There are a number of options for taxpayers who are facing unsettled tax debts. These options include bankruptcy, failed comeback case submissions, and seeking the assistance of an IRS lawyer. IRS lawyers specialize in dealing with tax issues and will work with the IRS to help taxpayers minimize their tax debts and avoid bankruptcy. Tax attorneys understand how the IRS process works and will know how to best protect taxpayers’ rights.
While many taxpayers may have difficulty with IRS collection efforts, there is hope. The IRS and state revenue departments can be relentless in collecting tax debts. Not only can the taxpayers face higher penalties and fees, but they could have their credit opportunities and possessions seized. This is where the services of an IRS tax lawyer can help. By hiring a qualified attorney, you will receive the help you need to fight the IRS.
An offer in compromise (OIC) is another option for taxpayers with unsettled tax debts. An OIC allows a taxpayer to settle their debt for a smaller amount than it was originally due. It is often the best option for people with low incomes and limited resources, since this approach is more likely to be accepted by the IRS. An Offer in Compromise can be difficult to get approved, so only those with low incomes or businesses may be eligible for it.
Taxpayers should never ignore an unsettled tax debt because it may be difficult to pay. It is important to remember that the IRS’s primary goal is to collect taxes, but they also have a duty to act fairly and encourage voluntary compliance. By allowing some taxpayers to negotiate their tax debts, the IRS can avoid filing a levy on their property, which will make it more difficult to refinance a home.
The IRS offers repayment plans for unsettled tax debts, which can be as little as $0 or as much as $225. Most taxpayers who qualify for these plans can get their debts reduced through an offer in compromise, if they can show that they can pay a small amount each month and cover other expenses. These plans may also be a good option if you have good income and don’t mind paying a small monthly fee to the IRS.
Taxpayers who ignore their unpaid debts may be faced with a number of penalties and increased costs of taxes. Late fees start at 0.5% of the tax debt. Interest accrues at the federal short-term rate plus three percent. If this continues, the government may file liens on your property, garnish your wages, or seize your assets. This can severely hurt your finances. If ignored, tax debts can destroy your credit.
A business owner can also take steps to protect themselves by examining the background of a potential business partner. Performing a background check on a potential business partner can expose the person’s past tax problems, including any debts with the IRS. If a business partner doesn’t have the experience or success in the field, it can become a target of unsettled tax debts. In such cases, it is crucial to protect assets that have been invested in a business.
Once an unsettled tax debt has accumulated enough interest and penalties to make it impossible to pay, the IRS will seek to collect the debt. Moreover, if you do not make payments, the IRS may levy a portion of your paycheck or apply a tax refund towards the debt. Although the IRS prefers to work with taxpayers to reach an amicable agreement, it does have its share of penalties. The vast majority of penalties for nonpayment are monetary in nature. Criminal penalties are reserved for tax fraud.
While the IRS has the right to levy the assets of unpaid tax debtors, this rarely happens. The government will issue several notices before taking an asset. It may also levy a life insurance policy. Whether an asset is worth $700k or $1.8 million, the IRS can seize it if the debtor doesn’t pay it within a certain amount of time. Despite the legal threats, this situation is relatively easy to avoid.