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Tax easing companies use the radio, television and the internet to advertise help for taxpayers in distress. If you pay them an upfront tip, which can be thousands of dollars, these companies claim they can reduce or even eliminate your tax debts and stop back-tax solicitation by applying for legitimate IRS adversity programs. The truth is that most taxpayers do n’t qualify for the programs these fraudsters hawk, their companies do n’t settle the tax debt, and in many cases do n’t even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding abuse to injury, some of these companies do n’t provide refunds, and leave people even further in debt.
Reading: Tax Relief Companies
Some taxpayers who filed complaints with the Federal Trade Commission ( FTC ) reported that, after signing up with some of these companies and paying thousands of dollars in upfront fees, the companies took even more of their money by making unauthorized charges to their credit cards or withdrawals from their trust accounts .
If you owe back taxes and do n’t know how you ‘re going to pay the debt, the FTC, the state ‘s consumer protection representation, says do n’t panic, take a deep breath, and consider your options. If you are having trouble paying bills, it ‘s often better to try to work out a requital plan with the creditor yourself than to pay person else to negotiate a plan for you. The same is true when you owe money to the IRS or your state accountant .
IRS Help for Taxpayers
If you owe taxes, but can ’ deoxythymidine monophosphate pay the IRS in full, consider submitting an episode agreement Request ( Form 9465 ) with your hark back. In sealed situations, the IRS can ’ deoxythymidine monophosphate deny a request for an installment agreement if you owe less than $ 10,000. That said, you should distillery pay angstrom much as you can with the rejoinder. You will be charged pastime and possibly a late payment penalty on any tax not paid by its due date, even if your request for an episode agreement is approved. You can avoid IRS collection notices and actions, like a Notice of Federal Tax Lien or an IRS recruit, by establishing an episode agreement upfront and making your episode payments .
If you owe back taxes, there are respective IRS tax relief programs to help, including the representation ’ second Fresh Start first step :
- An Installment Agreement is generally available to people who can’t pay their tax debt in full at one time. The program allows people to make smaller monthly payments until the entire debt is satisfied.
- Under its Fresh Start initiative, the IRS raised the threshold for streamlined installment agreements from $25,000 to $50,000 in tax debt, and the maximum repayment term from five to six years. Taxpayers who owe less than $50,000 may apply online with the IRS and don’t have to complete an IRS Collection Information Statement (Form 433-A, 433-B or Form 433-F).
- An Offer in Compromise (OIC) lets taxpayers permanently settle their tax debt for less than the amount they owe. The OIC is an important tool to help people in limited circumstances; taxpayers are eligible only after other payment options have been exhausted.
- Under its Fresh Start initiative, the IRS expanded the OIC program to cover a larger group of struggling taxpayers. However, the IRS will not accept an offer if it believes the liability can be paid in full as a lump sum or through an installment agreement. The IRS offers guidance on choosing a tax professional for an OIC on its website.
In identical limited circumstances, the IRS may offer penalty abatement to people who have n’t paid their taxes because of a special hardship. If the taxpayer meets very constrict criteria, the IRS may agree to forgive the penalties. Interest abatement is even more specify and rarely provided. While these programs may eliminate penalties or interest, you distillery owe the taxes. If a tax relief ship’s company promises it can eliminate interest and/or penalties for you, be wary : there is restrict relief available, no matter who represents you before IRS Collections. Their services should include a face-to-face meet with you where they explain your options and their fee structure .
According to the IRS, you can apply for an Installment Agreement, OIC, or penalty or interest suspension without the help of a third party. If you prefer third-party aid in negotiating with the IRS, only certain tax professionals — enroll Agents ( federally-authorized tax practitioners who can represent taxpayers before all administrative levels of the IRS ), Certified Public Accountants ( CPAs ), and attorneys — have the authority to represent you. Their services should involve a face to face meeting where they explain your options and their fee structure .
If you are asked to make an upfront requital for representation in a tax collection count, cautiously review the refund policy before signing any agreement. besides check to see if a nonpayment placard rate — a flat rate applied to the solve of all employees at a firm, not only the tax professionals — will apply if you cancel the company ’ s services. A senior high school default option billing rate may quickly use up a large part of your upfront payment, even early on in the representation.
Contact the Taxpayer Advocate Service, an freelancer organization within the IRS, for free serve if you are having tax problems that you haven ’ thymine been able to resolve yourself, if your problems are causing fiscal difficulties for you or your business, or you face an immediate threat of adverse collection military action by the IRS. Call 1-877-777-4778 or sojourn irs.gov/advocate .
State Tax Relief Programs
The procedure for tax settlements with the states is very alike to the action with the IRS, although it varies from state to state. In some states, for exemplify, a taxpayer ‘s penalties can be waived, but interest ca n’t. In early states, interest can be waived, but penalties ca n’t. And in some states, legitimate tax debt ca n’t be reduced at all. For more information, contact your state accountant. For a state-by-state list, visit the National Association of State Auditors, Comptrollers and Treasurers ( NASACT ) at nasact.org .
Problems with Tax Relief Companies and Representatives
The IRS Office of Professional Responsibility targets questionable practices in the tax debt resolution industry. Report problems to the IRS on Form 14157, Complaint : Tax Return Preparer. The IRS Return Preparer Office will process the complaint and, if allow, submit it to the IRS Office of Professional Responsibility for probe .
Behavior warranting a charge to the IRS includes companies or individuals that :
- promise that you will get relief from tax liabilities;
- misrepresent how long it will take to process a debt relief request application; or
- omit relevant asset information on financial statements submitted to the IRS.
You besides may file a complaint with the FTC on-line or by phone : call 1-877-FTC-HELP. The FTC enters consumer complaints into the Consumer Sentinel Network, a batten on-line database and fact-finding instrument used by hundreds of civil and criminal law enforcement agencies in the U.S. and afield .
If you owe back taxes and are having trouble meeting your tax obligation :
- read your notices from the IRS or your state comptroller. Ask those agencies about collection alternatives.
- save yourself some aggravation by ignoring promises from businesses that say you “qualify” for a tax relief program to resolve your tax debt. Only the IRS or your state comptroller can make that determination. Read the IRS Offer in Compromise Booklet, Form 656-B, and use this IRS online tool to see if you may be eligible for an offer in compromise.
- think twice if the entire fee for services is requested upfront with no explanation of how services will be billed or whether a refund of unearned fees will be made.
For More Information
The IRS has extra information on the collection process and payment options at irs.gov .
publication 594, The IRS Collection Process, has information on options available to taxpayers, and the IRS YouTube transmit has a television with helpful information, a good .