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Owe Large Back Taxes? Look into Tax Relief (IRS/State Tax Debt Settlement)
Large tax debt? "Tax Relief" refers to reducing or making more manageable, the back taxes you owe, as well as the accrued penalties and interest. A different type of tax relief refers to government changes to reduce upcoming tax debt owed by thousands of individuals; here, we will discuss the first type -- for back taxes.
For those who wonder what percentage, or how many Americans owe back taxes to the government (unfiled returns / failure to file, error/miscalculation), it's been said that the number is over 20 million, or about 15 percent (15%). This is no surprise, with the economy in a recession, everyday people applying for payday or car title loans, trying to stop foreclosure with mortgage loan modifications while enduring unemployment, or seeking solutions for their credit card debt and even bankruptcy alternatives -- as they deal with the collection agencies. In this economic scenario, it's easy to see a family can face hardship on multiple financial fronts, especially after a bad credit rating is thrown in to produce a vicious cycle -- making it even more difficult to successfully apply for a job or get the best insurance rates. All the while, taxes must be paid so the nation and its states can continue to operate.
If your back taxes go unaddressed, you could face wage garnishment or liens and levies on property such as your house. An IRS bank levy freezes all account funds for 21 days from the date the levy is served. The frozen funds are released once the bank receives the release of the levy from the IRS. If the levy is attached to your personal account, you may have difficulty paying bills, or your rent/mortgage. If the levy is attached to your business account, you may be unable to meet payroll, pay business bills and you could lose vendors or business. A bank levy is not a one-time levy. If you do not resolve the unpaid balance, the IRS will continue to issue levies such as social security levies, wage levies, and assign a Revenue Officer (collection officer) to your account. And finally, a bank levy can also result in overdraft balance and additional fees to your account.
A Federal Tax Lien (FTL) attaches to your property, and rights to property for the amount of the liability. A tax lien is directly reported on your credit report and can make it more difficult to apply for loans, or to qualify for any type of approval where your credit rating is a factor. The determination of the filing of a federal tax lien is made within ten days of you being notified of your tax debt. Typically, a tax lien is filed with the Final notice of Intent of Levy, allowing a taxpayer thirty days to appeal the filing of tax lien, or future levy action on their bank account.
You may have heard of an "Offer In Compromise (OIC). This is a settlement between an individual and the Internal Revenue Service (IRS) to settle unpaid tax debt. To determine whether you qualify for an OIC requires an extensive financial analysis process. In order to qualify, you must demonstrate that you are unable to pay the current tax obligation.
Penalty abatement is a reduction of the penalty and interest accrued on the penalty for a tax year. Most states offer penalty abatement, but the rules can vary by each state. Most states will not abate any penalties until the original tax is fully paid, and some will abate penalties if the IRS has approved any abatement for a tax year.
If you're behind on taxes and you receive an IRS letter mentioning "Notice of Federal Lien," the sooner you act, the better. Although taxing authorities must diligently pursue all taxes owed to keep services running, it is often possible to arrange a settlement on taxes, penalties and interest where a taxpayer is far behind; i.e., some may qualify for the Offer In Compromise which allows the tax debt to be settled for a lesser amount (and/or find solutions which make the debt easier to manage). If you owe due to miscalculation or failure to file, there are professional tax professionals and attorneys ready to help you with back taxes! Choose a reputable company to help settle your back tax debts to the IRS or the state. Be careful of scams; look for a good rating from the Better Business Bureau. You can find help in person or online (example: "TaxRelief.At.Hm" [this is a short "tax relief service" video]). If you have concerns about IRS tax problems such as asset seizure, wage levies or IRS wage garnishment, there may be tax debt solutions that can help, such as the IRS OIC, total tax debt negotiation, reduction of penalties & interest, installment plans and other possibilities. The type of solutions you may qualify for will depend on your individual situation. The sooner your situation can be resolved, the better for your total bill accrued, and your credit rating. Good luck!
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