Tax Relief Explained
Navigating the wide world of taxes has long been a perplexing and arduous process that few feel comfortable handling on their own, and that’s ok! Tax relief services and professionals like certified public accountants (CPAs) and enrolled agents (EAs) exist to understand and stay abreast of the rules governing taxes so you don’t have to.
According to the US Government Accountability Office (GAO), 21% of Americans owe money to the IRS. These are taxes that went unpaid -- either partially or fully -- in the year they were due.
While it won’t erase the amount of taxes you owe and your obligations, tax relief can help alleviate your tax burden by reducing the amount of taxes owed to the IRS. It can come in a few different forms, such as a tax credit, deductions, or tax forgiveness, but it essentially consists of programs created by the IRS to decrease your tax bill.
The 5 Steps to Tax Relief
Recommended Tax Relief Companies
Getting Tax Relief
If you’re having trouble paying your taxes when they’re due, there are a few ways to get IRS tax relief. Below are the most popular avenues to consider.
Offer in Compromise
This type of tax relief is a sort of negotiation or compromise with the IRS for those struggling to pay their full tax liability or if doing so creates a financial hardship. It’s a legitimate way for you to settle your tax delinquency for less than what you owe and it takes into consideration a few factors, such as your income, your asset equity, and your overall ability to pay.
To ensure you’re eligible, all required estimated payments and tax returns must be made along with the application fee. You’ll also need to fill out a Form 433-A (individuals) or a 433-B (businesses), and a Form 656 along with all necessary documentation.
IRS Repayment Plan
Another strategy for tackling tax is the IRS Repayment Plan. This allows you to break down the full amount you owe into smaller and more manageable payments while avoiding levies and garnishments. You’ll still be on the hook for interest and penalties for being late until you’ve paid off your balance in full.
This type of tax relief is either short-term (payments made over the span of 120 days or less) or long-term (payments made over the span of 120 days or more). A short-term payment plan is only for individuals, not businesses, and won’t be liable for a user fee. The most you can owe with a short-term plan is $100,000 in combined taxes, penalties, and interest.
A long-term plan has fees and the most you can owe is $50,000 in combined taxes, penalties, and interest.
Penalty Abatement
If a hefty tax bill you can’t pay isn’t enough, there can also be penalties and interest that are piling up and from which you may need relief. Penalty abatement is a form of tax relief meant for those with special circumstances that have led to an inability to pay taxes, such as experiencing a natural disaster, hospitalization, serious illness, or other uncontrollable circumstances. This is known as reasonable cause penalty abatement.
There is also a first-time penalty abatement, which is the most widely available type of IRS waiver. If you don’t have a track record of tax penalties and not filing your taxes on time in the past, the IRS may qualify you for a first-time penalty abatement where they will waive your penalties.
Every day your bill goes unpaid, the IRS will tack on a substantial amount of fees and interest for each day the amount owed goes unpaid. So it’s worth seeing if you qualify for penalty abatement.
IRS Fresh Start Program
The Fresh Start Program is a significant initiative by the Internal Revenue Service aimed at helping individuals and small businesses struggling with unpaid taxes. This program eases the process of paying back taxes and avoiding tax liens. The Fresh Start tax program's key features include increasing the tax lien threshold, offering more flexible terms for an Offer in Compromise, and providing easier access to Installment Agreements. These measures are designed to reduce the financial burden on taxpayers, making it more manageable for them to settle their tax debts without overwhelming stress.
Top 3 Tax Relief Companies
Tax Relief Companies: Are They Worth It?
In short, we believe the answer is yes.
If you need tax relief help of any kind, it’s often much easier with one of the best tax relief companies. They will guide the harrowing and complex process of tax relief.
Tax relief companies are staffed by licensed professionals who know the IRS inside and out. The maze that is the IRS is their backyard. Also, if you’re unsure of whether you want to apply for their services, the best tax relief companies all offer a free consultation. Normally they can determine which tax relief services you qualify for after a free consultation and financial analysis. From there, they can walk you from start to finish, for a fee.
We believe the key is to find the right tax relief company for you. You want to work with a reputable company and avoid all the scams that surround tax season. While there are excellent tax relief companies, some businesses also make unreasonable promises to solve all your problems and eliminate your entire tax bill in exchange for an upfront payment. So, how do you know who are the best tax relief companies?
- Online reviews
- A staff that consists of licensed tax attorneys
- Free initial consultations
- No promises or guarantees of solving all your tax problems.
Below are some signs of a tax relief
- Promising or guaranteeing to eliminate what you owe to the IRS
- Soliciting their services through letters or emails
- Failure to assess your specific tax background
- Trying to delay your case, like asking for the same documents repeatedly
- Not being upfront about their fees
Pros & Cons
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Fully licensed and accredited staff in all 50 states
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Full service tax company
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A money-back guarantee is in place
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A+ rating with the BBB
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Free consultation
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Low minimum tax required
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Prices and fees not available on their website
Tax Relief Service Types
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Currently Not Collectible Cases
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Installment Plans
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Dealing with the IRS
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Levy Release
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Offer in Compromise
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Penalty Abatement
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Stop Wage Garnishment
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Tax Preparation and Planning
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Unfiled Tax Returns
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Fresh start IRS program
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Federal tax
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State tax
Type of Fees
Brand Certifications & Organizational Memberships
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NATP
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National Association of Enrolled Agents (NAEA)
Pros & Cons
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15 Day Money Back Satisfaction Guarantee
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In-house tax professionals
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Wide range of services
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Tax attorneys on staff
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Free initial consultation with tax associate
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Must have at least $10,000 in outstanding taxes owed with the IRS or state tax agencies
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No information about fees or fee structure on their website
Tax Relief Service Types
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Currently Not Collectible Cases
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Installment Plans
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Dealing with the IRS
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Innocent Spouse Relief
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Levy Release
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Offer in Compromise
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Penalty Abatement
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Stop Wage Garnishment
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Tax Lien Removal
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Unfiled Tax Returns
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Audit Representation
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Federal tax
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State tax
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PPIA
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OOIC
Type of Fees
In-House Professionals
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Tax Attorneys
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CPAs
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Enrolled Agents
Brand Certifications & Organizational Memberships
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NATP
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National Association of Enrolled Agents (NAEA)
Benefits of Hiring a Tax Relief Company
Every American can likely agree that the IRS is downright intimidating, and the last thing you want is to be audited. But the complex rules and regulations governing how we file taxes -- which can change every year -- along with tax jargon can make the process even more daunting for taxpayers.
Hiring for tax relief services simplifies the process and brings it down to a digestible level for the average American. Below are a few ways you can benefit from using a professional:
- Wage garnishment and asset seizure are two major ways the IRS collects on what they're owed, but they’re avoidable if you know what your options are. A tax relief firm can help you find the best option if you’re unable to pay the amount you owe.
- A tax specialist can prevent or stop tax liens and levies by diving into your specific IRS collection case.
- They can interpret tax law many of us don’t have the time to learn and help explain the complexities and processes involved.
- They can find the best solution for your specific tax situation.
- They can step in as your tax representative to help protect and negotiate on your behalf.
- Hiring a tax professional will not only help alleviate your tax issues but prevent further ones from coming up in the future.
Tax Levy and Tax Garnishments: What You Need to Know
Amidst the already complicated maze of tax relief, penalties, and resolutions, the concepts of tax levies and tax garnishments often make individuals even more apprehensive. These two methods are utilized by the IRS to collect taxes owed. It’s crucial to understand them, as they can significantly impact an individual's financial health and well-being.
Tax Levy
A tax levy is a legal seizure of your property to satisfy a tax debt. If you neglect or refuse to pay the taxes you owe, the IRS can levy, seize, and sell any type of real or personal property that you own or have an interest in.
Once a property is levied, reversing it is tough. It's crucial to address tax debts early and, if needed, get professional help to liaise with the IRS.
When will the IRS issue a levy?
If you don't settle your taxes or arrange for payment, the IRS can seize any property or assets you own or have a stake in. This includes properties held by others, like wages, bank accounts, or retirement funds, and properties you directly hold, such as your car or house.
Tax Garnishments
Tax or wage garnishment is when the IRS instructs your employer to directly send them a part of your wages for unpaid taxes. This can strain your finances and make your tax issues known to your employer.
Avoiding Tax Levy and Garnishments
To avoid levies or garnishments, settle your tax bill promptly. Consult the IRS or hire experts to discuss alternatives if you can't pay in full. Options may include an Offer in Compromise or an IRS Repayment Plan. Remember, the IRS sends multiple warnings before taking severe steps. Responding to these in a timely can prevent drastic actions.
In summary, while levies and garnishments are harsh IRS tools, staying informed and proactive, especially with expert assistance, can help you manage these situations.
Final Thoughts
If you’re like many Americans looking for tax relief, take comfort that you’re not alone and have options to relieve your tax burden.
Whether it’s an offer in compromise, an IRS repayment plan, penalty abatement, or some other type of tax relief, it’s worth doing your research and seeing what you qualify for. You can find all the information you need about your IRS notices, penalties, tax relief options and more on the IRS website, or you can save yourself the hassle by hiring a tax relief company to work with you on finding the best option.
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