IRS Hardship Program: Eligibility and Program Details

As the tax filing date for 2023 approaches, you may be experiencing the burden of tax debts owed to the IRS, making it difficult to catch up and stay current with payments. If this is the case, it is important to know that you may be eligible for the IRS Hardship Program, which can offer some relief and take the weight off your shoulders. This program allows taxpayers experiencing financial hardship to pay off their tax debt through an installment agreement or an Offer in Compromise. To determine eligibility, the IRS will review the taxpayer's income, expenses, assets, and liabilities on a case-by-case basis. If you are struggling to pay off back taxes, the IRS Hardship Program may provide the assistance needed to get back on track with your payments.

Finishline Tax Solutions can help you navigate the process of applying for the IRS Hardship Program and getting the tax relief you need.

The IRS Hardship Program is a program that allows taxpayers to pay off their tax debts through an installment agreement or an Offer in Compromise (OIC) if they are experiencing financial hardship.

Taxpayers who are experiencing financial hardship and are unable to pay their tax debt in full may be eligible for the program. Eligibility is determined on a case-by-case basis, taking into consideration the taxpayer's income, expenses, assets, and liabilities.

An installment agreement is a payment plan that allows taxpayers to pay off their tax debt over time, rather than in one lump sum. The payment plan may last up to 72 months, and the taxpayer must make monthly payments.

An Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS that settles the tax debt for less than the full amount owed. To qualify for an OIC, the taxpayer must demonstrate that they are unable to pay the full amount and that accepting the OIC is in the best interest of both the taxpayer and the government.

To apply for the IRS Hardship Program, taxpayers must complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-F, Collection Information Statement. These forms require detailed financial information about the taxpayer's income, expenses, assets, and liabilities. The forms can be submitted online or by mail.

If a taxpayer does not qualify for the IRS Hardship Program, they may still be able to arrange a payment plan with the IRS or explore other options, such as an Offer in Compromise or bankruptcy.

Yes, interest and penalties will continue to accrue while on the IRS Hardship Program. However, the IRS may waive or reduce penalties in some cases.

If a taxpayer defaults on their installment agreement while on the IRS Hardship Program, the IRS may take collection actions, such as filing a Notice of Federal Tax Lien or issuing a levy on the taxpayer's wages or bank account.

The IRS has 10 years from the date the tax was assessed to collect the tax debt. However, the collection period may be extended in certain cases, such as if the taxpayer enters into an installment agreement or an Offer in Compromise.

Yes, it is possible to qualify for the IRS hardship program more than once, but it will depend on your specific situation. If you have previously entered into an installment agreement or Offer in Compromise and are experiencing financial hardship again, you may be able to apply for the IRS hardship program again. However, the IRS will consider factors such as your payment history and current financial situation before approving your application. It's important to note that you must be current on all your tax filings and payments to be eligible for the program.

Tax Relief Services During Coronavirus

Getting tax relief services during a global pandemic can help. Fortunately, there's help with FinishLine Tax Solutions. If you owe back taxes and can't afford to pay them back, find a tax relief services professional. Dealing with back taxes can be hard, but it's especially hard during a global pandemic. Fortunately, the federal government continues to provide tax relief options for taxpayers seeking relief during the coronavirus. Even outside of a global pandemic, there are tax relief services available to taxpayers who owe more than they can pay. We'll share the various tax relief options that are available to you. Additionally, we'll touch on tax relief options that are available as a result of the COVID-19 pandemic.

What are tax relief services?

First, we want to tell you exactly what tax relief services are. If you owe more in taxes than you can pay, you may be eligible for tax relief services. But, the program you qualify for will depend on how much you owe. In other words, those owning more than $50,000 will be eligible for a different program than those owning $10,000. Fortunately, there are several tax relief programs available. Additionally, in light of the current COVID-19 pandemic, the federal government has offered even more tax relief programs.

How do tax relief services work?

Tax relief services are available to taxpayers when they owe more than they can pay. The IRS has several tax relief services that can help taxpayers in need. Enrolling in a tax relief plan enables you to break down your tax debt into payments. Similarly, there are relief programs that can reduce the amount of tax you have to pay to the government. Tax relief services will not clear out your entire tax bill. But it can save you a lot of money in the long run. Additionally, it can make paying what you owe the government a lot more manageable.

What is tax relief?

Tax relief is when you set up a payment plan or negotiate a settlement with the IRS. However, keep in mind that tax relief isn't about totally erasing your tax obligation. Instead, it makes it easier for you to pay back your tax debt. In some cases, you may be eligible for special tax relief options. For instance, if you've been involved in a natural disaster, you may be eligible for special tax relief programs. Additionally, there are special tax relief programs available in light of COVID-19, which we will discuss later.

What are my tax relief services options?

Depending on your tax situation, there are multiple options for tax relief services. Here are a few programs to consider. We will discuss these more in-depth further below.

  • Installment Agreement: This program allows you to pay back your debt in installments. In other words, you can pay down your debt in smaller payments. There are long-term and short-term Installment Agreement programs. Available.
  • Offer in Compromise: If your debt is more than you can handle, you may be eligible for an Offer in Compromise. Your eligibility for an Offer in Compromise will depend on a few things. In other words, the IRS will first consider your ability to pay, income, expenses, and assets first.
  • Penalty Abatement: When you owe tax debt, penalties can also add up. Fortunately, there are tax relief services that may help. In this case, the IRS forgives the penalties on your tax bill.

What is an Installment Agreement?

Another way to think of an Installment Agreement is a payment plan. In other words, you arrange with the IRS to pay back your tax debt in monthly installments. There are long-term payment plans and there are short-term payment plans.

  • A short-term payment plan is for those who owe a maximum of $100,000. This maximum amount includes taxes, penalties, and interest.
  • Long-term payment plans are for those who owe a maximum of $50,000. This maximum amount includes taxes, penalties, and interest.

An Installment Agreement can be a helpful tax relief plan for taxpayers. It enables you to negotiate an affordable monthly payment plan with the IRS. However, negotiating your monthly payment is a very important step. In other words, you'll want to work with a tax relief specialist on negotiating. A tax relief specialist can help you ensure you get an affordable monthly payment amount.

Offer in Compromise

An Offer in Compromise program can be a beneficial tax relief program. With an Offer in Compromise, you can often settle your tax debt for much less. In other words, the IRS will reduce some of your overall tax debt. But, it's important to note that not everyone will get approved for an Offer in Compromise. The IRS will require financial proof that you are unable to pay back your tax debt in full. In this case, a tax relief professional can help you negotiate your total settlement amount. For example, you don't want to come up with a number that's too low. In other words, you can run the risk of having the IRS deny your Offer in Compromise agreement amount if it's too low. Therefore, working with a tax relief professional can help you get the best deal.

Penalty Abatement

Another tax relief service is penalty abatement. In this case, you can get the IRS to release the penalties you have on your tax debt. However, it's important to note that a penalty abatement will not totally reduce your tax debt. In other words, you will still owe taxes with a penalty abatement. However, it's a tax relief program that can greatly reduce your overall tax debt.

Tax Relief for COVID-19 Pandemic

In light of the current COVID-19 pandemic, the federal government has announced several tax relief services. First, taxpayers now have until July 15 to file and pay back their taxes. This date was extended from the original tax deadline of April 15. However, it's not advisable to delay paying or filing taxes. Work with a tax relief specialist to pay back any debt you cannot afford to pay at once. In addition, the federal government has offered a federal stimulus check available to the majority of taxpayers. The stimulus check amount starts at $1,200 and decreases based on your total earnings. Furthermore, the IRS is making it possible to borrow up to $100,000 from your IRA. In addition, the federal government will allow you three years to pay this back. Furthermore, you get three years to pay off tax debt without consequences.

Need Tax Relief Services?

During these uncertain times, tax debt relief services can be of the utmost importance. If you have tax debt that you can't pay back, don't hesitate to call us. We can help you with tax relief options and more. Call FinishLine Tax Solutions for a free consultation at 855-950-2720.

IRS Penalty Abatement Letter Writing Instructions

If you owe tax debt and fail to pay it in time, the IRS can penalize you. Every year, millions of penalties are assessed. The IRS uses penalties for encouraging taxpayers to comply with the rules. Owing money to the IRS is overwhelming and intimidating. This penalty can further increase your tax debt. However, before the IRS starts taking collection actions, you can request for Penalty Abatement.

When you owe money to the IRS, you can’t just put it off forever. You need to resolve all issues before the IRS starts taking extreme measures to collect the debt. These extreme measures might include garnishing your wages, seizing your assets, levying bank accounts, and others. But, would Penalty Abatement get you some relief from tax debt? Yes, because penalties and interest make up a large portion of your debt. 

So, if you have a reasonable cause, you can request the IRS for penalty abatement. Here are some of the reasons acceptable by the IRS for penalty abatement:

Reasons acceptable by the IRS for penalty abatement:

  • A medical emergency
  • Death in the family
  • An error made by an employee of the IRS
  • Records destroyed because of a natural disaster or a catastrophe. E.g. Flood, etc.
  • Mailed returns and payment timely but to the wrong address

Even if you had one of the above-mentioned reasons, you must meet the following three basic criteria to qualify for the penalty abatement:

Criteria to qualify for penalty abatement

  • You must not have had any penalty of more than $100 for the last three years.
  • All your returns and extensions are filed properly. If you still have paperwork to do, you won’t be eligible. So, before you write your penalty abatement letter, make sure that you have already updated all the filing with the IRS.
  • You must have made arrangements for any tax debt that you owe. Even if you are not able to pay the debt in full, you must have at least set up a payment plan with the IRS.

For the first time penalty abatement, you can apply in writing, online, or by calling the IRS. If you are eligible, the IRS will remove the penalties. However, if the IRS refuses, the penalties will continue to grow. Also, the IRS removes penalties that were incurred in the first year. On several penalties, there is a limit on how much can be removed. 

Writing a Penalty Abatement Letter

If the IRS has imposed a penalty on your back taxes, you can write a letter to the IRS requesting Penalty Abatement. However, if you want to improve the chances of getting your request accepted, you must take the help of tax professionals. 

For requesting specific penalty abatement that is for more than a year, you have to prove to the IRS that you had a reasonable cause like:

  • The death of a family member
  • Held hostage in some other country
  • Unavoidable absence like being in jail or rehab
  • Tax records were destroyed because of floods, fires, or other casualties
  • Could not make the payment because of a civil disturbance like a riot or mail strike
  • Couldn’t determine the right amount of tax for reasons that were not in your control
  • Received wrong advice from a tax expert whom you thought to be trustworthy and competent.

With the letter, you have to send the copies of documents supporting your reason.

Three things to do before drafting your Abatement Letter

  1. Get all the historical tax records from the IRS as well as your personal papers. It will help you get the same view as the IRS agent.
  2. Next, you need to start reviewing the records so that you have an understanding of what happened that stopped you from paying your tax debt on time. This way, you will be able to start working on the penalty abatement letter.
  3. Once you have an understanding of what occurred and what the IRS knows about you, you need to start conducting research. This is just to ensure you have enough grounds for warranting penalty relief.

Organizing a Penalty Abatement Letter

While writing your penalty abatement letter, you have to design it in a way that the IRS agent is able to easily follow what happened, why you were penalized, and what steps you took for rectifying or mitigating the problems. Every fact that you present might need different styles of organization. Here, is a general section format of a penalty abatement letter:

  1. Introduction - The letter should start with a brief statement where you introduce yourself and tell what exactly you are asking for. In this case, you are asking for relief from penalties and any interest accruing because of those penalties.
  2. Facts - This section is the most important part of your penalty abatement letter. You should present the facts in a way that the reader, the IRS agent who will be making the decision, feels sympathetic to your plight.
  3. Issues - If your fact section is becoming too complicated, you can add a separate section for clarifying the exact issue.
  4. Law and Analysis - This section is a follow-up to the facts sections. In this, you will be mentioning the laws that are in conjunction with the facts. They must support your proposition of warranting penalty relief.
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  6. Conclusion - In the end, reiterate what you are looking for. Request the IRS to give you relief from penalties and the interest accrued from those penalties.

It is not necessary to include the payment along with the penalty abatement letter. But, if you can pay the debt, it will help your case a lot. If you cannot afford to pay, you can apply for an IRS payment plan that allows you to make monthly payments to pay off your tax debt. 

Conclusion

Penalty abatement has more open-ended requirements. It is also easier to get than any other form of debt settlement. This is because, instead of a computer, an actual person will be attending your case. The only important issue here is whether your situation was beyond your control or not. If you want to improve your chances of getting the penalty abatement, take help from tax relief experts who specialize in penalty abatement.

IRS Payment Plans Pros and Cons

IRS PAYMENT PLANS PROS AND CONS

Failing to pay back taxes can result in IRS audits, interests and penalties on back taxes, IRS wage garnishments and many more tax debt issues. But, the good news is that you have different options for dealing with your back taxes and tax debt, one of which is the IRS Payment plans. If you are unable to pay the owed tax amount, you have the option to apply for the IRS payment plan. A reputable tax relief company can help you setup IRS payment plans.


IRS payment plan is an agreement between the IRS and the taxpayers that allows you to pay the federal tax bill in monthly payments over a certain period of time. But, is it the right option for you? To determine this, you need to know about the Pros and Cons of IRS payment plans:


Pros of Signing Up for IRS Payment Plans


If you are going through financial hardships, you need to be honest with the IRS. You don’t have to panic. Pay what you can, file the returns by the deadline, and contact the federal agency for discussing the IRS payment plan. Here are the benefits of this route:


1. You might get an extension


If you don’t owe a lot of amounts and are sure that you can pay the taxes soon, the IRS can offer you a short-term extension. With this extension, you won’t have to worry about paying your taxes by the April deadline. Also, you will be able to avoid interest and some penalties. This way, you won’t have to take out a loan or put your taxes on a credit card. You will have enough time for paying back the owed amount.


2. The penalties might be waived


In some cases, the IRS might agree to waive the failure-to-pay penalties. However, the interest charges will remain as it is. You can still save a lot of money on the tax bill by getting rid of the penalties.


3. You will know exactly what you owe while setting up an IRS payment plan


When you are in an IRS payment plan, the IRS will tell you exactly what you owe and when it is due. If you sign up for direct debit, making the payments will be very easy. What you need to do is make the right budget. This way paying back the debt doesn’t put you in a financial crisis.


4. You might get an Offer in Compromise


If you are not able to pay your taxes because you have a low income, the IRS might offer you an offer in compromise to forgive your debt. This is a tax resolution option that allows you to pay less than what you owe. However, this option is available only to the people who are facing genuine financial hardship. When you apply for an offer in compromise, the IRS checks your expenses, income, ability to pay, assets, etc. You have to make a reasonable offer which is equal to or more than what the IRS expects to get back over a certain period of time. Only then, the IRS will agree to it.


However, before you apply for the OIC, you have to try an IRS payment plan first. To check if you are eligible, you can check the Offer in Compromise Pre-qualifier tool provided by the IRS. You will have to submit a non-refundable fee of $186. After that, you will have the option to either make periodic payments or make a lump sum payment. Taxpayers who meet the guidelines of the low-income certification don’t have to pay the initial payment of the application fee. While the IRS is evaluating the offer, you don’t have to pay the monthly payments anymore.



Cons of IRS Payment Plans


There are several cons of the IRS payment plans as well.


1. Back taxes Interest and penalties 


Even with the IRS payment plan, the additional penalties and interest will be applied for each month until you pay off the complete debt. This means that ultimately, you will end up paying more than the actual owed amount by the time you finish making your monthly payments.


2. The IRS might still file a tax lien against you


If the IRS has a tax lien against you and you are not able to pay back your taxes, it gives them the right of seizing your property. The IRS will serve you a notice of lien. The notice will state that if you don't make immediate payments, the IRS will seize your assets. If even after receiving the notice of lien, you are not able to pay, then your assets like your house, vehicles, etc. can be sold for satisfying the debt.

3. Paying the sign-up fees


Until and unless you can pay your tax debt in less than 120 days, there is a fee associated with signing up for the IRS payment plan. The fee amount varies for taxpayers depending on their income. For low-income applicants, it costs $43 while for regular applicants of the IRS payment plan might have to pay as much as $225.


As you can see, the worst con of having an IRS payment plan is the interest and penalties that are accrued to the owed amount. So, the most significant disadvantage of having an IRS payment plan is that they are expensive. Also, if you miss a payment, it can damage your credit. Lastly, to apply for an IRS payment plan, you must have filed all the past year’s returns.


Clearly, the pros of the IRS payment plan far outweigh the cons. It makes paying off the debt more manageable. You won’t have to pay off the whole tax debt at once and avoid any collection actions from the IRS. Whether you are an individual taxpayer or a business owner who can’t pay off their debt, signing up for an IRS payment plan is the best option for you.


So, if you are one of the millions of Americans who can’t pay their tax bill, don’t panic. And definitely don’t hide. Be upfront about your situation instead of ignoring it and hoping it goes away. The IRS payment plan is the best option for people who are behind on the current year’s taxes and can't pay it within the deadline. However, you shouldn’t rely completely on this. The best pathway for you is to hire a tax resolution service. They have tax experts who can determine the best strategy for you.


Frequently Asked Questions About IRS PAYMENTS


Once your Installment Agreement Request is accepted, the IRS will set up a payment plan, which can last up to six years. 

If you have a financial hardship and have fallen behind on your taxes, you can request full payment, a short payment plan (120 days or less), or a long term payment plan (more than 120 days). 

Yes. The IRS can refuse a payment plan if a taxpayer provides false/inaccurate information, offers a bad deal, underreports income, or makes mathematical mistakes. 

You may qualify for a long-term payment plan if you owe $50,000 or less in back taxes (including penalties and interest) and have been filing returns regularly. A taxpayer who owes less than $100,000 in combined tax, penalties, and interest may qualify for a short-term payment plan. 

If you enter into an installment agreement with the IRS and cannot pay in the future tax year, you can add the new balance to your existing agreement. 

There is no limit to the number of times you can enter into a payment plan with the IRS. 


IRS Fresh Start Program

People are usually fearful of the IRS. A letter from the IRS is enough to fill them with fear, especially if they have an unpaid tax bill. They might end up in debt to the IRS and think that there is no way out of this. Thankfully, the IRS Fresh Start Program to help the taxpayers with tax resolution. Even if you have owed a debt for years, this program can help you get the tax relief.

The IRS Fresh Start Program is a tax resolution option from the IRS. The program makes it easy for taxpayers to pay their tax debt without having a levy on their assets. This is not a new initiative. It has been in place for several years. The program started in 2008 to help the taxpayers during the recession. In 2012, thanks to the changes introduced by the IRS, it became easier for the taxpayers with financial hardship to get their tax debt reduced.

Recently, the program was expanded to help people who are struggling with their tax debt. The IRS had made changes to their tax code for alleviating tax bills and helping out the taxpayers. The aim of this program is to provide tax resolution options to taxpayers. It allows them to pay back their debt without any excess fees of liens. The IRS might even forgive a certain amount of past debts or eliminate penalties for late fees.

Eligibility criteria for the IRS Fresh Start Program

  • Owe $50,000 or less money in tax debt.
  • Self-employed individuals who had a 25% or more drop in their gross income.
  • Married couples who are filing joint-returns must have income less than $200,000 in a year. In this case, the amount earned by an individual taxpayer should be less than $100,000. 

Repayment options offered through the IRS Fresh Start Program

Extended Installment Agreement

This tax resolution option reduces the fees and penalties imposed on the taxpayers. However, this need not be confused with the regular payment option.

The regular payment option is for taxpayers who are unable to pay their tax debt before the deadline, but the extended installment agreement is for taxpayers who are unable to pay penalties and other fees associated with debt before the deadline. 

There are two forms of installment plans. 

The first one is the short-term plan that is available without any fee for late payment. Also, there won’t be any fee for setting up this installment plan. These are for a period of 120 days and have penalties associated until the complete debt is paid off.

The second form is the long-term installment plan that will include some setup fees. It will depend on whether the payment is made by the taxpayers or if it is deducted automatically for the bank account.

The Fresh Start Program offers different tax resolution payment arrangements like stair-step, partial-pay, debt installment, or streamlined installment agreement. Now even though there are arrangements available, all taxpayers have to negotiate directly with the IRS for determining whether they are eligible for this or not. Depending on this, they might have to pay a certain amount over time through monthly payments. Regardless of the plan approved by the IRS, you have to ensure that every installment is paid in full and on time. Failure to do so will nullify the arrangement. 

It is important to know that these payments are accompanied by a fee. In cases of debt of $50,000 or more, it requires taxpayers to submit Form 9465 and Form 433-F via mail or in-person.

Offer in Compromise

If you are unable to pay off your debt in full, there is an Offer in Compromise option offered by the IRS. For this, you will need the help of tax experts.  Getting the IRS to agree to let you pay a reduced amount is a tricky process and requires the help of tax experts. There are several tax resolution services that can help you negotiate with the IRS.

To get your request for an Offer in Compromise accepted, you’ll have to prove to the IRS that paying their taxes will result in financial hardship. 

To determine whether you are qualified for this tax resolution option, the IRS will be checking your current and future income and expenses. Also, the IRS will first determine if the reduced amount from the offer in compromise is more or at least equal to the amount they expect to receive from the taxpayer through the collection actions. 

Here are the three criteria that can determine your eligibility:

  1. Credibility

If the IRS thinks that they won’t be able to get any money from you through collection actions, they might accept your ‘offer in compromise’ request. If they think that you have assets that might get them a higher amount of money, they won’t accept your OIC. Please note that a levy on a lien can impact your credit score, affecting your ability to buy any assets or apply for a loan.

2. Liability and accuracy

This includes proving that you don’t owe the money the IRS is claiming. If you think that there was an error during tax preparation, IRS might agree to let go of the initial owed amount and take your offer. For this, you need to take the help of tax resolution services.

3. Effective tax administration

When the IRS believes that paying the complete amount will lead to severe financial hardship for you, they might accept your offer in compromise.

IRS very rarely accepts the Offer in Compromise. To make sure that you even have a slight chance at this tax resolution option, you need the help of tax experts. Once your offer is accepted, all the payments should be made in time. Failure to do so will nullify your OIC, and you will have to pay the complete amount.

Tax resolution is a way to make the process of paying taxes easier for people undergoing hardships. However, if you earn well and have assets, the IRS won’t be accepting your request. If you are going through a financial hardship, you need the help of tax resolution services to help you get back on your feet.

Here Is How You Can Become A Tax Attorney

Many people envisage the work of a tax attorney to be always stressful, involving courtroom litigation. However, this doesn’t mean that tax attorneys don’t have a fruitful career. The best part about being a tax attorney is that they will never become obsolete. Taxes will always exist, and so will the tax lawyers. Making a career as a tax lawyer will help provide stability and longevity.

Education of a tax attorney

If you want to be a tax attorney, there is an educational path specifically mapped out for you. The one thing that you need to know before starting a career in this field is that it is very different from family law and won’t involve a lot of personal interaction. You will be interacting with ‘Numbers.’ This is why students who want to be future tax attorneys need to have a strong academic background. Here are some education requirements for a tax attorney:

  • A Bachelor’s Degree
  • Law School admission through LSAT
  • Juris Doctor Law Degree
  • MPRE
  • Passing the Bar examination

The first step towards becoming a tax attorney is earning a bachelor’s degree. But there is no specific undergraduate degree that you need. However, it is recommended that you major in either accounting or business to help you prepare for law school better.

Once you have graduated, you would have to take the Law School Admission Test or the LSAT. This score is compulsory for admission to any law school and without which no school will even consider your application. If you want to get into a top tier law school, it is important that your application is strong. Also, there are only a limited number of seats, and having a good LSAT score will strengthen your position. You can take LSAT more than once. However, you will have to report test scores for a period of 5 years. So, it is important that you perform well on your first attempt.

Now that you are in law school, you need to focus on the extreme workload you will be facing. Every law degree is 3 years long, and the specific requirements and courses will depend on the school you are in. In law school, you will learn everything you need to know about the field.

After graduating, the next step is passing the Multistate Professional Responsibility Examination or the MPRE. In the exam, you will be asked 60 questions about ethics. Once you get a passing score in this, you will be eligible for taking the State Bar Examination.

Next comes the most difficult step in becoming a tax attorney – the Bar Exam. Students usually spend months preparing for it. It is a very comprehensive exam in which students are tested in all areas of the law. However, the bar exam is not the same for every state. To be a Los Angeles Tax Attorney, you might have to check up the Bar Exam in the California state. It might include either one of the following:

  • MBE (Multistate Bar Examination)
  • MEE (Multistate Essay Examination)
  • MPT (Multistate Performance Test)
  • UBE (Uniform Bar Examination)

The Bar examination is the final step in the journey of a tax attorney’s education. 

Skills and job description of a tax attorney

It is clear that a tax attorney is responsible for helping people and businesses with their taxes. Now, this could include representing them during disputes with the IRS or any other government agency or finding a legal way to reduce any tax exposure. Also, their job involves a number of tasks like doing research on tax law, negotiating with other lawyers, conducting transactions, etc. If they are representing their clients in a court, they will be preparing for a trial. If you're looking for a Probate Lawyer west Jordan Utah, you've come to the right spot.

A tax attorney can enter into a number of specialty fields including the following:

  • Corporate tax
  • Mergers and acquisitions
  • Litigation
  • Audits
  • Appeals
  • Estate planning
  • Real estate tax

Regardless of the area you choose, there are some required qualities that a tax attorney should possess to be successful in their field.

  • Attention to detail
  • Knowledge of IRS protocol
  • Knowledge of tax law
  • Strong analytical reasoning
  • A strong foundation of legal codes
  • Updated on the government regulations

One of the main duties of a tax attorney, or for that matter any attorney, is ensuring full compliance for clients. This means that they have to strictly adhere to government deadlines. Another responsibility of a tax lawyer is working on designing a tax planning project. For projects like these, creativity is needed, and usually, clients hand over the responsibility to their attorneys who are tax experts. Also, there are some other complicated job assignments that a tax attorney must perform, including providing support to the clients through domestic market calculations. Tax audits are another important and common responsibility of a tax attorney.

It is the job of a tax attorney to help individual clients and business owners understand their tax situation. The reason why these tax experts are so much in demand is that the tax is an important and essential part of every business transaction. Even NGOs hire tax attorneys for documenting their transactions and staying updated with all the tax processes involved. Also, tax attorneys are the client’s line of defense against state tax agencies and the IRS.

Salary of a tax attorney

Attorneys are usually paid through billable hours. The same goes for tax attorneys. They will have to log every single minute of work done for the clients. The salary of a tax attorney depends on their experience. For example, the entry-level tax attorneys earn an average of $77,000 to $105,000, which is less than the average income. They spend most of their time conducting research. With experience, the value of a tax attorney also increases. Also, the salary will depend on the city you live in. This means that a Los Angeles tax attorney might earn more than a tax attorney in smaller cities. According to Glassdoor, a Los Angeles Tax attorney earns on an average of $141,000 per year while a Houston Tax attorney earns about $133,000 per year. 

Every business and every professional has to deal with taxes. This means that no matter which sector you work in or which state you live in, you will need a tax attorney. These tax experts can be hired by a law firm or an accounting firm. Tax attorneys are very flexible. They can work in a law firm, in a large corporation, or have their own business. It is a stable field for any lawyer. And if you want to work as a less-stressed lawyer, tax law is the one for you.

IRS audits Most common questions

No matter how honest and diligent you are, an IRS audit can send shivers down your spine. The reason for this fear is that most people believe that IRS audits will include a team of agents knocking at their front door and confiscating everything in their house. While this is also a possible situation in extreme cases, mostly, the audit will include agents checking your financial statements and ensuring that you haven’t been reporting incorrect information on your tax forms. So, unless you are over-reporting deductible expenses or reporting less income, you don’t need to worry about IRS audits.

Here are some of the most common questions asked about the IRS audits

I always make sure that my tax forms are filed without any errors? Why would the IRS still audit me?

The process of selecting a taxpayer for an IRS audit does not mean you have made an error. Many returns are randomly selected through an automated process when the 1099s and W-2s don’t match. In some cases, they are a result of an amending oversight. However, there are some red flags for the IRS. For example, large business expenses or charitable donations can raise eyebrows. 

Is the IRS audit affected by the amount I earn?

Yes, but only if you are earning is in millions. For example, if you earn more than $200,000 annually, there is a 1% probability that you will face an IRS audit. However, this probability increases when you earn more than $1 million.

Will I be notified of an IRS audit beforehand?

Yes, the IRS will send you a notice of the audit via mail.

What are the different types of IRS audits?

There are three types of IRS audits. 

The first one is the correspondence audit. In this audit, you will have to back up the claims made on the returns by sending additional documents. This can include mileage logs for travel, canceled checks for charities, and receipts. 

The second type of IRS audits is the in-person audit for which you will be summoned to the office of the federal agency. 

Lastly, there is a field audit. This form of the audit will be your worst nightmare. IRS agents will be visiting you at home or office and check all the tax-related documents. 

What happens when I ignore the notice of the audit?

Ignoring the notice of the IRS audit won’t make the IRS go away. Instead, the IRS will begin to think that you are hiding something. It can force the IRS to investigate immediately and impose fines or penalties. They can even get a court order to force you to cooperate. So, after you have received the notice, it is best that you respond within 30 days. 

Can the IRS only audit my last filed tax return?

No, the IRS has 3 years for pursuing an audit. So, just because the year has passed, it doesn’t mean that you are off the hook. It is possible that you receive a notice for the 2018 returns in 2020. This is why it is recommended that you keep all the tax-related documents for 3 years.

What documents do I need to provide during the IRS audit?

You only need to submit the documents requested by the IRS. If you bring anything unnecessary, it might broaden the audit’s scope. If the IRS has asked for some unaccounted paperwork, try tracing your steps. In cases of charitable donations and medical expenses, you can easily get duplicate copies.

Do I need to have tax experts present during the IRS audit?

Having tax attorneys is not mandatory during an audit. However, having a tax attorney by your side can make the whole process a lot easier for you. Hire an attorney through tax resolution services, and he will do the rest. 

After you’ve hired tax experts, you should let them do the talking. If you volunteer extra information, it can open up another investigation and compromise your advantage. 

What will be the duration of IRS audits?

The duration of IRS audits can vary. However, tax experts recommend that you set aside a complete day to deal with the audit. 

The duration of the audit will depend on a number of factors, like how organized your financial records are or how complex the issues are. In case the IRS wants more time or wants to have a follow-up meeting, you will be notified. If you want an audio recording of the proceedings, you have to give a 10-day notice to the IRS.

What penalties might I be liable to pay after the audit?

If the IRS decided that you have underpaid taxes, you might face either one of the following penalties:

  • If the IRS finds an underpayment because of undervaluation or overvaluation of the property, understating tax liability, neglecting, or disregarding rules and regulations of the IRS, you will be facing a 20% penalty.
  • For cases of serious underpayments that are related to fraud, you might face a penalty of 75%. If this is the case, it will be your responsibility to prove otherwise.
  • For all the violations made because of negligence, fraud, and not filing returns on time or valuing the property incorrectly, you might face interest payments. It will start from the due date of the return.
  • In severe cases of tax evasions, you might even face prison. 

Can the outcome of IRS audits be appealed?

If the IRS has imposed a penalty on you and you are not satisfied with the audit report, it is possible to appeal to this outcome. You will have to send an appeal letter to the IRS within 30 days after the audit proceedings ended. If the IRS denies your appeal, you can file a petition in the tax court for bills worth $50,000 or less. For the amount more than that, you will have to knock on the door or a regular court. 

For cases of IRS audits it is best that you hire tax experts from tax resolution services. An attorney will help you put a strong foot forward. There are a number of tax resolution services in the US that can help you with your tax-related issues. IRS audit can be a complicated process with extreme outcomes. However, as long as you abide by the law, you won’t have to worry about anything.

File Back Taxes and COVID-19 Tax Deadline

On 20th March 2020, the Treasury Department made an announcement stating the guidelines for the COVID-19 tax deadline. Certain businesses and taxpayers now have a 90-day extension for filing and paying their tax liability for 2019. The deadline for tax filing is 15th July 2020. If you are unable to file back taxes on time, you can still request a 3-month extension and file back taxes by 15th October 2020. The deadline for paying the taxes has also been extended to 15th July 2020. If you are able to pay your taxes before this deadline, you won't have to pay any additional penalties or interest.

Coronavirus pandemic has affected the world in a way that it’ll take us years to get back to normal. Every country has been trying its best to make it a little less stressful for its citizens. In this direction, the United States has also granted an extension to help its taxpayers with back taxes filing. Now, the taxpayers can enjoy a 90-day payment extension to file back taxes. This has brought a sigh of relief for many. Here is all that you need to know about the extension.

How To File Back Taxes After The COVID-19 Extension

The Corona Virus that originated in the Wuhan district of China has infected about 2.6 million people worldwide. Government and private organizations across the globe are counting costs because of this pandemic. In the United States, unemployment reached a record high and ended a decade of expansion efforts. But, the government is trying its best to make sure that the citizens are able to financially survive this pandemic. For this, the tax day has now shifted from 15th April 2020 to 15th July 2020. This change is applicable to the deadline to file back taxes. However, the IRS is still accepting returns and processing all the refunds. 

Here are the most common questions asked about the changes in the deadline made because of the Coronavirus:

Which taxpayers are eligible for the tax payment and filing deferral?

The following filers are eligible for the coronavirus tax extension:

  • Corporations who file Form 1120
  • Individuals for file Form 1040
  • States and trusts that file Form 1041
  • Fiscal year associations, companies, and partnerships who had 15th April 2020 as their due date

What must be done to delay the tax filing and payment?

The process to file back taxes or an extension is normal as before. Only the deadline has extended to 15th July. When you file the return, the special coronavirus extension for 90-days will be applied automatically. This means that all the penalties and interest are waived for 90 days. The same is applicable for paying the taxes as well. For all the qualifying businesses and taxpayers, no interest or penalties will accrue if they make the payment by 15th July.

What can I do if I can’t file back taxes by the new deadline?

If you are unable to file back taxes by 15th July 2020, you can request an extension by filing Form 4868. This way, you will have a 3-month extension and would have to file back taxes by 15th October 2020. However, the extension is not applicable to paying the taxes. The deadline for the payment is 15th July 2020.

How does this extension apply to refunds?

The extension won’t have any effect on the refund. According to the Treasury Department, all the taxpayers will be receiving their refunds in the normal time period. For example, in the case of electronic filing, 9/10 people will get their refunds in less than 21 days.

What payments are covered by this deferral?

The coronavirus tax deadline covers all the income tax payments along with the penalties and interest associated with it like failure-to-file or failure-to-pay penalty. Also, all the estimated tax payments and included tax payments on self-employment income that were due on 15th April 2020 are covered as well.

  1. Is there a limit on the amount of payment that can be deferred?

No, there is no limit on the tax payment amount that can be deferred.

Is the deferral applicable to the estimated tax payments of 2020 including the estimated taxes on self-employment income?

It is dependent on the date of the payment. For the estimated tax payment of first-quarter 2020, the deferral is applicable. This means that you can make the tax payment by 15th July 2020. For the estimated tax payment of second-quarter 2020, the deferral is not applicable. Also, there will be no waiver or deferral for the failure-to-pay penalty for estimated tax payments.

Is the deferral applicable to the state tax returns as well?

All the states have been issuing their own guidelines and deadlines to file back taxes. In some cases, it is the same as that of the federal guidelines while in others, it is different. You should check your state guidelines to ensure that you are eligible for the deferral.

Does this deferral mean that we don’t owe any taxes or need not file back taxes for the year 2019?

No. This deferral is only extending the deadline for the tax liability. Starting from 16th July 2020, all the penalties and interest will start to accrue on the outstanding tax payments. 

You can take the help of a tax resolution service to help you with the COVID-19 tax extension. A right tax resolution service will help you file back taxes and get the maximum possible refund by making legitimate claims and deductions. For some tax resolution firms, all you have to do is bring the documents to their offices. You won’t have to wait at all and a tax expert will do all your work for you. After they have completed the return, they will send a completed return electronically that you can review and approve.

Back taxes filing isn’t easy. However, the experts in the field can make it easy for you. Take the help of tax professionals while preparing your returns. They know how to file back taxes and will help eliminate errors. With tax experts by your side, you can rest assured that your tax returns are prepared correctly. Contact the best tax relief firm to hire a tax attorney today!