How to Settle Your Back Tax Debt

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Do you owe a large amount of back taxes to the IRS? If so, you may wonder if you’ll ever be able to discharge your debt. While the simplest way to clear a tax debt is to pay it in full, this may not be possible, especially if you’re currently facing a financial crisis. The good news is that there are options to help taxpayers settle their back tax debts. However, many individuals need to get help to pursue a tax debt settlement Los Angeles residents can count on.

Tax Debt Settlement Options

The IRS offers a few ways for taxpayers to settle their back tax debt. These include the following:

Repayment Plans – In many cases, taxpayers can begin repaying their back taxes through an installment agreement. This arrangement allows individuals to repay their tax bill in monthly increments over a period of up to three years. Depending on the size of the debt, the IRS may even consider extending the total repayment period to six years. To request an installment plan, taxpayers can complete Form 9465 and submit it directly to the IRS.

Offers in Compromise – The IRS occasionally grants taxpayers the option to settle their outstanding debt for pennies on the dollar. This arrangement is called an offer in compromise and it is available for individuals who have financial concerns that legitimately prevent them from ever being able to repay their debts.

Amending Past Returns – If you’re facing a tax debt from a return that is a few years old, it may be worth your time to re-examine it for any possible errors. You can even take the completed return to a qualified tax preparer or attorney who can review it and amend it, if necessary. If your return contains errors, you may find that your tax bill can be lowered substantially.

Qualifying for Tax Debt Relief

While some tax debt settlement options are available to everyone, a few require meeting certain qualifications. For example, if you plan to request an offer in compromise, you’ll have to convince the IRS that you cannot possibly repay the tax debt now or at any point in the future. Since it can be very difficult to prove this, the IRS does not grant many of these requests each year.

If you’re dealing with back tax problems Los Angeles residents fear, you can get help by speaking with a qualified tax attorney or advisor.

When Do You Need A Tax Attorney

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Tax attorneys are highly trained, well qualified legal professionals who are thoroughly familiar with the IRS tax code. Despite these qualifications, some taxpayers might be hesitant to hire a tax attorney. Individuals may feel that they can handle their IRS problems alone or they may not be aware of how serious their tax predicament can be. However, there are several situations when a taxpayer can benefit from enlisting the help of a qualified Hollywood tax attorney.

• If You Need Help Understanding Your Tax Liability

Tax lawyers are extremely knowledgeable about U.S. income tax laws. Because of this background, they can find the specific statute that applies to your situation and then explain it in a way that helps you understand your particular obligation to the IRS. This is an important service, because some taxpayers may believe that they are required to comply with tax laws that do not truly apply to them.

• If You are Being Audited

Tax lawyers can provide essential legal and financial advice during the audit process, particularly if you decide to defend your case in the Tax Court. A tax attorney can review your case and help you determine if you have a chance of winning. He or she can also help you put together a convincing case and find the evidence to support your claims. Even better, the tax attorney will represent you in Tax Court, which prevents you from having to present your case on your own.

• If You are Facing Business Tax Issues

Tax lawyers are essential advisers for taxpayers who operate small businesses, partnerships, corporations, and non-profit organizations, since the applicable tax laws for these entities can be far more complex than those that apply to individuals. A qualified income tax attorney Los Angeles entrepreneurs can depend on will be able to interpret the applicable regulations and explain how to comply with them. Tax attorneys can also provide financial advice that will help with structuring the organization, preventing unnecessary taxation, and filing annual forms to the IRS.

There are lots of situations that call for hiring a tax attorney, but these three are among the most common. If you are facing these or any tax situations for which you feel unprepared, enlisting the services of a tax lawyer may prove to be helpful.

Do You Qualify for IRS Tax Penalty Relief?

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The thought of an IRS tax penalty can be frightening to the average taxpayer. The agency can impose more than 100 different tax penalties, even doing so in batches. For example, if you file your return late and you owe a balance, expect to be hit with two penalties: one for failure to file on time and another for failure to pay your balance on time. The good news is that there are ways to make an IRS penalty abatement request, especially if you seek advice from a qualified Los Angeles tax lawyer.IRS Penalty Abatement Qualifications According to the IRS penalty handbook, there are several situations in which the agency may consider granting an abatement request. These include: Flawed advice from the IRS: If you receive faulty tax advice from the IRS in writing, you are qualified to an automatic penalty abatement. If you speak with an agent and he or she gives you mistaken tax advice, you may be able to get an abatement. In this case, you’ll need supporting documentation of the conversation. Natural or man-made disaster: If you’ve been the victim of a disaster such as a fire, a flood, or a tornado, the IRS may consider abating any tax-related penalties you’ve incurred. In cases where a federal state of emergency is declared, the IRS typically issues an abatement to all affected citizens in the area. Severe personal circumstances: This might include situations such as a diagnosis of a serious or terminal illness within the family, the death of a loved one, or a violent crime. However, the IRS uses a “reasonable cause” standard to determine if these situations legitimately contributed to the incurring of a penalty. Applying for an IRS Penalty Abatement IRS Form 843 “Claim for Refund and Request for Abatement” can be used to request an abatement. Form 843 must be accompanied by a written explanation that justifies the abatement. To increase the chances of having your request approved, it is always best to cite the specific section in the IRS penalty handbook that applies to your situation.  Should You Request the Abatement on Your Own? The process of making an IRS penalty abatement request may seem simple, but it can pose several pitfalls. The only situation where the IRS is required to grant the abatement automatically is if you have written advice from the agency that is erroneous, which is a very rare occurrence. In most situations, you’ll have to make your case and this often requires assistance from a qualified tax advisor. Seeking the assistance of an experienced Los Angeles tax lawyer can make it much easier to get your abatement request granted.

Can You Stop a Wage Garnishment?

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If you’ve received a wage garnishment notice in the mail, you may be wondering if you have any options to stop the process. The IRS has the power to garnish your wages if you owe a considerable amount of back income taxes. However, there are relief options available that can help you stop the wage garnishment process. Working with a wage garnishment attorney Los Angeles business owners trust may provide you with solutions to this problem.

How Does Wage Garnishment Work?

Wage garnishment is typically the last resort a creditor will use to collect an unpaid debt. The IRS has the legal authority to begin garnishment if you have an outstanding tax bill that you have not attempted to repay. Generally, the agency will only take this step if there has been a considerable amount of time since the debt was incurred and if you have not responded to efforts to clear the account. In most cases, the IRS does not garnish the wages of taxpayers who communicate with agents and make an attempt to pay their debts.

If the garnishment process begins, your employer will receive an IRS notice with instructions to deduct a set amount of your wages and remit them to the agency. The IRS is only required to leave you with enough of your salary to cover your basic necessities, so the bulk of your pay may be garnished.

Ways to Stop Wage Garnishment

The good news is that there are a few ways to stop wage garnishment. If you’ve received a notice that garnishment may soon begin, contact the IRS immediately and try to set up a payment plan you can afford. If you do, the agency will usually halt the garnishment procedure. On the other hand, if your garnishment has already begun, the only way you can stop the process is to either quit your job or file for bankruptcy – both of which may have long-lasting consequences.

What if you disagree with the garnishment completely? You have the choice to contest it on certain grounds. If you’re unsure whether you have a case for exemption, talk with a qualified tax attorney Los Angeles taxpayers recommend. He or she can explain the criteria for each option and how you can meet the qualifications.