxes, a tax attorney or accountant at FinishLine Tax Solutions can help. However, accountants are typically more involved in the financial side of your taxes. In contrast, a tax attorney can help with the legal side of your taxes. Depending on the result of your taxes, a tax attorney can be a lot of help. For instance, if you find out you owe more than you can pay, a tax attorney can help. During the COVID-19 crisis, the federal government is offering different tax relief programs to taxpayers. While it can be hard to stay up to date with all the new rules, we can help. We employ tax attorneys and accountants that can help you file taxes. Even though the filing deadline has been extended, we encourage you to file sooner rather than later.

How Can A Tax Attorney Help Me?

A tax attorney can help you if your tax situation needs legal help. For example, if you are under an IRS audit, a tax attorney can represent you. Furthermore, if you own property overseas, a tax attorney can help you. In other words, there are certain exemptions you can take advantage of depending on your tax situation. The average taxpayer may not be aware of the different exemptions available. Therefore, working with a tax attorney can often get you the most out of your taxes. Furthermore, the world of taxes is going to be a different thing once the COVID-19 pandemic is over. You’ll want a tax attorney’s help to see if you qualify for any relief resulting from the pandemic. Here are some other instances where a tax attorney may be helpful.

Taxes When Buying or Selling a Business

If you are buying or selling a business, help from a tax attorney can be beneficial. You will want a tax allocation that maximizes capital gain if you’re selling a business. But, if you’re buying a business, you’ll want a different tax allocation. In other words, when buying a business you’ll want to recover the purchase price faster through depreciation. Setting a business up tax-wise can be complicated for the average taxpayer. Fortunately, this is an area of taxes that many tax attorneys have experience in. The professional tax attorneys at FinishLine Tax Solutions have helped many individuals buy and sell businesses. If you’re in the middle of buying or selling a business, contact an attorney.

Taxes to Set Up A Business

The tax attorneys at FinishLine Tax Solutions have tons of experience helping business owners set up their companies. Starting a business can be complicated for taxes. Fortunately, FinishLine Tax Solutions specializes in businesses. Our tax attorneys can help you anticipate potential tax incomes. In other words, your tax incomes will differ depending on how you set your business up. For instance, an LLC is treated differently for taxes than an S-Corp or C-Corp. This level of complexity is often outside of a normal taxpayers’ experience. Therefore, the tax attorneys at FinishLine Tax Solutions can help. Our tax attorneys can also help you with setting up your business type. For instance, you will have to choose between an LLC, S-Corp, or C-corp. We can help you go over the pros and cons of each business type. Furthermore, we can help you understand how each business type can impact taxes.

Taxes when Leaving Money or Property to Heirs

A tax attorney can also help when you’re leaving money for family members in your will. Additionally, a tax attorney can help if you have a property you want to leave to family in your will. Some tax attorneys also specialize in estate planning, which will be especially helpful here. If you’re leaving over $11 million, you will need to file an estate tax return. This can be especially difficult to understand if you’ve never filed one before. Therefore, seeking the help of an experienced tax attorney can save you a lot of time. Furthermore, if you don’t have $11 million, it can still be a good idea to consult a professional.

Been Accused by the IRS? Hire A Tax Attorney

You also want to hire an attorney if you’ve been accused of doing something wrong. For example, these may be some potential scenarios when you want to hire an attorney.

  • If you are under an IRS audit. But don’t worry, an IRS audit doesn’t always mean you’ve done something wrong. However, it is an investigation into your financials by the IRS. In other words, the tax audit should be taken very seriously.
  • Additionally, you may want to appeal your IRS audit if you are under one. In that case, a tax attorney can also be very helpful. Moreover, an attorney can be extremely helpful if you are being taken to court over your audit.

Owe Back Taxes To The IRS? Hire A Tax Attorney

In some cases, you can handle filing and paying back taxes on your own. This is especially true if you have the funds to settle your tax debt. However, if you owe a significant amount of money, hire an attorney.  The federal government has put in place a number of tax relief measures for taxpayers. In other words, if you’re worried about paying back taxes during the COVID-19 pandemic, hire an attorney. Our attorneys specialize in all kinds of tax laws and are here to help. If you find yourself in a stressful financial situation due to taxes, get help. Hiring an attorney can mean the difference between financial debt and financial freedom.

If you need to hire a tax attorney, call the professionals at FinishLine Tax Solutions today. We offer free consultations to new customers.

IRS Penalty Abatement Letter Writing Instructions

IRS penalty abatement

If you owe tax debt and fail to pay it in time, the IRS can penalize you. Every year, millions of penalties are assessed. The IRS uses penalties for encouraging taxpayers to comply with the rules. Owing money to the IRS is overwhelming and intimidating. This penalty can further increase your tax debt. However, before the IRS starts taking collection actions, you can request for Penalty Abatement.

When you owe money to the IRS, you can’t just put it off forever. You need to resolve all issues before the IRS starts taking extreme measures to collect the debt. These extreme measures might include garnishing your wages, seizing your assets, levying bank accounts, and others. But, would Penalty Abatement get you some relief from tax debt? Yes, because penalties and interest make up a large portion of your debt. 

So, if you have a reasonable cause, you can request the IRS for penalty abatement. Here are some of the reasons acceptable by the IRS for penalty abatement:

Reasons acceptable by the IRS for penalty abatement:

  • A medical emergency
  • Death in the family
  • An error made by an employee of the IRS
  • Records destroyed because of a natural disaster or a catastrophe. E.g. Flood, etc.
  • Mailed returns and payment timely but to the wrong address

Even if you had one of the above-mentioned reasons, you must meet the following three basic criteria to qualify for the penalty abatement:

Criteria to qualify for penalty abatement

  1. You must not have had any penalty of more than $100 for the last three years.
  1. All your returns and extensions are filed properly. If you still have paperwork to do, you won’t be eligible. So, before you write your penalty abatement letter, make sure that you have already updated all the filing with the IRS.
  1. You must have made arrangements for any tax debt that you owe. Even if you are not able to pay the debt in full, you must have at least set up a payment plan with the IRS.

For the first time penalty abatement, you can apply in writing, online, or by calling the IRS. If you are eligible, the IRS will remove the penalties. However, if the IRS refuses, the penalties will continue to grow. Also, the IRS removes penalties that were incurred in the first year. On several penalties, there is a limit on how much can be removed. 

Writing a Penalty Abatement Letter

If the IRS has imposed a penalty on your back taxes, you can write a letter to the IRS requesting Penalty Abatement. However, if you want to improve the chances of getting your request accepted, you must take the help of tax professionals. 

For requesting specific penalty abatement that is for more than a year, you have to prove to the IRS that you had a reasonable cause like:

  • The death of a family member
  • Held hostage in some other country
  • Unavoidable absence like being in jail or rehab
  • Tax records were destroyed because of floods, fires, or other casualties
  • Could not make the payment because of a civil disturbance like a riot or mail strike
  • Couldn’t determine the right amount of tax for reasons that were not in your control
  • Received wrong advice from a tax expert whom you thought to be trustworthy and competent.

With the letter, you have to send the copies of documents supporting your reason.

Three things to do before drafting your Abatement Letter

  1. Get all the historical tax records from the IRS as well as your personal papers. It will help you get the same view as the IRS agent.
  2. Next, you need to start reviewing the records so that you have an understanding of what happened that stopped you from paying your tax debt on time. This way, you will be able to start working on the penalty abatement letter.
  3. Once you have an understanding of what occurred and what the IRS knows about you, you need to start conducting research. This is just to ensure you have enough grounds for warranting penalty relief.

Organizing a Penalty Abatement Letter

While writing your penalty abatement letter, you have to design it in a way that the IRS agent is able to easily follow what happened, why you were penalized, and what steps you took for rectifying or mitigating the problems. Every fact that you present might need different styles of organization. Here, is a general section format of a penalty abatement letter:

  1. Introduction - The letter should start with a brief statement where you introduce yourself and tell what exactly you are asking for. In this case, you are asking for relief from penalties and any interest accruing because of those penalties.
  2. Facts - This section is the most important part of your penalty abatement letter. You should present the facts in a way that the reader, the IRS agent who will be making the decision, feels sympathetic to your plight.
  3. Issues - If your fact section is becoming too complicated, you can add a separate section for clarifying the exact issue.
  4. Law and Analysis - This section is a follow-up to the facts sections. In this, you will be mentioning the laws that are in conjunction with the facts. They must support your proposition of warranting penalty relief.
  5. Conclusion - In the end, reiterate what you are looking for. Request the IRS to give you relief from penalties and the interest accrued from those penalties.

It is not necessary to include the payment along with the penalty abatement letter. But, if you can pay the debt, it will help your case a lot. If you cannot afford to pay, you can apply for an IRS payment plan that allows you to make monthly payments to pay off your tax debt. 

Conclusion

Penalty abatement has more open-ended requirements. It is also easier to get than any other form of debt settlement. This is because, instead of a computer, an actual person will be attending your case. The only important issue here is whether your situation was beyond your control or not. If you want to improve your chances of getting the penalty abatement, take help from tax relief experts who specialize in penalty abatement.

IRS Payment Plans Pros and Cons

IRS Payment Plans

Failing to pay back taxes can result in IRS audits, interests and penalties on back taxes, IRS wage garnishments and many more tax debt issues. But, the good news is that you have different options for dealing with your back taxes and tax debt, one of which is the IRS Payment plans. If you are unable to pay the owed tax amount, you have the option to apply for the IRS payment plan. A reputable tax relief company can help you setup IRS payment plans.

IRS payment plan is an agreement between the IRS and the taxpayers that allows you to pay the federal tax bill in monthly payments over a certain period of time. But, is it the right option for you? To determine this, you need to know about the Pros and Cons of IRS payment plans:

Pros of Signing Up for IRS Payment Plans

If you are going through financial hardships, you need to be honest with the IRS. You don’t have to panic. Pay what you can, file the returns by the deadline, and contact the federal agency for discussing the IRS payment plan. Here are the benefits of this route:

1. You might get an extension

If you don’t owe a lot of amounts and are sure that you can pay the taxes soon, the IRS can offer you a short-term extension. With this extension, you won’t have to worry about paying your taxes by the April deadline. Also, you will be able to avoid interest and some penalties. This way, you won’t have to take out a loan or put your taxes on a credit card. You will have enough time for paying back the owed amount.

2. The penalties might be waived

In some cases, the IRS might agree to waive the failure-to-pay penalties. However, the interest charges will remain as it is. You can still save a lot of money on the tax bill by getting rid of the penalties.

3. You will know exactly what you owe while setting up an IRS payment plan

When you are in an IRS payment plan, the IRS will tell you exactly what you owe and when it is due. If you sign up for direct debit, making the payments will be very easy. What you need to do is make the right budget. This way paying back the debt doesn’t put you in a financial crisis.

4. You might get an Offer in Compromise

If you are not able to pay your taxes because you have a low income, the IRS might offer you an offer in compromise to forgive your debt. This is a tax resolution option that allows you to pay less than what you owe. However, this option is available only to the people who are facing genuine financial hardship. When you apply for an offer in compromise, the IRS checks your expenses, income, ability to pay, assets, etc. You have to make a reasonable offer which is equal to or more than what the IRS expects to get back over a certain period of time. Only then, the IRS will agree to it.

However, before you apply for the OIC, you have to try an IRS payment plan first. To check if you are eligible, you can check the Offer in Compromise Pre-qualifier tool provided by the IRS. You will have to submit a non-refundable fee of $186. After that, you will have the option to either make periodic payments or make a lump sum payment. Taxpayers who meet the guidelines of the low-income certification don’t have to pay the initial payment of the application fee. While the IRS is evaluating the offer, you don’t have to pay the monthly payments anymore.


Cons of IRS Payment Plans

There are several cons of the IRS payment plans as well. 

1. Back taxes Interest and penalties 

Even with the IRS payment plan, the additional penalties and interest will be applied for each month until you pay off the complete debt. This means that ultimately, you will end up paying more than the actual owed amount by the time you finish making your monthly payments.

2. The IRS might still file a tax lien against you

If the IRS has a tax lien against you and you are not able to pay back your taxes, it gives them the right of seizing your property. The IRS will serve you a notice of lien. The notice will state that if you don't make immediate payments, the IRS will seize your assets. If even after receiving the notice of lien, you are not able to pay, then your assets like your house, vehicles, etc. can be sold for satisfying the debt.

3. Paying the sign-up fees

Until and unless you can pay your tax debt in less than 120 days, there is a fee associated with signing up for the IRS payment plan. The fee amount varies for taxpayers depending on their income. For low-income applicants, it costs $43 while for regular applicants of the IRS payment plan might have to pay as much as $225.

As you can see, the worst con of having an IRS payment plan is the interest and penalties that are accrued to the owed amount. So, the most significant disadvantage of having an IRS payment plan is that they are expensive. Also, if you miss a payment, it can damage your credit. Lastly, to apply for an IRS payment plan, you must have filed all the past year’s returns.

Clearly, the pros of the IRS payment plan far outweigh the cons. It makes paying off the debt more manageable. You won’t have to pay off the whole tax debt at once and avoid any collection actions from the IRS. Whether you are an individual taxpayer or a business owner who can’t pay off their debt, signing up for an IRS payment plan is the best option for you.

So, if you are one of the millions of Americans who can’t pay their tax bill, don’t panic. And definitely don’t hide. Be upfront about your situation instead of ignoring it and hoping it goes away. The IRS payment plan is the best option for people who are behind on the current year’s taxes and can't pay it within the deadline. However, you shouldn’t rely completely on this. The best pathway for you is to hire a tax resolution service. They have tax experts who can determine the best strategy for you.

IRS Fresh Start Program

IRS Fresh Start Program

People are usually fearful of the IRS. A letter from the IRS is enough to fill them with fear, especially if they have an unpaid tax bill. They might end up in debt to the IRS and think that there is no way out of this. Thankfully, the IRS Fresh Start Program to help the taxpayers with tax resolution. Even if you have owed a debt for years, this program can help you get the tax relief.

The IRS Fresh Start Program is a tax resolution option from the IRS. The program makes it easy for taxpayers to pay their tax debt without having a levy on their assets. This is not a new initiative. It has been in place for several years. The program started in 2008 to help the taxpayers during the recession. In 2012, thanks to the changes introduced by the IRS, it became easier for the taxpayers with financial hardship to get their tax debt reduced.

Recently, the program was expanded to help people who are struggling with their tax debt. The IRS had made changes to their tax code for alleviating tax bills and helping out the taxpayers. The aim of this program is to provide tax resolution options to taxpayers. It allows them to pay back their debt without any excess fees of liens. The IRS might even forgive a certain amount of past debts or eliminate penalties for late fees.

Eligibility criteria for the IRS Fresh Start Program

  • Owe $50,000 or less money in tax debt.
  • Self-employed individuals who had a 25% or more drop in their gross income.
  • Married couples who are filing joint-returns must have income less than $200,000 in a year. In this case, the amount earned by an individual taxpayer should be less than $100,000. 

Repayment options offered through the IRS Fresh Start Program

Extended Installment Agreement

This tax resolution option reduces the fees and penalties imposed on the taxpayers. However, this need not be confused with the regular payment option.

The regular payment option is for taxpayers who are unable to pay their tax debt before the deadline, but the extended installment agreement is for taxpayers who are unable to pay penalties and other fees associated with debt before the deadline. 

There are two forms of installment plans. 

The first one is the short-term plan that is available without any fee for late payment. Also, there won’t be any fee for setting up this installment plan. These are for a period of 120 days and have penalties associated until the complete debt is paid off.

The second form is the long-term installment plan that will include some setup fees. It will depend on whether the payment is made by the taxpayers or if it is deducted automatically for the bank account.

The Fresh Start Program offers different tax resolution payment arrangements like stair-step, partial-pay, debt installment, or streamlined installment agreement. Now even though there are arrangements available, all taxpayers have to negotiate directly with the IRS for determining whether they are eligible for this or not. Depending on this, they might have to pay a certain amount over time through monthly payments. Regardless of the plan approved by the IRS, you have to ensure that every installment is paid in full and on time. Failure to do so will nullify the arrangement. 

It is important to know that these payments are accompanied by a fee. In cases of debt of $50,000 or more, it requires taxpayers to submit Form 9465 and Form 433-F via mail or in-person.

Offer in Compromise

If you are unable to pay off your debt in full, there is an Offer in Compromise option offered by the IRS. For this, you will need the help of tax experts.  Getting the IRS to agree to let you pay a reduced amount is a tricky process and requires the help of tax experts. There are several tax resolution services that can help you negotiate with the IRS.

To get your request for an Offer in Compromise accepted, you’ll have to prove to the IRS that paying their taxes will result in financial hardship. 

To determine whether you are qualified for this tax resolution option, the IRS will be checking your current and future income and expenses. Also, the IRS will first determine if the reduced amount from the offer in compromise is more or at least equal to the amount they expect to receive from the taxpayer through the collection actions. 

Here are the three criteria that can determine your eligibility:

  • Credibility

If the IRS thinks that they won’t be able to get any money from you through collection actions, they might accept your ‘offer in compromise’ request. If they think that you have assets that might get them a higher amount of money, they won’t accept your OIC. Please note that a levy on a lien can impact your credit score, affecting your ability to buy any assets or apply for a loan.

  • Liability and accuracy

This includes proving that you don’t owe the money the IRS is claiming. If you think that there was an error during tax preparation, IRS might agree to let go of the initial owed amount and take your offer. For this, you need to take the help of tax resolution services.

  • Effective tax administration

When the IRS believes that paying the complete amount will lead to severe financial hardship for you, they might accept your offer in compromise.

IRS very rarely accepts the Offer in Compromise. To make sure that you even have a slight chance at this tax resolution option, you need the help of tax experts. Once your offer is accepted, all the payments should be made in time. Failure to do so will nullify your OIC, and you will have to pay the complete amount.

Tax resolution is a way to make the process of paying taxes easier for people undergoing hardships. However, if you earn well and have assets, the IRS won’t be accepting your request. If you are going through a financial hardship, you need the help of tax resolution services to help you get back on your feet.

Here Is How You Can Become A Tax Attorney

Tax Attorneys at Finishline Tax

Many people envisage the work of a tax attorney to be always stressful, involving courtroom litigation. However, this doesn’t mean that tax attorneys don’t have a fruitful career. The best part about being a tax attorney is that they will never become obsolete. Taxes will always exist, and so will the tax lawyers. Making a career as a tax lawyer will help provide stability and longevity.

Education of a tax attorney

If you want to be a tax attorney, there is an educational path specifically mapped out for you. The one thing that you need to know before starting a career in this field is that it is very different from family law and won’t involve a lot of personal interaction. You will be interacting with ‘Numbers.’ This is why students who want to be future tax attorneys need to have a strong academic background. Here are some education requirements for a tax attorney:

  • A Bachelor’s Degree
  • Law School admission through LSAT
  • Juris Doctor Law Degree
  • MPRE
  • Passing the Bar examination

The first step towards becoming a tax attorney is earning a bachelor’s degree. But there is no specific undergraduate degree that you need. However, it is recommended that you major in either accounting or business to help you prepare for law school better.

Once you have graduated, you would have to take the Law School Admission Test or the LSAT. This score is compulsory for admission to any law school and without which no school will even consider your application. If you want to get into a top tier law school, it is important that your application is strong. Also, there are only a limited number of seats, and having a good LSAT score will strengthen your position. You can take LSAT more than once. However, you will have to report test scores for a period of 5 years. So, it is important that you perform well on your first attempt.

Now that you are in law school, you need to focus on the extreme workload you will be facing. Every law degree is 3 years long, and the specific requirements and courses will depend on the school you are in. In law school, you will learn everything you need to know about the field.

After graduating, the next step is passing the Multistate Professional Responsibility Examination or the MPRE. In the exam, you will be asked 60 questions about ethics. Once you get a passing score in this, you will be eligible for taking the State Bar Examination.

Next comes the most difficult step in becoming a tax attorney – the Bar Exam. Students usually spend months preparing for it. It is a very comprehensive exam in which students are tested in all areas of the law. However, the bar exam is not the same for every state. To be a Los Angeles Tax Attorney, you might have to check up the Bar Exam in the California state. It might include either one of the following:

  • MBE (Multistate Bar Examination)
  • MEE (Multistate Essay Examination)
  • MPT (Multistate Performance Test)
  • UBE (Uniform Bar Examination)

The Bar examination is the final step in the journey of a tax attorney’s education. 

Skills and job description of a tax attorney

It is clear that a tax attorney is responsible for helping people and businesses with their taxes. Now, this could include representing them during disputes with the IRS or any other government agency or finding a legal way to reduce any tax exposure. Also, their job involves a number of tasks like doing research on tax law, negotiating with other lawyers, conducting transactions, etc. If they are representing their clients in a court, they will be preparing for a trial.

A tax attorney can enter into a number of specialty fields including the following:

  • Corporate tax
  • Mergers and acquisitions
  • Litigation
  • Audits
  • Appeals
  • Estate planning
  • Real estate tax

Regardless of the area you choose, there are some required qualities that a tax attorney should possess to be successful in their field.

  • Attention to detail
  • Knowledge of IRS protocol
  • Knowledge of tax law
  • Strong analytical reasoning
  • A strong foundation of legal codes
  • Updated on the government regulations

One of the main duties of a tax attorney, or for that matter any attorney, is ensuring full compliance for clients. This means that they have to strictly adhere to government deadlines. Another responsibility of a tax lawyer is working on designing a tax planning project. For projects like these, creativity is needed, and usually, clients hand over the responsibility to their attorneys who are tax experts. Also, there are some other complicated job assignments that a tax attorney must perform, including providing support to the clients through domestic market calculations. Tax audits are another important and common responsibility of a tax attorney.

It is the job of a tax attorney to help individual clients and business owners understand their tax situation. The reason why these tax experts are so much in demand is that the tax is an important and essential part of every business transaction. Even NGOs hire tax attorneys for documenting their transactions and staying updated with all the tax processes involved. Also, tax attorneys are the client’s line of defense against state tax agencies and the IRS.

Salary of a tax attorney

Attorneys are usually paid through billable hours. The same goes for tax attorneys. They will have to log every single minute of work done for the clients. The salary of a tax attorney depends on their experience. For example, the entry-level tax attorneys earn an average of $77,000 to $105,000, which is less than the average income. They spend most of their time conducting research. With experience, the value of a tax attorney also increases. Also, the salary will depend on the city you live in. This means that a Los Angeles tax attorney might earn more than a tax attorney in smaller cities. According to Glassdoor, a Los Angeles Tax attorney earns on an average of $141,000 per year while a Houston Tax attorney earns about $133,000 per year. 

Every business and every professional has to deal with taxes. This means that no matter which sector you work in or which state you live in, you will need a tax attorney. These tax experts can be hired by a law firm or an accounting firm. Tax attorneys are very flexible. They can work in a law firm, in a large corporation, or have their own business. It is a stable field for any lawyer. And if you want to work as a less-stressed lawyer, tax law is the one for you.

IRS audits Most common questions

IRS audits

No matter how honest and diligent you are, an IRS audit can send shivers down your spine. The reason for this fear is that most people believe that IRS audits will include a team of agents knocking at their front door and confiscating everything in their house. While this is also a possible situation in extreme cases, mostly, the audit will include agents checking your financial statements and ensuring that you haven’t been reporting incorrect information on your tax forms. So, unless you are over-reporting deductible expenses or reporting less income, you don’t need to worry about IRS audits.

Here are some of the most common questions asked about the IRS audits

I always make sure that my tax forms are filed without any errors? Why would the IRS still audit me?

The process of selecting a taxpayer for an IRS audit does not mean you have made an error. Many returns are randomly selected through an automated process when the 1099s and W-2s don’t match. In some cases, they are a result of an amending oversight. However, there are some red flags for the IRS. For example, large business expenses or charitable donations can raise eyebrows. 

Is the IRS audit affected by the amount I earn?

Yes, but only if you are earning is in millions. For example, if you earn more than $200,000 annually, there is a 1% probability that you will face an IRS audit. However, this probability increases when you earn more than $1 million.

Will I be notified of an IRS audit beforehand?

Yes, the IRS will send you a notice of the audit via mail.

What are the different types of IRS audits?

There are three types of IRS audits

The first one is the correspondence audit. In this audit, you will have to back up the claims made on the returns by sending additional documents. This can include mileage logs for travel, canceled checks for charities, and receipts. 

The second type of IRS audits is the in-person audit for which you will be summoned to the office of the federal agency. 

Lastly, there is a field audit. This form of the audit will be your worst nightmare. IRS agents will be visiting you at home or office and check all the tax-related documents. 

What happens when I ignore the notice of the audit?

Ignoring the notice of the IRS audit won’t make the IRS go away. Instead, the IRS will begin to think that you are hiding something. It can force the IRS to investigate immediately and impose fines or penalties. They can even get a court order to force you to cooperate. So, after you have received the notice, it is best that you respond within 30 days. 

Can the IRS only audit my last filed tax return?

No, the IRS has 3 years for pursuing an audit. So, just because the year has passed, it doesn’t mean that you are off the hook. It is possible that you receive a notice for the 2018 returns in 2020. This is why it is recommended that you keep all the tax-related documents for 3 years.

What documents do I need to provide during the IRS audit?

You only need to submit the documents requested by the IRS. If you bring anything unnecessary, it might broaden the audit’s scope. If the IRS has asked for some unaccounted paperwork, try tracing your steps. In cases of charitable donations and medical expenses, you can easily get duplicate copies.

Do I need to have tax experts present during the IRS audit?

Having tax attorneys is not mandatory during an audit. However, having a tax attorney by your side can make the whole process a lot easier for you. Hire an attorney through tax resolution services, and he will do the rest. 

After you’ve hired tax experts, you should let them do the talking. If you volunteer extra information, it can open up another investigation and compromise your advantage. 

What will be the duration of IRS audits?

The duration of IRS audits can vary. However, tax experts recommend that you set aside a complete day to deal with the audit. 

The duration of the audit will depend on a number of factors, like how organized your financial records are or how complex the issues are. In case the IRS wants more time or wants to have a follow-up meeting, you will be notified. If you want an audio recording of the proceedings, you have to give a 10-day notice to the IRS.

What penalties might I be liable to pay after the audit?

If the IRS decided that you have underpaid taxes, you might face either one of the following penalties:

  • If the IRS finds an underpayment because of undervaluation or overvaluation of the property, understating tax liability, neglecting, or disregarding rules and regulations of the IRS, you will be facing a 20% penalty.
  • For cases of serious underpayments that are related to fraud, you might face a penalty of 75%. If this is the case, it will be your responsibility to prove otherwise.
  • For all the violations made because of negligence, fraud, and not filing returns on time or valuing the property incorrectly, you might face interest payments. It will start from the due date of the return.
  • In severe cases of tax evasions, you might even face prison. 

Can the outcome of IRS audits be appealed?

If the IRS has imposed a penalty on you and you are not satisfied with the audit report, it is possible to appeal to this outcome. You will have to send an appeal letter to the IRS within 30 days after the audit proceedings ended. If the IRS denies your appeal, you can file a petition in the tax court for bills worth $50,000 or less. For the amount more than that, you will have to knock on the door or a regular court. 

For cases of IRS audits, it is best that you hire tax experts from tax resolution services. An attorney will help you put a strong foot forward. There are a number of tax resolution services in the US that can help you with your tax-related issues. IRS audit can be a complicated process with extreme outcomes. However, as long as you abide by the law, you won’t have to worry about anything.