Posted by Dennis Jao

IRS Tax Resolution Companies

IRS Tax Resolution Companies

Tax relief is a broad term that includes IRS programs designed to allow taxpayers to pay off their tax debts by reducing taxes owed or dividing the debt into affordable payments. If you find out that you are among the 20% of US citizens who have not withheld federal income tax and cannot pay the difference by the annual tax deadline, a tax-exempt company can work with the Internal Revenue Service to make your debt manageable.


What Can A Tax Relief Company Do For You?

The Internal Revenue Service (IRS) can garnish your wages or confiscate your property and assets to pay the income tax you owe. If you are late with your taxes, you will first receive a letter from the IRS (never a phone call or email). A tax relief company can determine the programs you are eligible for to help you reduce taxes and late payment fines. They represent your interests when working with the IRS. Once you've determined the tax benefit laws that apply to your situation, a tax relief company works to reduce your tax burden with a settlement you can pay for. These companies also correct IRS errors that result in excessive taxes or fines and eliminate property and estate tax guarantees.


How to choose a tax relief company

While you can represent yourself before the IRS, it can be frustrating and stressful. But if you can raise funds to pay off your tax obligations in three months, try signing a contract with the IRS. If your situation is more complicated, consider bringing in a tax relief company's professionals to find the best deal available and save you time and ultimately money.

To select the right tax relief company, interview three or more. All of the best options for the best tax relief companies offer free initial consultations, so you won't have to pay anything to familiarize yourself with each one. Apply these tips during the initial discussion to find a reputable tax relief company. Find out:

  • Full fee disclosure on the first call.

  • Ask how tax professionals will determine which tax exemption programs you can benefit from.

  • Ensure the tax professional you are working with is a lawyer, public accountant, former IRS agent, or registered agent. Do not accept other accreditations.

  • Note how your representative answers your inquiries during the consultation. Is the information understandable? Is the representative on the other end of the call willing to take the time to make sure all rates, policies, and procedures are right for you?


Types of tax benefits

The IRS has many tax relief options, but qualifying for these programs is no easy task. We explain typical plans to reduce or eliminate your tax debt below. Still, a tax relief company specialist can help you understand even more options and choose the best for your situation.


Overview of tax relief plans

  • A fresh start: A simplified payment plan with additional tax benefits within six years or less.

  • Currently, not collectible (CNC): If financial hardship prevents you from paying income tax, the IRS may put the liability on hold.

  • IRS Payment Plans: This is an agreement with the IRS to pay taxes owed within a specified period.

  • Offer in compromise (OIC): The taxpayer agrees with the IRS to pay less than the total amount owed in taxes.

  • Penalty Abatement: The IRS waives the penalty for failing to file a tax return.


IRS payment plans

An IRS payment plan extends the time it takes to pay off a tax debt through regular payments rather than a lump sum. These payment plans are short-term if you can pay your taxes in less than 120 days. Otherwise, they are long-term. You keep racking up fines and interest until you pay off your tax debt in full.

  • Short-term plan payments are instinctively deducted from a checking account or paid by money order or check. The Internal Revenue Service will accept debit or credit card payments, but fees are associated with these types of payments.

  • Long-term plans allow you to spread your tax benefit payments over three months. The Internal Revenue Service will make automatic withdrawals from a bank account, and you will pay $31 to set it up. Setup fees drop to $149 payable online and $225 if paying by phone, mail, or in person.


Currently not collectible (CNC)

If you are having financial difficulty, the IRS may agree to place you on the currently not collectible (CNC) to defer tax payments. To qualify, you don't need to have funds in bank or investment accounts. The IRS may set a limit on some of your expenses, such as a maximum allowed auto loan payment of $400 per month as part of the CNC tax deduction. Any future tax refund value applies to the balance of your tax arrears until they are paid, and the IRS annually reviews your eligibility for CNC status. If you remain in CNC for ten years, the IRS will likely waive all taxes, penalties, and interest owed to the statute of limitations.


Payment Abatement 

You may be eligible for payment abatement if you fail to file your taxes by the deadline due to factors beyond your control, as determined by the Internal Revenue Service. There are 3-types of penalty abatement tax relief:


Reasonable Cause: The IRS may view tragedies such as fires, natural disasters, debilitating illnesses, or the death of a loved one as a reasonable reason for not filing taxes on time.


First Time Penalty Abatement (FTA): If you haven't been fined income tax for three years and filed your tax return or extension before the due date, you may qualify for this form of tax relief. The IRS may grant an administrative exemption from the FTA for fines to help current taxpayers who fail to file their taxes on time or pay their income tax owed.


Statutory exception: If you receive incorrect advice from the IRS, you may benefit from a statutory exception to waive the penalties. However, communication with the IRS must be in writing, and you may need to provide the original request, and the written correspondence received. Unfortunately, few people have a written question, like a phone call, email, or personal visit with a VITA volunteer is much more common.


Offer in Compromise

An offer-in-compromise allows you to pay your tax debt to the IRS and pay less than the amount you originally owed. You can take advantage of this tax benefit if you cannot pay the entire income tax bill without creating financial hardship. The tax administration considers factors such as income, expenses, equity, and ability to pay when applying for a mutual fund.


IRS Fresh Start

The IRS Fresh Start program provides a simplified procedure for creating a streamlined plan to pay tax arrears. Taxpayers can avoid the tax burden entirely by agreeing to make electronic payments from a bank account with tax arrears between $25,000 and $50,000. IRS Fresh Start provides taxpayers up to six years to pay off their tax debts, and more people qualify for an offer in compromise through this tax relief program.


Tax exemption scams

Unfortunately, you should beware of fraudsters posing as legitimate tax relief companies. These criminals take advantage of taxpayer fears and explain how the IRS can provide security on wages, property, or other assets if you can't pay income tax. 


Consider these tips to avoid a tax-relief scam:

  • Beware of companies that guarantee "cents on the dollar" or "next to nothing" on tax relief while charging very high non-refundable commissions upfront.

  • Stay away from companies that offer tax relief benefits without contacting the IRS or doing a thorough analysis of your finances.

  • Never sign a business that disregards tax exemption options, tax structure, and refund policy in plain language.

  • Ask if the relief company has a standard collection rate, a flat rate that applies to an employee's work and whether or not they are a tax professional. A standard billing rate can eliminate the refund you would receive if you cancel the service.


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Dennis Jao
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