What is Tax Resolution?
Most small business owners have a lot to worry about but few issues can compare to the fear of being contacted by the IRS. Unlike many other government agencies, the IRS enjoys almost unlimited power to collect the money they are due. That means they have the power to garnish your wages, freeze your bank accounts and seize your properties. So, if you receive a notice from the IRS, you need to act fast and you need the right support from professionals who have the expertise to take on the IRS.
Tax resolution is the process of working with the IRS and tax professionals to resolve tax problems. Some instances when you might use tax resolution services include:
Audit Representation
The first thing to remember if you receive a notice from the IRS that you will be audited is don’t panic. The audit process can seem intimidating, but you don’t have to go it alone. There is a range of reasons the IRS audits taxpayers, and just because the IRS decides to audit you doesn’t mean you’ve done anything wrong.
Hiring a professional tax consultant to help put together an audit defense for you can help you rest assured that the results of the audit will be as accurate and fair as possible. While you are not legally obligated to have tax audit defense services, hired tax professionals can help you perform many necessary tasks, such as handling all correspondence with the IRS to resolve your case as soon as possible.
Transcript Protest
Remember, the IRS makes mistakes, too. Sometimes, it believes you made more money than you actually did, or it includes the income from an ex-spouse or a former business partner with your income. The good news is that, if you disagree with the IRS, you have the right to present evidence to help you make your case. Additionally, tax professionals can help you put together a transcript protest, so you don’t have to pay more than you owe.
Non-Collectible Debt
The IRS offers a form of relief when you can’t pay your tax debt due to financial hardship – meaning you don’t have the ability to pay your debt and continue to afford reasonable cost of living expenses.
During what’s known as a “Currently Not Collectible” status, the IRS won’t try to collect the debt you owe. Using tax resolution services can help you see if you qualify for the status and can help you understand the benefits and drawbacks of using it.
Tax Penalties
Although the IRS typically charges interest and tax penalties when individuals or businesses pay their taxes late or don’t pay at all, there are some instances when the IRS will waive the penalty. Tax resolution firms can help you determine if you’re eligible for tax penalty abatement and help you through the process as well as help you determine whether or not you qualify for the penalty waiver.
Unfiled Returns
Although you’re expected to file a tax return each year, life and other circumstances can get in the way. If you fail to file a return, the IRS might guess how much you owe that year based on the documents it’s received, such as Forms W-2 and 1099.
Filing late taxes comes with penalties and late fees so timely resolution is critical. A tax consulting firm can help you prepare returns from past years as well as put together a tax plan for the future.
You know what you owe – now what? There are various ways that you and your tax professional can work with the IRS to resolve tax debt. These include:
Paying Back Taxes
If you owe back taxes, you may not have to pay the total amount that you owe in one lump sum. The tax resolution process involves evaluating your returns to determine if you are actually responsible for the back taxes being charged. It also includes working with the IRS to put together a payment plan that is more financially manageable.
Compromising With The IRS
Through the IRS’ Offer in Compromise program, there are situations when the IRS is willing to compromise with taxpayers. If you owe a large amount and are not able to pay it, The IRS may accept less than what you owe through the Offer in Compromise program.
Keep in mind that compromising with the IRS can be tricky and the agency usually doesn’t take requests for reduced payments. Working with an experienced tax consultant can help you see if compromising with the IRS will help you resolve your tax issue or if another option, such as a payment plan, might be more appropriate.
Tax Liens
If you don’t pay your property taxes, federal taxes, or state taxes, the tax agency can put a lien on your home or other valuable property. In order to avoid foreclosure, any liens must be adequately removed and discharged from the property. Tax resolution can help protect your property from liens as well as ensure that any liens have been discharged or withdrawn.
Wage Garnishment Help
When you owe a tax debt, the IRS can choose to garnish your wages to get their money. Part of tax resolution involves negotiating with the IRS before it begins garnishing your income. A tax consultant can help you put together a payment plan to present to the IRS, which can help demonstrate that you can pay what you owe without them having to step in and take the money directly.
The sooner your tax issue is resolved, the better. Getting professional help for tax resolution can mean less headache and stress for you and mean you don’t pay more than you need to the IRS.
Everyone’s tax situation is unique, and the type of results you get will depend on your circumstances. Contact us to see what tax relief options that might be available to you and how NextGen can help you solve your tax problems.