As a taxpayer, you want to avoid a situation where the IRS has to forcibly recover unpaid taxes from you. Rather than ignoring any communications from the IRS, it is always better to work with them to resolve any back-tax issues.
Tax resolution helps you through the process of resolving the problems. However, the IRS will not approve voluntary resolution unless you meet some basic requirements, like filing all missing returns and not accruing any more back taxes.
Tax filing compliance
If you have neglected to file any tax returns that are past due, you will need to file them. Two exceptions to this requirement are personal tax returns that are over six years old or if the IRS has already filed a substitute for return. Filing compliance is essential because any resolution must include all outstanding periods of liability.
For business tax relief is helps to have the assistance of a professional who deals with tax resolution. Fortress Tax Relief has professionals who will evaluate your situation at no charge. They will help you to get back into compliance and protect you from enforcement while you’re becoming eligible for voluntary resolution.
Tax deposit compliance
Any form of resolution only covers back tax liability so all current tax deposits have to be made on time and in full. This includes any tax due, scheduled payroll deposits for a business or self-employment estimated payments.
If you accrue any new liability, your voluntary resolution agreement will default. If you default, you are likely to end up in worse shape than ever because you will be considered a repeat offender. This means the IRS will be less willing to negotiate a new arrangement and may proceed with enforced collection.
What happens after you’re current and compliant?
The next step after you’ve brought your filing up to date and you’re staying compliant with your deposits is for the IRS to determine whether you personally or your business can repay what is owed. The IRS will ask you to complete a financial disclosure representing your income, expenses, liabilities and assets.
Staying compliant with an agreement means negotiating terms you can stick to and it helps to have a professional tax resolution firm to help you decide on the best resolution strategy for your circumstances and ensure that you receive the type of deal where you won’t default.
Tax resolution methods
An installment agreement allows you to pay off your debt in monthly installations over a certain period. By paying in small amounts you can manage, your debt is less overwhelming.
A ‘currently not collectible status’ will stop any collection activity. The IRS will determine whether a taxpayer is able to afford basic living expenses to determine whether this status applies.
If you can’t meet even the lowest installment agreement due to extreme financial hardship, your representative may be able to negotiate an offer in compromise. This allows you to settle your unpaid taxes for less than the full amount you owe. If the IRS agrees to forgive taxes, a condition is that you remain current and compliant for five years. If you don’t remain in good standing, your full liability may be reinstated.
Penalty abatement
It is common for tax resolution services to deal with some or all of the penalties if you have reasonable cause for failing to file or pay taxes. Penalties can come to a large amount, and they may be reduced or removed for a good cause. A first-time penalty abatement may also be considered if you have a prior history of compliance.