Obscure Information about IRS Tax Relief Programs
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It is that time again in a year when tax relief firms besiege our radios and TVs with promises of settling your past taxes for pennies on the dollar. You may even know some of the popular jingles. But are these services really helping or just a lot of fluff? Detractors think that these organizations take advantage of people who are financially desperate or those who do not clearly comprehend their tax situations. Here’s what you need to know before selecting a tax relief company.
You can achieve tax relief alone—at no cost.
Here’s the truth: everything that a tax relief service does can be done for free. Third parties are not necessary to deal with IRS. Making payments on taxes is like any other debt scenario out there. Should you find it hard to pay your taxes, contacting IRS as soon as possible would be your best option. Often, they are willing to negotiate payment terms.
The IRS also has a specialized body known as The Taxpayer Advocate Service which renders free assistance to taxpayers. They can be reached through 1-877-777-4778 or through filling form 911 which is called Request for Taxpayer Advocate Service Assistance and faxing or mailing it. The address varies by state.
Another choice could be IRS Fresh Start Program that makes paying back past taxes easier besides avoiding tax liens. The application has three main components:
- Tax Liens: The Internal Revenue Service (IRS) has increased its threshold before filing Notice of Federal Tax Lien from $5,000 till $10,000.
- Installment Agreements: In up to 72 months, taxpayers owing up to $50,000 can satisfy their obligations through monthly repayments.
- Offers in Compromise: Less than all owed amount should be paid by the taxpayer in order to settle his/her tax liability.
If the money can be recovered over time by the agency then normally it accepts an Offer in Compromise. A few people may not qualify if they could pay the entire sum as a lump or in an installment agreement. For more information on whether you qualify for the Fresh Start Program, go to IRS website.
Options Other than Tax Relief Services
If you want further help, you should also consider speaking with a tax attorney, certified public accountant (CPA), or enrolled agent who is federally recognized as a tax expert and may represent you before the IRS. My personal choice is a CPA because they can review previous tax returns, locate problems and make adjustments that might lower your tax burden. Some penalties are waived when filing errors are made; however, this sounds improbable but it happens more frequently than we think.
Scarce Are “Penny on the Dollar” Promises
Tax relief firms offering “pennies on the dollar” settlements are referencing actual IRS hardship programs. Nonetheless, not all individuals qualify for these services. Among other tax relief options provided by Internal Revenue Service three major ones include:
- Installment Agreement: The option that allows taxpayers who are unable to pay their taxes in full at once to make smaller monthly payments instead of this. An interest rate and set up fee may be charged in some cases too. While it takes $225 by phone or mail or in person application but low-income individuals can only pay $43.The online application process costs $149 though.
- Offer in Compromise: This program allows taxpayers to settle their debt for less than the amount owing in certain circumstances, such as when the IRS considers full payment is improbable or paying the full amount would create undue economic hardship. Only after exhausting all other payment choices and an assessment of the taxpayer’s financial condition by the IRS does it come into play.
- Penalty Abatement: It is applied in situations where tax liabilities are underrated for natural disasters or serious illness. More often abatements on interests. In that case, one should explain why it was not possible to pay taxes at once right after they were due but still be able to pay back whole balance without interest or penalties.
These programs can only be accessed through application though sometimes it may help to have an advocate file on your behalf.
This Can Be Paid Upfront But You Get Nothing
Regrettably, this services ask for upfront charges that will go towards denying your claims. While not illegal, this can be especially frustrating if you are already struggling financially. Instances of complaints against these entities include failure to file paperwork and no refunds given.
There are limits even for lawful services which must also meet IRS qualifications Therefore follow the rules provided by the IRS no matter how appealing those promises might appear.
Bottom Line
Tax relief firms are not always just what they seem like they claim to be easy solutions. Some examples of huge discounts may indeed be true; however, you could get same deal yourself. Such services can come handy if you find tax law intricate or don’t have time for them. Employing a CPA/E.A./tax lawyer is best if English isn’t your first language or if there are special needs.
Otherwise expect longer case times and higher costs with third party service providers However, calling directly internal revenue service would usually work better off in most cases. With enough knowledge and effort you can negotiate your own tax status and save money
Senior Writer • Business and Information Trends Writer
Lucas writes long-form, investigative articles that explore the deeper implications of business and information advancements.
