Millions of Americans struggle with tax issues every year, from minor debts and unfiled returns to liens, levies, and garnishments. If you’re struggling with an unresolved tax issue, keep reading and learn about several proven tax resolution methods that may be able to solve your problem.
1) File All Unfiled Returns
The first question we ask new clients is whether they have unfiled tax returns from previous years. This is the first (and one of the most common) barriers to effective tax resolution, so it needs to be addressed immediately. If you want to resolve any federal tax issue, all your tax return filings (income and payroll) must be accurate, up-to-date, and accepted by the IRS.
All taxpayers with unfiled returns are subject to additional fees and penalties. So, it’s in your best interest to take care of unfiled returns as soon as possible. Since the IRS often reviews late tax returns with extra scrutiny, you should reach out to S.H. Block Tax Services for help filing any previously unfiled tax returns.
We might even be able to help you enter currently not collectible (CNC) status. This status will not eliminate your tax debt, but it will prevent the IRS from pursuing collection efforts while you improve your employment and financial situation.
2) Negotiate an Offer in Compromise With the IRS
As part of the IRS’ 2011 Fresh Start Initiative, the agency created a series of updated rules and regulations designed to help taxpayers with unresolved issues get back into compliance. One of the focal points of the initiative is the Offer in Compromise (OIC) program, which provides one of the most powerful tools taxpayers have at their disposal when they’re trying to resolve a tax liability.
An offer in compromise allows you to settle your outstanding tax debt with the IRS or Maryland comptroller for less (sometimes significantly less) than the full amount owed. In our experience, we find that an OIC can be an especially helpful option for taxpayers who cannot pay their full tax liability or for those who would suffer financial hardship if they were to pay their debt in full.
The IRS and Maryland comptroller are often eager to work with delinquent taxpayers to resolve the debt owed. However, if you want to get the best possible settlement, you should work with a certified tax attorney who has a track record of successfully negotiating offers in compromise. At S.H. Block Tax Services, we have an OIC acceptance rate of over 75%, which is about 35% higher than the national average.
3) Set Up an Installment Agreement
You can also work with the IRS to pay your tax liability over an extended timeframe (usually less than seven years) as part of a monthly installment agreement (IA). However, many taxpayers who negotiate IAs on their own enter payment plans that result in substantial penalties and interest. As a result, these taxpayers’ balances continue to grow each month even as they make payments on their installment agreements.
Sometimes, taxpayers believe they’re on an installment agreement because they’re making monthly payments. If you haven’t made an official request for a monthly installment plan or if that request hasn’t been officially approved, you are not on an installment agreement, and your assets may still be subject to bank seizures and wage garnishments.
IRS installment agreements offer a proven method for taxpayers to resolve their debt, but it’s essential to work with an experienced tax resolution expert. Your attorney or other expert representative should be able to set up an efficient agreement that minimizes potential penalties and places you on the road to financial recovery.
4) Consider a Partial Payment Installment Agreement
A partial payment installment agreement (PPIA) allows taxpayers to make monthly payments based on an approved agreement with the IRS. The difference between a regular IA and a PPIA is that with the PPIA, you will only pay back a portion of your tax liability over time.
Many taxpayers who do not qualify for an offer in compromise or who don’t have enough monthly disposable income to make regular installment agreement payments may be able to find relief with a PPIA. A PPIA can:
- Allow for easier and faster approval
- Help you avoid a lump-sum payment up front
- Reduce your monthly payments compared to other options
Based on these advantages, a PPIA may sound like the perfect solution, but PPIAs also have drawbacks. When you enter a PPIA, you agree to let the IRS review your financial situation every two years. If the IRS finds that your financial situation has improved, they can increase your monthly payments under the PPIA.
Whether a PPIA, IA, or OIC is the best option depends on your unique circumstances, so we can’t provide blanket advice. To make sure you explore all options and get the possible solution for your tax issue, contact S.H. Block Tax Services today and let an expert from our team help you.
5) File for First-Time Penalty Abatement
There are nearly 150 different types of IRS penalties for infractions that range from failure to file to using dishonored checks. And when you receive a penalty, the IRS can (and will) charge interest and additional penalties on the original penalties if you don’t resolve the outstanding balance right away.
The good news is that first-time offenders can often have their penalties and fees significantly reduced or even eliminated as part of the IRS’ Fresh Start Initiative.
To qualify for first-time penalty abatement, taxpayers must be able to explain why they made a mistake and received the penalty. Valid explanations may include death or serious illness, fires or floods, difficulty obtaining records, or even basic human error and ignorance of tax laws.
However, first-time penalty abatement isn’t a get-out-of-jail-free card. Writing and filing a successful penalty abatement requests is a challenging process that can overwhelm a layperson or even an attorney who doesn’t specialize in tax law.
At S.H. Block Tax Services, we have years of experience filing successful first-time penalty abatement requests, and we’ve saved our clients hundreds of thousands of dollars in penalties. Please reach out today to learn about your options and find out how we can help.
Start Resolving Your Tax Issues Today With Help From S.H. Block Tax Services
If you’re struggling with outstanding tax liabilities and would like to learn how one or more of the tax resolution strategies listed above might fit your unique situation, please contact S.H. Block Tax Services today. Our mission is to help you find an efficient and affordable resolution to your tax problems so you can start rebuilding and moving forward.
To schedule your free initial consultation and speak with a tax expert from our team, call (410) 793-1231 or use the contact form on this page.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.