Owing money to the Internal Revenue Service (IRS) is not a good position to be in. The IRS has the power to seize things you own and garnish your wages if you fail to pay your taxes, but there are options you can use to get these taxes paid off. If you want to clear up this big problem, you may want to start by hiring a tax attorney for help. Here are three options your attorney may use to help you solve this problem.
Review Your Tax Returns
Back taxes are one of few types of debts that cannot be included in bankruptcy cases. In other words, if you owe back taxes, you will have to find a way to pay them. In some cases, attorneys are able to prove that the amount owed is not correct. If this is the case, you may not end up owing as much as you thought you did.
Because of this, one of the first steps a tax attorney will take is verifying that you really owe the taxes in question. To do this, a tax attorney will review every tax return from the period in question. If your taxes had not been prepared properly, there is a chance that it could be in your favor. There is also a chance it could make the situation worse though.
If the attorney finds mistakes in your favor, he or she might be able to amend these tax returns and file the corrected versions. After this is complete, the lawyer will send them to the IRS. The IRS will need time to review them and approve, and this could change the total amount of money you owe in back taxes.
Set Up A Repayment Plan
If you owe less than $10,000 in back taxes, the IRS might approve an installment repayment plan. This plan will allow you to make payments over a period of time, which may be up to 72 months. You will be required to pay fees if you set up an installment plan, and you may still be required to pay penalties and interest on the money owed.
Your lawyer may ask the IRS for leniency, which could also help your case. If you have a great record of paying your taxes on time, the IRS might agree to be lenient with your case. If they do, they might drop the penalty fees you owe, and they might even waive some of the interest.
Make An Offer In Compromise
If you are unable to pay off the taxes you owe and will never be able to repay them, there is a chance your attorney might be able to make an offer in compromise (OIC) to the IRS. An OIC is a plan that allows a person to clear up a tax debt without repaying the entire thing. This plan is similar to a debt settlement plan, because it allows you to satisfy a debt by paying only a portion of this.
This type of plan can be very helpful; however, there are guidelines you must meet in order to qualify for it. It can also be time-consuming and may require you to submit financial information. This can include:
- Pay stubs
- Bank statements
- Copies of your bills and debts
- Record of all assets you own
The IRS will carefully analyze your financial situation before approving an OIC. If they approve it, you will only be required to pay a certain percentage of your taxes.
If you owe money to the IRS, take action now; this debt will never just disappear on its own. To learn more about your options, make an appointment with a tax attorney or someone from a firm like Wiesner & Frackowiak, LC today.