Back Taxes Help: How to Set Up a Payment Plan With the IRS

Filing Back Taxes

Back taxes can drive you into significant debt due to penalties and accumulating interests. You may also lose your assets due to liens imposed by the IRS. Setting up a payment plan is the best way to avoid such consequences while organizing your finances.

The IRS allows taxpayers to pay their debt using various installment plans. It also offers tax forgiveness programs to reduce the burden of delinquent taxes.

Here, we discuss ways to set up a payment plan with the IRS. We will also cover some debt relief programs you can consider.

Apply Online

One way to set up a payment plan with the IRS is by applying online. Log in to your e-filing portal using your account ID. After that, complete Form 9465 (installment agreement request) and submit it.

This document will require you to provide details needed during payment plan processing. Such may include the amount you owe, your employer, and your bank information. It also provides a section inquiring about the amount you can afford and the date you want to remit the installments.

Contact the IRS by Phone

Another way to set up an installment plan is by calling the IRS. Use the number 800-829-1040 to apply for debt relief for personal taxes. On the other hand, if you need an installment plan for your business, use 800-829-4933.

The IRS may provide phone numbers on the bill or notice sent by mail. Contact this number if you do not want to fill out the payment plan form. The agent will then request some information and use it to request a payment plan on your behalf.

Apply by Mail

The method used to set up a payment plan by mail can vary. If you request a tax relief program while submitting your returns, attach Form 9465 to the front. However, send the document to the nearest IRS office if you mailed your tax return forms or filed them online.

Contact a Tax Resolution Expert

Working with a tax resolution expert is the best way to set up an installment plan with the IRS. Professionals can review your financial documents and help you file back taxes. They will also consider your income and expenses before recommending a suitable tax relief program.

When setting up a tax forgiveness plan with an expert's help, they will identify all the documents needed for the process. Afterward, they will guide you in filling out various forms or do it for you. The expert will then verify your application before submitting it to the IRS.

IRS Tax Payment Plans to Consider

 The IRS has several IRS fresh start programs to help you deal with back taxes. Such include:

The short-term installment plan is available if you owe a total amount of less than $100,000. When applying for this program, you won't pay a setup fee. Still, you will have to clear the total debt in 180 days or less.

If you owe the IRS less than $50k, you may qualify for a long-term installment plan. The setup fee is $31 when applying online and $107 when using other methods.

An IRS offer in compromise lets you pay less than what you owe. However, you must remit 20% of the debt when sending your application. If the IRS approves your request, you may clear the balance in installments.

An IRS hardship program stops all debt collection measures. Such may include imposing tax liens and freezing bank accounts. Still, the interest and penalties on the owed amount will continue accruing until you can pay.

Reach Out to FinishLine Tax Solutions to Set Up a Payment Plan

Getting tax relief services from expert tax relief companies ensures you opt for a program suitable for your financial capability. At FinishLine Tax Solutions, we provide reliable back taxes help.

Our CPAs and tax attorneys will offer all the guidance and assistance you need. They may also advise ways to manage debt and deal with a tax audit. Call us now for a consultation.

For Texas Tax Payers: Tax Resolution Options If You Owe $10K or More to the IRS

Tax Resolution

Owing the IRS means more penalties and fines if you do not come up with a payment plan. You may also lose control of your assets if the government seizes them or impose a tax lien. If you have a debt of more than $10k, you may wonder how to repay it without straining your finances.

Read on to discover several options you can explore and their eligibility criteria. We will also cover each tax relief option's terms and suitability for various conditions.

Installment Payment Plan

One way to deal with tax debt is by setting up an installment agreement plan. This way, you can pay a specified amount for a given period and avoid accumulating penalties.

Apply for an installment plan online and pay a setup fee of $31. Alternatively, submit your application physically or by mail for a $107 charge.

Once the IRS receives and reviews your application, you can agree on a reasonable repayment plan. A short-term installment program is suitable if your total debt is less than $100k. On the other hand, a long-term agreement is ideal for debt that is not more than $50k.

The eligibility criteria for installment payment plans will depend on specific programs. Still, you must meet some basic requirements such as:

  • You filed all past returns
  • You cannot pay the total amount once
  • You do not have a current bankruptcy filing

Applying for an installment agreement plan will allow you to stop IRS debt collection measures. Further, you can qualify for other forms of credit like mortgages.

An Offer in Compromise (OIC)

If you cannot pay your entire tax liability due to severe financial problems, you may qualify for an offer in compromise. This program allows you to settle the debt for an amount lower than the actual value.

Submit an OIC application if you filed all past returns and submitted the estimated payments. You can also request consideration if you have a valid extension for the current financial year returns.

When the IRS receives your OIC application, they will review it and evaluate various factors. Such include your ability to pay and asset equity. They will also verify your income and revise your expenditure for a given period.

Before the IRS approves an offer in compromise, you will submit an initial payment in a lump sum. This is often 20% of the total amount you owe. If the IRS accepts your offer, they will send a confirmation letter. The document will include guidelines on clearing the balance in five or four installments.

Filing a Currently not Collectible Status

If you cannot cover living expenses and pay a tax debt, you may file a currently not collectible status. This program allows taxpayers to stop the IRS from using debt collection measures. Such may include wage garnishment, seizing assets, or freezing accounts.

When applying for this tax debt relief program, the IRS will require information about your expenditure and income. They will also need you to fill out a Collection Information Statement.

Filing a currently not collectible status is only suitable if you are in a severe financial crisis. This is because the program only delays the IRS from collecting what you owe. Still, the penalties and fines will accumulate until you can pay fully or apply for a different debt relief plan.

How to Identify the Most Suitable Tax Resolution Option

Identifying the best tax resolution plan can be tricky due to several options. Consulting an expert will help you evaluate your choices and eligibility for each program. Further, it ensures you organize your documents and file past returns before applying.

Get Tax Resolution Services in Texas

Seeking professional tax resolution services will help you determine how to deal with debt. Moreover, it protects your finances and allows you to avoid significant penalties.

At FinishLine Tax Solutions, we help Texas taxpayers that owe the IRS set up payment plans. Our professionals will ensure you pick a relief program suitable for the debt amount and your financial situation. Call us now if you owe the IRS $10k or more.

Dealing With Tax Debt: How to Set Things Right With the IRS

Dealing With Tax Debt: How to Set Things Right With the IRS

Remitting all the taxes you owe can be challenging, especially when facing financial problems. If you owe the IRS, it is vital to act promptly to avoid penalties and significant debt. This step can also prevent tax liens and stop the IRS from using harsh debt collection measures like seizing your assets.

Are you wondering about the best ways to deal with tax debt and protect your finances? Read on for tips on setting things right with the IRS and the benefits of working with a professional if you have delinquent taxes.

1. Ask for a Deadline Extension

Sometimes, you may fail to remit taxes due to delays. For example, you might be waiting for an investment to mature and use the funds to pay what you owe.

If you will likely get the funds to clear tax debt soon, it is advisable to ask for a deadline extension. While the IRS will not charge any fees for the process, they will impose a 0.5% monthly penalty on balance.

Requesting a short deadline extension will help you avoid paying fees associated with other tax relief programs. Besides, it gives you more time to get your finances in order and repay the total amount.

2. Apply for Installment Payment

If you cannot pay the taxes you owe in full, you should apply for debt relief. The IRS provides an installment agreement program to help taxpayers pay the amount they owe over an extended period.

Still, you must meet the eligibility criteria, including filing back taxes. Besides, your debt should be less than $50,000 but more than $10,00, including fines and penalties.

When the IRS accepts your application, they will require you to send a given amount each month for an agreed period. For example, if you choose a short-term installment plan, you will clear the debt within 120 days. On the other hand, the IRS will require you to pay delinquent taxes within 72 months with a long-term plan.

Enrolling in an IRS installment agreement program will help you avoid accruing penalties and fines. Further, you get more time to organize your finances and pay the debt without worrying about collection measures.

3. Do Not Ignore the Matter

While you may not be in a financial position to pay taxes, ignoring the issue will only worsen it. File your returns on time to avoid penalties associated with failing to submit your forms. Further, determine the most suitable repayment program and send your application within the deadline provided by the IRS.

If the IRS sends a notice or contacts you regarding tax debt, you should respond promptly. This measure will help you set things right and avoid consequences like:

  • Property seizure
  • Ruined creditworthiness
  • Imprisonment
  • Bank levies
  • Wage garnishment

4. Contact a Tax Resolution Expert

Dealing with tax debt may be confusing without professional help. Set things right with the IRS by consulting a resolution expert near you. These will assess your situation and determine the best way to deal with accrued debt. Besides, they can identify the most suitable tax debt relief program and help you apply.

Another way a tax resolution professional may assist is by filing back taxes and determining the total amount you owe. They will then develop a tax relief plan and meet with IRS officials on your behalf.

If the IRS seized assets and imposed a bank or property lien, you cannot use the funds to finance debt. A tax resolution professional will help you negotiate a lien release. Further, they will ensure you only apply for a debt relief program that will not cause more financial challenges.

Contact FinishLine Tax Solutions to Set Things Right With IRS

Setting things right with the IRS can protect your reputation and lessen financial problems. At FinishLine Tax solutions, we will help you deal with debt using an ideal repayment plan. Our professionals can also determine the debt relief plan you qualify for and present the required forms. Contact us now to lower the effects of unpaid taxes.

Owe the IRS $10K+?: See if you qualify for IRS Tax Forgiveness Program

Owe The IRS 10k See If You Qualify For IRS Tax Forgiveness Program

Your debt may increase rapidly due to penalties and fines when you owe delinquent taxes. The IRS can also take measures like imposing tax liens on your property, requesting a financial audit, or freezing your assets to recover the amount due.

Applying to a tax forgiveness program allows you to repay your debt over a specified duration. Here, we discuss some options you can use to repay your debt if you owe $10,000 or more and their eligibility criteria.

A Short Term Installment Agreement

One option you can use to clear a $10k+ IRS debt is a short-term installment plan. This agreement allows you to pay the debt within 180 days or less. For you to qualify for a short-term installment plan, your debt must be less than $100,000, including penalties, interests, and fines.

A Long-Term Installment Agreement

A long-term installment agreement is suitable if your total debt is less than $50,000. When you qualify for this IRS Fresh start program, you must repay what you owe within 72 months. In most cases, the installments you remit each month will depend on your debt amount and financial capability.

Offer in Compromise

An offer in compromise (OIC) is an IRS tax debt relief program that allows you to repay a lower amount. To qualify for this plan, you must file past returns and deposit the estimated tax requirement for the current year. If you are a business owner, the IRS will also require you to make all federal tax deposits.

Once you qualify for an offer in compromise, the IRS will determine the amount you can pay based on your financial situation. They will then require you to make specific monthly deposits to clear your debt.

Another IRS tax resolution option under the offer in compromise program is lump sum cash. This plan involves making a 20% deposit of the offer amount when sending your OIC application. If the IRS accepts your request, you will clear the remaining balance in five or fewer installments.

Currently Not Collectible (CNC)

Financial hardships can make it tough to clear your tax debt. Luckily, the IRS provides a currently not collectible plan to stop collection measures until your situation changes.

Before you qualify for this plan, you must prove that paying the debt will cause significant financial hardships. The IRS will then conduct period reviews to assess your situation and require you to start installment payment if your status improves.

Penalty Abatement

Penalty abatement is an IRS tax debt relief program involving a penalty reduction or removal. When applying for this plan, you must provide a reasonable cause for failing to meet your tax obligations. Some aspects that will qualify you for a penalty abatement are:

  • A natural disaster that destroyed vital personal documents
  • Severe illness or death of your immediate family
  • Inability to get records needed for tax preparation

How to Apply to the IRS Fresh Start Program

The forms needed when applying to a Fresh Start program will depend on the selected repayment plan. Consult a tax resolution expert to determine the most suitable option depending on your debt and ability to pay. After that, gather the needed documents and submit them alongside your IRS tax debt relief application.

You may need to deposit a certain fee when sending a Fresh Start application. A tax resolution expert will help you determine the charges for each program. They can also recommend applying online or via mail based on your preferences.

Determine If You Qualify for a Tax Forgiveness Program

Navigating IRS tax resolution can be challenging without help. At Finishline Tax Solutions, we have a team of CPAs and attorneys who can help you determine eligibility for the Fresh start program. They will then file your taxes and ensure you apply for an appropriate repayment plan. Call us today to schedule a consultation.

Tax Evasion, Fraud and the Statute of Limitations

Tax Evasion, Fraud and the Statute of Limitations

When calculating or filing back taxes, you may make various mistakes, leading to remitting an amount that is less than what you owe. While the error may be minor or accidental, the IRS may consider it as fraud or a way to evade paying taxes.

Since the difference between tax evasion and fraud is confusing, you should learn about the two to avoid getting in trouble with the IRS. Here, we provide more details about these two aspects to help you differentiate them. We'll also discuss what you should do if you find yourself in such situations to avoid further consequences.

What is Tax Evasion?

Tax evasion refers to using illegal methods to avoid paying your taxes in full. For example, you may fail to submit the relevant tax filing forms then refuse to remit any amount even after an assessment.

Since the IRS can determine the taxes you owe them using documents sent by third parties like your employer, they can easily detect evasion.  This issue will then lead to penalties and criminal charges depending on the gravity of the situation.

What is Tax Fraud?

Tax fraud is the deliberate misinterpretation of information regarding your taxes or failing to include some details on your return forms. An example is when you do not disclose all income sources to reduce the amount due.

Other examples of tax fraud are:

  • Using the wrong social security number
  • Claiming false deduction
  • Claiming personal expenses as business spending
  • Filing under the incorrect status

When you commit tax fraud, you may face criminal charges and get a maximum sentence of three years or a fine of up to $100,000. In some cases, you might have to pay an additional amount equal to 75% of the taxes you avoided.

Statute of Limitations for Tax Evasion and Fraud

A statute of limitations is the maximum period that parties in a dispute have to start legal proceedings from when the issue occurred.  The law gives the IRS three years to audit your returns if they suspect you provided wrong information and evaded taxes.

During this period, the body will review your accounts and financial details to track expenses and income.

If they detect that you failed to disclose about 25% of your income, they will hand over the matter to relevant authorities for prosecution. The statute of limitations for such a tax evasion charge will then extend up to six years.

Since tax fraud is not a specific crime, the statute of limitations often differs depending on the issue at hand. For example, if you fail to pay taxes, the duration will be six years. On the other hand, the law provides a maximum of three years to prosecute those who fail to supply some information or keep the required records.

It is important to note that the statute of limitations for tax evasion and fraud can be longer due to various reasons.

For example, if you commit a similar or related crime, authorities will start counting the duration from the date of your last fraudulent act. Besides, when you leave the US, they will stop counting until you go back or they locate you.

Preventing Tax Evasion and Fraud Charges

Tax evasion and fraud have significant consequences on your finances and reputation. Hence, it is vital to avoid such cases by remitting the correct amount and providing accurate information when filing taxes.

If you cannot pay all your taxes in full, consider working with liability experts to apply for installment agreement programs. These can also help you file your taxes to avoid errors that may appear as fraudulent attempts.

Reach Out to Tax Industry to Deal With Tax Evasion and Fraud Charges

When facing a tax evasion or fraud charge, it is crucial to get the proper representation. At Tax industry, we have qualified attorneys to help you navigate tax laws and disputes. These experts can guide you in proving honest mistakes like calculation and typing errors.

If found innocent, we will assist you in choosing a Tax debt relief program to clear your tax debt. Contact us now to consult our liability experts.

How to Find Out How Much You Owe in Taxes to the IRS

Dealing With Tax Debt: How to Set Things Right With the IRS

When you owe taxes to the IRS, it is essential to clear them to avoid debt accumulation. Taking this precaution also prevents the consequences of unpaid taxes like federal liens and financial audits.

Unfortunately, it may be challenging to calculate your debt since the fines and penalties accumulate with time. Here, we discuss four methods to find out the amount you owe the IRS. We'll also highlight the steps to follow when using each and discuss why it is advisable to work with tax resolution experts when determining your tax debt.

1. Call the IRS

One ideal way to determine the taxes you owe is by contacting the IRS via phone between 7:00 am and 7:00 pm. This method is suitable if you do not know how to use the online tool or prefer to talk to a representative for clarification.

Since the IRS receives many calls, you may have to wait for about thirty minutes to connect with their staff. The best strategy to avoid staying on hold for an extended period is to call as early as possible.

If you want to contact the IRS to determine the amount of personal taxes you owe, you can use 1-800-829-1040.  On the other hand, if you are calling on behalf of a business, use 1-800-829-4933.

Once you get connected with a representative, they will request various details to confirm your identity. Some of the information they may need is your social security number, date of birth, and filing status. They will then use this data to check your profile and inform you how much you owe.

2. Using the IRS Online System

The IRS provides you with a tool to view your tax status and payment history. While the system can help you determine the amount you owe, it is not available all the time. The periods you can log in are Monday-Saturday, 6 am-9 pm, and 10 am-12 am on Sundays.

When using the portal to check your tax balance, you need to confirm your identity. The system will require you to provide various details like:

  • Social security number
  • Date of birth
  • Email address
  • Mobile phone number
  • Filing status
  • A bank account number

Once you log in to your account, you can confirm the balance you owe. Still, it is crucial to note that the system takes about 24 hours to update. Hence, you may not view the most recent penalties and fines.

3. Mailing the IRS

Another way to determine the taxes you owe is by mailing the IRS. Once they receive your request, they will send you a transcript of your account. This document includes one-year taxes, excluding the penalties and fines.

While mailing the IRS may help you determine the taxes owed, it has some drawbacks. For example, the transcript will not provide an accurate tax debt quotation. Besides, you will need to wait for some time to get feedback, which means that the penalties will continue to accumulate.

4. Consulting Tax Relief Professionals

The best way to determine your tax debt is by consulting liability experts. Such include tax attorneys, CPAs, and enrolled agents.

When working with these experts, all you need is to provide them with various identifying details. After that, they will determine the exact amount you owe, including penalties.

The main benefit of working with tax liability experts is that you will have an accurate figure of your debt. Besides, they can guide you in selecting a repayment program that is suitable for your financial status.

Contact Tax Industry to Find Out How Much You Owe

Working with a tax liability professional is the simplest way to determine your total debt. At Tax Industry, we have a team of experts specialized in tax resolution.

With their services, you can avoid lengthy processes of contacting the IRS. Further, they can help you negotiate favorable installment repayment terms and forgiveness programs. Contact us now to consult with a tax liability expert.

Delinquent Taxes and How to Handle Them

Delinquent Taxes and How to Handle Them

The IRS requires each taxpayer to remit the taxes they owe before the provided deadline. If you do not send the whole amount, the debt accumulates with an interest of 1.5% each month up to 25%. Besides, your account becomes delinquent, implying that you now owe the IRS and are subject to debt collection.

If you have delinquent taxes, it is crucial to clear them to avoid getting in trouble with the IRS. This measure also stops the penalties from accumulating, saving you from repaying a hefty amount.

Here, we provide more details about delinquent taxes and the best ways to deal with them. We will also discuss the precautions you can take to avoid owing the IRS in the future.

What Happens When I Have Delinquent Taxes?

Once the deadline for paying taxes passes, the IRS will start the collection process. The first step they will take is sending a notice to your mailing address.

This document states the amount due and the consequences you may face if you do not pay. It also indicates how much the penalties and fines will accumulate until you clear the balance.

It is vital to contact the IRS after receiving the notice to develop a payment plan. If you do not do this, they may take various debt collection actions.

For example, the IRS can freeze all your bank accounts and assets. Besides, they may file a federal tax lien, affecting your ability to get financial credit.

How to Handle Delinquent Taxes

The best way to deal with delinquent taxes is by responding to the notice sent by the IRS in time. If possible, pay the total amount you owe and update your filing documents. In case you cannot repay in full, it is advisable to consult a tax liability professional.

With their help, you can determine the most suitable installment program based on your financial situation and the amount you owe. Further, it will be easier to negotiate with the IRS for an installment payment program.

Repaying Delinquent Taxes

The IRS offers various programs to help you pay delinquent taxes. These include an installment agreement, offer in compromise, and currently not collectible. The installment agreement plan allows you to repay debts that are equal to or less than $50,000. In most cases, the IRS will give you 72 months to clear the total amount.

Offer in compromise is a tax relief program that allows you to pay less than what you owe. Still, you will need to remit an agreed lump sum amount and then pay the balance over a specified duration.

When facing financial hardships, you may not be in a position to pay your tax debt. In such a case, the IRS can declare your account currently not collectible to stop recovery attempts. To qualify for this relief program, you must show that paying your debt will cause severe hardship.

How to Avoid Delinquent Taxes

Delinquent taxes often result from minor calculation errors and failing to provide correct information. Hence, it is essential to double-check all figures when filling your forms. Alternatively, use the IRS online system to avoid miscalculations or hire an expert to file your taxes.

More strategies to prevent a tax debt are:

  • Filing under the correct status
  • Reporting all your income
  • Reviewing all your details before submitting tax forms

Another way to avoid delinquent taxes is by ensuring you remit the total amount owed by the due date. Further, understand all the taxes that apply to your filing status to ensure you pay the correct amount.

Get Professional Help to Deal with Delinquent Taxes

Handing delinquent taxes without the help of an expert can be challenging. At Tax Industry, we provide reliable tax resolution services. Our experienced attorneys and CPAs can help you qualify for a repayment program by providing all the needed documentation.  Reach out to us now to book a consultation appointment and resolve your tax liability.

How to Negotiate a Payment Installment Agreement with the IRS

How to Negotiate a Payment Installment Agreement with the IRS

Owing taxes to the IRS often leads to fines, penalties, and, in some cases, financial audits. It may also affect your credit score and damage your business reputation. Fortunately, the IRS provides various programs to help taxpayers repay what they owe.

One popular and convenient tax relief program with negotiable terms is an installment agreement. Applying and qualifying for this plan is an effective way to avoid debt accumulation and clear the entire amount over some time.

When applying for tax relief, it is crucial to determine how to negotiate with the IRS. Here, we discuss the installment agreement options available and their requirements. We will also explain how to confirm if you qualify and mention the methods you can use to boost the chances of qualifying.

Installment Agreements You Can Negotiate With the IRS

The IRS provides several installment payment agreements for different categories of debt. Each of these has specific aspects that you must meet to qualify. The first and most common one is guaranteed installment, available to those who owe income tax equal to or less than $10,000.

Another option is the streamlined agreement used to clear debts of up to $50,000. If you qualify for this category, you have to repay back taxes in 72 months.

The IRS also provides a partial payment installment agreement for those who cannot afford the minimum repayment amounts for the other packages.

Negotiating Payment Installment Agreements With the IRS

Before contacting the IRS, you should first understand the requirements for each installment agreement plan. This way, you can prepare the needed documents and set up costs for negotiation.

To qualify for guaranteed installment, you must not have any tax debt for the last five years. Besides, you should prove that you cannot pay the entire amount at once.

If the IRS accepts your application, you will have a maximum of three years to clear the debt. Moreover, they will require a setup fee of $31 when you make a direct debit agreement through OPA(Online Payment Agreements). You must also pay an additional $149 for OPA. If you don't use this tool for the application, the fees will increase to $107 and $225, respectively.

When applying for a partial installment agreement, you should be able to prove that you cannot pay the debt in full. Further, you need to clear any past tax or fine and ascertain you are not bankrupt. The IRS will require fees similar to those charged for the guaranteed installment option to set up this plan.

If you are interested in the streamlined installment agreement, you must have a total tax debt, including penalties of less than $50,000. Unlike in other relief programs, the IRS does not require you to provide any verification of your assets during the negotiation process.

You will pay $105 to create a new agreement and $45 to reinstate an existing one when setting up this plan. But, if you use a direct debit agreement, the IRS will charge you $52.

Tips for Negotiating a Payment Installment Agreement

Understanding how to apply and negotiate for tax relief can increase the chances of qualifying. If you have an online payment agreement, use it to set an installment payment plan. Alternatively, apply by mail by printing out form 9465 and filling in all the needed details.

In the application, mention how much you can repay each month. However, ensure that the amount you state will allow you to clear the balance within the provided period. Other items to include are:

  • Payment date
  • Any needed documents
  • A cheque for your set up fee

Since selecting the right payment installment plan and negotiating with the IRS may be challenging, it is advisable to contact a tax liability expert. This will guide you in the entire process and help you pick the most convenient plan for you.

Contact Tax Industry to Negotiate an Installment Agreement

Getting professional help when negotiating for debt relief with the IRS can increase the chances of qualifying. At Tax Industry, we offer reliable tax resolution services. Our experts can help you work out the right installment agreement plan to avoid debt accumulation and penalties. Reach out to us today to schedule a consultation.

6 Common Back Tax Mistakes

6 Common Back Tax Mistakes

Each year, the IRS requires citizens to remit a certain amount of taxes based on their revenue. Unfortunately, when facing financial challenges, you may find it hard to pay what you owe. In some cases, you may also make mistakes when calculating your taxes and remit a lower amount.

If you owe taxes from previous years, it is essential to clear them as soon as possible. Besides, take various precautions to protect yourself and your business from audits and asset freezing.

Are you wondering which mistakes to avoid when owing to the IRS? Read on to discover six common blunders people make with back taxes and how you can prevent them.

1. Failing to Confirm Details on the Notice Letter

Once the IRS notices that you owe them taxes, they will send a notice explaining the reason for the contact and instructions on handling the issue at hand. Most people often fail to confirm the details indicated then end up repaying an amount higher than what they owe.

After receiving notice, confirm if the details indicated are correct. You can do this by comparing it with tax forms from the year in question. This way, you can correct an erroneous tax bill and prevent paying higher fines and penalties.

2. Not Responding to the IRS

Most IRS notices often indicate that you should respond by a certain date. Failing to do this can cause wage garnishment and bank account or asset freezing, worsening your financial situation.

Most IRS notices often indicate that you should respond by a certain date. Failing to do this can cause wage garnishment and bank account or asset freezing, worsening your financial situation.

3. Delaying to Select a Payment Plan

The IRS offers payment plans to help clear back taxes when facing financial problems. Still, most people delay selecting a suitable tax debt relief program, leading to interest accumulation. Waiting too long to start repaying the debt also affects credit scores and financial credibility.

The best way to avoid this issue is by picking a suitable repayment plan quickly. Some of the programs to consider are installment agreement, offer in compromise, and IRS Fresh Start.

4. Paying Taxes with Credit

Another common mistake with back taxes is borrowing money to repay it. While you may want to clear your debt faster, it is crucial to consider your financial situation. Taking out a loan or paying tax bills with a credit card charging a high-interest rate will further affect your finances.

In the long run, you will end up spending a significantly high amount. Avoid further damage to your assets by applying for a suitable IRS repayment program. This way, you have more time to clear the debt with limited straining or financial pressure.

5. Failing to Seek Professional Help

While you may find it less expensive to deal with the IRS alone, it may lead to costly mistakes. Without professional help, you may reduce the chances of qualifying for a repayment program. Moreover, you increase the chances of higher penalties and fines after failing to abide by IRS policies.

Working with a tax resolution expert can help you deal with back taxes more efficiently. These experts will ensure you select a payment plan that is suitable for your financial status.

6. Inadequate Documentation

If you do not keep proper records of your interactions with the IRS, it may be hard to provide evidence for a claim. Besides that, following up on your application may be challenging and time-consuming.

Avoid this back tax mistake by keeping copies of all documents shared by or with the IRS. Further, ensure you note the name of the personnel you converse with for simplified follow-up. If possible, record these conversations as you may need them for future reference.

Contact Tax Industry to Help Deal with Back Taxes

Seeking professional help when handling back taxes can help you avoid the discussed errors. At Tax Industry, we offer specialized tax resolution services to help you deal with IRS debt.

Our experts can help rectify erroneous tax bills and guide you in picking a suitable repayment program. Contact us today for back tax filing and tax relief services.

Five Reasons the IRS Abates Penalties

5 Reasons the IRS Abates Penalties | FinishLine Tax Solutions

Receiving a penalty from the IRS can be devastating, especially when you don’t have the means to repay it on time. A penalty makes it harder to clear your outstanding taxes since it attracts further penalties and interest until you repay the debt fully.

However, it is possible to apply for and get relief/abatement from a tax penalty if you show that you made an effort to comply but could not do this because of circumstances you could not control. Once you get the notice of penalty, check all the details to ensure they are correct and see what you can resolve. You can receive penalty relief for the following tax issues:

  • Failure to pay outstanding taxes on time
  • Failure to file tax returns on time
  • Failure to deposit specific taxes according to requirements
  • Other applicable penalties from the above

After assessing the notice, you (or a tax relief specialists acting on your behalf) can submit a written request seeking penalty abatement. This article discusses the main reasons which IRS accepts for penalty abatement.

Reasonable Cause

If you have reasonable cause for not paying, filing or depositing on time, your application must demonstrate the reasons for the delay/non-payment. Some acceptable reasons include:

  • Travelling abroad/out of the country
  • Being incarcerated
  • Being seriously ill/dealing with the serious illness of a close family member
  • Death of an immediate family member
  • Destruction or theft leading to loss of documents

Depending on your reason above, you should attach proof in the form of insurance claims, doctors’ reports and hospital records, a death certificate, or pictures of floods/hurricanes leading to the destruction of documents.

The IRS evaluates whether the person acted prudently according to the circumstances but could not because of circumstances beyond their control. They will also check whether the taxpayer could have foreseen the event causing non-compliance and what steps they could have taken to ensure compliance.

Statutory Exceptions

Congress may provide statutory exceptions, giving taxpayers relief from tax penalties after major disasters like fires, hurricanes, earthquakes, and floods.

Administrative Relief

Qualified taxpayers can receive an administrative waiver called First Time Abatement (FTA) for penalties for failing to file, pay, or deposit taxes. Eligible taxpayers are those who show all of the following:

  • The taxpayer filed all returns or extensions
  • The taxpayer has paid or made arrangements to pay all outstanding taxes
  • The taxpayer was not required to file returns or was not assessed for penalties for three tax years before the year attracting the penalty

Correcting IRS Errors

The IRS must abate any penalties assessed because of an error in the written advice given by an IRS officer or employee in their official capacity. Where appropriate, the IRS may also consider abatement if the taxpayer shows they relied on an IRS officer’s oral advice.

The taxpayer must prove that they exercised ordinary prudence and business care considering their situation, the advice rendered and the penalty. They will also consider the taxpayer’s filing and payment history and whether they received the correct information in written format.

Relying on a Tax Advisor

A taxpayer may receive limited penalty abatement for relying on a tax advisor – but this cannot be the only reason given. If there is a failure to file, pay, or deposit taxes, the taxpayer is still held liable even if he/she relied on a tax debt relief advisor. Only accuracy-based penalties based on reasonable cause may be abated.

Get Professional Tax Liability Advice from Finishline Tax Solutions

If you have received a notice of tax penalty from the IRS, you may be able to get penalty abatement. There is no guarantee of abatement even when you have reasonable cause, but you can improve your chances by getting Finishline tax professionals to help you apply for an abatement. Even if the abatement is rejected initially, our professionals can help you to file an appeal, during which the IRS agent will assess the totality of your circumstance.

Contact Finishline Tax solutions today to fix your taxes once and for all.