October 19, 2017

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Why Would The IRS Settle My Tax Debt?


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Why Would The IRS Settle My Tax Debt?

There are few words in the English language which can evoke fear in Americans in quite the same way as “Internal Revenue Service” can.

Even law-abiding, annual tax filers cringe when they hear those words. The fear of being audited often is an irrational one, even for those who take creative liberties with their deductions.

But what happens to those who legitimately owe back taxes? What is the best way to handle their debt with the least amount of pain from the IRS?

According to the most recent figures, the IRS estimates that over 20 million Americans owe back taxes. There are numerous reasons for each and every case of back taxes being owed. For some, a tough economy has made it difficult to pay what is owed to a variety of creditors, not just the IRS. Unfortunately, the IRS has a job to do, and they are not swayed by excuses for failure to pay taxes.

The IRS has a number of options available at their disposal for collecting overdue taxes. Actions they are permitted to take include the seizure of assets, the placing of liens on a taxpayer’s property, garnishing wages or claiming future tax refunds.

Prior to taking any action to recover overdue taxes, the IRS will send a notice to the taxpayer, outlining the full amount owed. It is required by federal law to itemize the full amount, indicating how much is the actual tax owed, how much is penalties for failure to pay and how much of it is interest.

Once that notice is issued, the taxpayer will have a set amount of time in which to pay the amount in full before the IRS will take one of the actions at its disposal to recover the funds.

So what do you do if you are among the 20 million Americans who owe back taxes?

There are a number of options available to taxpayers who find themselves in this predicament.

One of the most popular courses of action is for taxpayers to enter into what is known as an installment agreement with the IRS. Taxpayers who agree to an installment repayment plan are seen as being in compliance, and the IRS is less likely to take a harsher course of action to recover back taxes. The only downside to an installment plan is that interest continues to accrue on the total amount owed while taxpayers are making payments, similar to what happens when a person makes only the minimum payment on a full credit card balance.

Another option, which the IRS makes available on its own website, is what is known as an “offer in compromise”.

This option allows taxpayers to settle their debt for less than the full amount that is owed if they can prove that paying in full would cause a financial hardship for them. Qualified candidates for this option must meet specific criteria as determined by the IRS, and must provide documentation supporting their ability to pay, income level, current expenses and asset equity.

Anyone who currently is in the process of bankruptcy does not qualify for this option.

Proposal would provide Nebraskans with $1.1 billion worth of property tax relief in effort to make "˜The Good Life' a reality

LINCOLN - Nebraska property owners would get $1.1 billion worth of tax relief under a proposal developed by a loose-knit group this summer. State Sen. Steve Erdman of Bayard said the proposal would provide income tax credits equal to 50 percent of the ...

Published:  Wed, 18 Oct 2017 08:18:00 GMT

Trump: "˜Massive tax relief' would be "˜best Christmas present of all'

In a speech to the Heritage Foundation on Tuesday, Trump said that he wants to deliver "massive tax relief" to American families. "So let's give our country the best Christmas present of all," Trump said Tuesday. "Massive tax relief." The Republican-held ...

Published:  Tue, 17 Oct 2017 17:55:05 GMT

Nebraska proposal would give $1.1B in property tax relief

LINCOLN, Neb. (AP) - Nebraska property owners would get $1.1 billion worth of annual tax relief under a proposal that supporters say they'll push in the Legislature and as an initiative petition drive. A coalition of agricultural, business and ...

Published:  Wed, 18 Oct 2017 13:00:00 GMT

Democrats seek tax relief for Puerto Rico, Virgin Islands

WASHINGTON (AP) - A group of Democratic lawmakers are asking for tax relief for hurricane-stricken Puerto Rico and the U.S. Virgin Islands, saying people and businesses in the two U.S. territories don't enjoy the same benefits as those in the mainland.

Published:  Mon, 16 Oct 2017 15:34:00 GMT

President Trump Signs Disaster Tax Relief Bill in Wake of Hurricanes

With overwhelming bi-partisan support, President Donald Trump signed sweeping tax relief measures into law for victims of Hurricanes Harvey, Irma and Maria. U.S. citizens still recovering from the devastation of the recent hurricanes in Texas, Florida and ...

Published:  Wed, 18 Oct 2017 07:41:00 GMT

Tax relief arrives for North Bay fire-damaged properties

County tax officials are clearing the air on how much property owners will owe on real estate that was significantly damaged or reduced to ashes in the massive fires that have been tearing through Sonoma, Napa, Mendocino and Lake counties this month.

Published:  Wed, 18 Oct 2017 10:53:00 GMT

Tax relief incumbent hits the campaign trail

A day after his state's college football team whipped the Nebraska Cornhuskers, Wisconsin Gov. Scott Walker whipped up enthusiasm for Nebraska Gov. Pete Ricketts' re-election bid. Walker and the governors of Kentucky and Missouri joined Ricketts and ...

Published:  Wed, 18 Oct 2017 09:28:00 GMT

Working together on a solution for state tax relief

Too often recently, those shouting loudest in the public square for property tax relief seem bent on seeing that issue as a rural-versus-urban zero-sum game. And that shortsighted vision gets harder and harder to alter, leading to fewer openings for ...

Published:  Wed, 18 Oct 2017 01:20:00 GMT

alliantgroup Applauds Disaster Tax Relief Legislation

HOUSTON, Oct. 18, 2017 /PRNewswire/ -- alliantgroup applauds the passage of the Disaster Tax Relief and Airport and Airway Extension Act of 2017. The legislation was recently signed into law by the president and includes several provisions designed to ...

Published:  Wed, 18 Oct 2017 05:00:00 GMT

Taxpayers impacted by fire get tax relief

The Franchise Tax Board announced special tax relief for California taxpayers impacted by wildfires. Affected taxpayers are granted an extension to file 2016 California tax returns and make payments until Jan. 31, 2018. "Families affected by natural ...

Published:  Tue, 17 Oct 2017 16:43:00 GMT

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