Posted by Income Taxes and Bookkeeping LLC

What Is The Tax Resolution?

What Is The Tax Resolution?

In the United States, the Internal Revenue Service (IRS) collects federal taxes and makes sure people follow tax laws. The Internal Revenue Service handles the processing of tax returns, the collection of tax money, and the distribution of tax refunds. In 2018, the agency collected nearly $250 million in tax returns and distributed nearly $400 billion in tax refunds.

Many people think of the IRS only during tax season and while waiting to receive a tax refund. However, there are times when the IRS makes its presence felt at other times of the year. If the agency finds that a person or business hasn't reported income, is underpaid, or hasn't filed a return when they should, it can take action. An individual or business may need tax services to resolve the issue, pay taxes, or obtain tax relief when this happens.

What is the tax resolution?

This is the process of working with the Internal Revenue Service and tax professionals to find a solution to your tax problems. The IRS may have a problem with your tax return or tax status for several reasons. If you have a complex tax return, for example, the IRS may check you to make sure you're reporting the correct amount of income and claiming legitimate deductions. In some cases, the IRS may consider that you have understated your income and wish to take a closer look at the tax situation.

Another example of a problem with the IRS is when you haven't filed a tax return for several years. Finally, the problem may be serious enough to require outside help to get back on track and avoid being overwhelmed by the IRS.

Some instances in which tax resolution services may be used include:

Audit Representation

If you receive a warning from the IRS that you will be audited, don't panic. Although the audit process may seem daunting, it is not something you should go through alone.

The IRS monitors taxpayers for a variety of reasons, and just because the IRS decides to monitor you doesn't mean you've done anything wrong. Hiring a professional tax advisor to help you develop an audit defense can help ensure that your audit results are as accurate and precise as possible.

Transcript Protest

Even the taxman makes mistakes. Sometimes you think you made more money than you did, or you included income from an ex-spouse or business partner in your income. When this happens, you have the right to disagree with the IRS and present evidence to help make your case. Tax professionals can help you prepare a transcript protest, so you don't have to pay the money you don't owe.

Non-Collectible Debts

What happens when the money you owe the IRS is so high that you can't pay it and still pay a reasonable cost of living? In this case, you don't have to choose between having a roof over your head or paying the IRS.

The IRS offers a form of relief when it is not possible to pay the tax debt. During what is known as "currently not collectible," the IRS will not attempt to collect your debts. Using tax resolution techniques can help you see if you are eligible for the status and help you understand the cons and pros of using them.

Tax Penalties

The Internal Revenue Service tends to charge interest and tax penalties when people or businesses pay their taxes late or don't pay anything. Fortunately, there are instances where the IRS will waive the fine. Tax resolution companies can help you determine if you are eligible for a tax exemption and help you decide whether or not you are eligible for a tax exemption.

Unfiled Returns

You must file a tax return every year, but in some cases, life and other circumstances may prevent you from filing a tax return. When this happens, the IRS can guess how much you owe based on documents you receive, such as W-2s and 1099s. A tax consulting firm or tax professional can help you prepare your returns for previous years. They can also help you file routine returns and work with you to create a tax plan for the future.

Paying Back Taxes

If you have to repay taxes, you may not be able to pay the full amount at once. Part of the tax resolution is to assess your income to make sure you are responsible for any unpaid taxes withheld. It may also include working with the IRS to develop a plan that makes it easier to manage to pay taxes.

Get into an offer-in-compromise with the IRS.

There are instances where the IRS is willing to engage with taxpayers. If you owe a large amount and are unable to pay, the IRS Offer in Compromise may accept a payment that is less than what is owed.

Interacting with the IRS can be difficult because the agency generally does not accept payment reduction requests. Working with a tax professional can help you see if contacting the IRS will help resolve your tax issue, such as a payment plan, which might be more appropriate.

Payroll Tax Recovery

Companies that have employees must pay taxes on the wages of their employees. When a business does not pay payroll taxes, the IRS can sanction it, usually with a fine to recover the trust fund. A tax pro can help you navigate the process when the IRS issues a fine, including working with you to complete Form 4180 and can help you prepare for the 4180 interviews.

Tax Liens

A lien is a right is a claim against something you own, like your house. If you have trouble paying property, federal, or state taxes, the IRS may have a lien on your home or other valuable assets.

To help you avoid foreclosure or other intricacies, all collateral on a property should be removed and released accordingly. The resolution fee can help protect your property against warranties and confirm that the warranty has been properly released or removed.

Wage Garnishment Help

When the IRS wants your money, it will do whatever it takes to get it. One of these lengths is to garnish your wages by making them lower or non-existent. Part of tax resolution is negotiating with the IRS before it begins garnishing your wages. A tax advisor can help you come up with a payment plan that you can submit to the IRS, showing that you can pay what you owe without them having to step in and collect the money directly.

The sooner the tax problem is resolved, the better. Getting professional help with tax relief can mean fewer headaches and stress for you and means you don't pay the IRS more than you should.

How does tax resolution help you?

Although you have the ability to resolve your own tax issues with the IRS, it is generally in your best interest to work with tax professionals who can help you work with the IRS and resolve your issue.

As a taxpayer, you have certain rights outlined in the IRS Taxpayer Bill of Rights. You have the right to:

  • A tax system that is just and fair

  • Appeal the decision of the IRS

  • Be informed

  • Challenge the IRS and be heard

  • Confidentiality

  • Finality

  • Pay no more than you owe

  • Privacy

  • Receive quality service

  • Retain representation

Working with a tax resolution company helps ensure that your rights are protected. A tax resolution firm can help you:

Assess your situation

The first step to working with a tax resolution firm is to make an appointment. During the meeting, you will have the opportunity to explain your specific problem, and a tax expert will have the opportunity to review your documentation and assess your situation.

Consultation can help you see if you can benefit from the services of a tax resolution company. It also allows your tax advisor to learn more about your situation and begin the process of finding a solution to your problem.

Make a defense

If a tax advisor or registered agent thinks your situation can be resolved, the next step is to come up with a plan to help you work with the IRS and reach an agreement that works for everyone. A registered agent will review your documents to fully understand your situation before preparing a defense for you if you are audited.

If you negotiate with the IRS or avoid seizure, your tax advisor can design a payment plan that tells the IRS whether or not you can pay in certain cases. Your plan and defense can save you from feeling overwhelmed by a huge tax burden.

Acts as an Intermediary

You have the right to be represented per the Taxpayer Bill of Rights. Your tax advisor may be the go-between or intermediary between you and the IRS. Working with a tax firm means you never have to worry about the IRS on your own.

Registered tax agents and consultants have years of experience working with the IRS and a thorough understanding of tax law. They know your rights and why the IRS can and cannot hold you liable. Having a professional represent you reduces stress and increases the likelihood of a result in your favor.



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