Tax professionals have access to a wide array of tax resolution methods that are designed to help individuals and businesses at a local, state, and federal level.
These tax resolution methods are typically available through tax agencies as a way to help taxpayers meet their obligations no matter what their financial situation is.
Read on to find out what the most important tax resolution methods are and which ones are most beneficial to you.
- Currently not Collectible
This is a status that makes a taxpayer exempt from all collection activity by the IRS.
However, Currently Not Collectible is only available as an option for taxpayers who can prove that their monthly costs are above their monthly income.
To make their final decision, the IRS must consider national standards to determine the taxpayer’s ability to manage basic living expenses. It’s one of the best tax resolution services available.
- Installment Agreement
An installment agreement enables the taxpayer to pay off the debt that they owe to the IRS in monthly installments instead of in one fell swoop.
These installments can last for up to 6 years and it makes for a situation that’s much easier to manage for the taxpayer who might be having a hard time financially.
By the time you get to this point, the IRS will have probably imposed a lien on you and once you’ve paid off all of the debt in installments, you’ll be able to free yourself from this lien.
- Penalty Abatement
Penalty abatement is allowed by most state agencies as well as the IRS, granted that you ask for it.
This is to avoid paying exorbitant amounts in penalties. As a result, these agencies are often forced to either forgive or reduce these penalties depending on the individual’s situation.
- Innocent Spouse
Sometimes, the IRS makes the mistake of requiring additional tax from an individual because they filed a joint return with their spouse.
Innocent spouse relief helps to resolve this issue, but it’s only available as an option to those who qualify and you might need the help of a tax attorney to determine if you do indeed qualify.
- File Returns
One of the best ways to resolve tax debt is to file returns that are already past due. It’s not uncommon for the IRS to charge interest and penalties for missing returns.
That’s why you’ll need a penalty abatement in order to avoid paying these outstanding amounts. You might even be eligible for a refund based on the returns that you’ve missed.
But, you’re going to have to file your past due returns in order to find out if you’re eligible for this and that involves getting your financial documents organized and in order.
- Offer in Compromise
Thanks to an OIC you can pay less than what you owe based on your financial situation. The IRS will basically compare your current financial status to the tax that you owe.
The OIC program is extremely difficult to get into, and you must truly qualify. However, if accepted then you must submit to a regular financial review so that the IRS can assess your ability to afford making your tax payments in the future.
- Statute of Limitations
The IRS statute of limitations can go up to 10 years after the agency has assessed tax liability.
This isn’t the most effective method though, because it can still lead to a bank levy or a tax lien by the IRS.
However, it might be a useful strategy for someone who doesn’t own any property, wages, or assets for the IRS to pursue in that 10-year span.