Tax Debt Reduction – How To Reduce Tax Debt The Right Way
Tax debt reduction is a dream solution for most taxpayers when they are facing back tax problems with the IRS. Usually tax debt penalties are accruing with interest & penalties over time. For example, what was once a 1500 USD tax debt, can eventually grow to 2500 USD or even more. One fact you should always remember is that the IRS won’t forget the tax you owe. They have sophisticated automated systems that ensure the collection actions are initiated.
Tax collection efforts start with IRS notices before leading to legal action (such as tax liens, bank levies, and wage garnishments, to name a few). In the event that the IRS has initiated legal proceedings against you, you will need to work with a tax lawyer. IRS legal proceedings are always complicated and hiring a tax attorney to navigate for you will ensure you get the best possible outcome..
Many taxpayers who are in tax debt can’t afford to pay the whole sum for their debt because of financial constraints. The most cost effective way individuals & businesses can resolve the issue of tax debt is to ensure that they qualify for a tax debt relief program or decide to seek a postponement in the payment of their tax debt. For the best tax debt reduction, taxpayers should work with a tax expert for a solid tax debt relief plan of action. A tax professional will highlight a step by step tax debt reduction plan for affected tax payers.
Tips To Carryout Tax Debt Reduction
The following steps can make the tax debt reduction process easier:
#1 Try To Verify The Total Sum You Owe The Tax Office
Do not assume that the total sum reflected on the IRS notice issued to you is the amount you actually owe as tax debt. However, the Internal Revenue Service can also make mistakes. So before you decide to do anything, make sure you run through your tax files adequately and compare the numbers indicated against what is shown in the IRS collection notice. Keep in mind that the amounts indicated in each document may differ.
If the tax debt doesn’t make sense to you, take advise from a tax expert, this can greatly increase your chanses of reducing your tax debt. They can help make corrections to errors and omissions on your tax returns, which can ultimately result in a tax debt reduction.
#2 Offer In Compromise
It is important to note that, if deciding to pay off your tax debt will directly put you in financial hardship, you may actually qualify for tax reduction through an offer in compromise. An offer in compromise can be defined as a settlement between the IRS and a debtor that settles the taxpayer’s tax debt for less than what is entirely owed.
Evaluating Your Finances for an Offer in Compromise
This simply means evaluating your finances. It is either you have the funds to pay off your tax debt, or you cannot afford it. Before making any move, think about how to pay the tax debt will ultimately going to affect your livelihood. To figure this out, ask yourself if paying the debt in full will cause you financial hardship? You will need to determine this number, before contemplating the tax settlement option to use.
What if You Have The Money To Payoff Your Tax Debt?
Since you have the required amount of money to handle the issue, you can successfully resolve your back tax problems with the IRS. One advice here is to pay off the debt as quickly as possibl. The reason for moving swiftly when it comes to paying off your tax debt is because delaying this process will only make you accumulate penalties and interest against your back taxes.
Interest rate of the IRS as of 2017 is 4 percent per year, which doesn’t even include the more significant penalties that can be imposed by the IRS such as the failure to file penalty or the failure to file penalty.
The Right Way to Excuse Tax Debt Reduction
Successfully obtaining a tax debt settlement with the IRS is very complicated and can be achieved by hiring a tax expert. If you have a financial hardship, this scenario can be complex and will require vast of experience to make sure it is done in the right way. Again, if the total amount you owe in tax debt is more than $10,000, talk to our tax professionals. We can reduce your tax debt call us today.
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