USA's 10 Best Tax Relief Companies

Basic Things You Should Know About Tax Relief

You’ve just found out you owe more IRS back taxes than you’ve expected? Then, you might want to tackle this problem as soon as possible. If you can’t afford to pay your back taxes, there are different relief programs you might qualify for. Here are the basic things you should know about tax relief.

The Consequences of Unpaid Taxes

The outcome of unpaid IRS taxes can be drastic. Once a taxpayer incurs them, these back taxes aren’t going anywhere. They just keep growing and become more difficult to pay as time passes. This is due to the interest and penalties these back taxes accumulate. Failing to pay IRS taxes can lead to devastating consequences for your finances and your peace of mind.

Once the IRS sends you notices about unpaid taxes, it’s recommended to act immediately. Check how much you owe and start looking for solutions to pay the amount or access a back taxes relief plan. Unpaid taxes can lead to liens, wage garnishment, or property seizure. Failing to respond to the IRS notices and to take any action can even lead to criminal charges down the road.

What Is Tax Relief and When Should You Apply for It?

Tax relief allows both individuals and companies to reduce the amount of IRS back taxes they have to pay. State tax and local taxes can also qualify for tax relief. Tax relief involves different solutions that either aim to lower the amount of back taxes owed or to provide a manageable payment plan.

There are different tax relief approaches taxpayers can rely on based on their specific back taxes and financial circumstances. Many people resort to tax relief programs only after they realize they can’t cope with their tax back taxes . However, you can also apply tax relief measures while you’re filing your taxes. IRS back taxes relief programs are designed to help you manage your back taxes when you’re past the due payment date. Other solutions such as deductions and exclusions aim to help you reduce your back taxes before your tax bill is released.

Tax Relief Eligibility Requirements

The IRS offers different tax relief solutions, and each program comes with specific eligibility criteria. For example, applicants for offer in compromise need to provide all sorts of financial-related documents. The IRS will scrutinize them. Only those who are considered unable to pay their tax back taxes will qualify for an offer in compromise. The taxpayer’s income, assets, investments, and any source of revenue will be taken into account.

Those who want to access the IRS Fresh Start program must meet other criteria, starting with a maximum amount of back taxes of $50,000. Another condition is earning a maximum of $100,000 per year and $200,000 in case the person files together with their spouse.

Types of Tax Back Taxes Relief Solutions

There is more than one back taxes relief program you can resort to if you find yourself in the unpleasant and often stressful situation of owing a large back taxes. Further on, we will detail some of the most common back taxes relief solutions:

Installment Agreements

Installment agreements are the most common type of back taxes relief method most taxpayers choose for their back taxes. These agreements involve contact the IRS to get a back taxes payment plan based on installments. Since most nack taxes owed people can’t pay their past due tax bill at once, the IRS offers to let them pay in installments. This method means prolonging your back taxes payment period (usually up to 72 months), but it is still a good solution if you’re not able to get the lump sum you’d need to cover your entire amount of back taxes.

Installment agreements have different terms and fees. Depending on the plan you access and how you will pay your back taxes, there will be different fees, interest rates, and penalties. The main condition to qualify for an installment agreement is to have more than $50,000 in back taxes.

Once you agree to choose this path, you will know the fees and interest your b will incur. If you’re not willing or able to access an installment agreement on your own, you can work with a tax relief firm. These companies can talk with the IRS on your behalf. You will only need to provide them with the necessary documentation and keep in touch with their representative. They will offer you all the information about the best tax relief program you can qualify for and help you throughout the application process.

Offer in Compromise

This is one of the most efficient ways to tackle your IRS back taxes. Offer in compromise (OIC) allows you to your back taxes for a lower amount than what you owe. This solution seems excellent, but there is one problem. Not many taxpayers qualify. There are strict eligibility requirements. The IRS carefully evaluates every aspect of an applicant’s financial situation before allowing them to access an OIC.

Only those applicants that are deemed unable to pay their back taxes due to financial hardship will receive an offer in compromise. The principle is similar to the back taxes agreements you may reach with banks or non-bank lenders. The IRS prefers recovering some money than nothing at all.

IRS Fresh Start Initiative

As its name suggests, this program aims to offer you a fresh start if you’re currently struggling with back taxes. The program has been around since 2011 and it works in different ways.

One method is enabling taxpayers to reach an installment agreement. This involves paying lower amounts of the incurred back taxes over a longer period. Another method is to access an offer in compromise and reduce your amount of back taxes. A third possibility is to file for a tax lien withdrawal. This might help you have your lien removed.

Currently Not Collectible

This is one of the less common back taxes relief solutions. Not many people who owes tax to IRS manage to rely on this method which involves labeling back taxes as CNC (currently not collectible). If you manage to get the CNC status, you are no longer required to pay IRS back taxes. However, qualifying for this status can be a long and tedious process.

To become a CNC taxpayer, you need to prove to the IRS that you’re in deep financial hardship, hence, you can’t pay your back taxes. The IRS will scrutinize your financial circumstances and ask for lots of documents such as all your income sources, a list of your expenses, all your assets, bank statements from the previous months, medical expenses documents, and plenty more.