Delinquent taxpayers often look for a trustworthy company that provides services to alleviate income tax debt. The two most common tax problems taxpayers face are: first, not withholding enough federal income taxes, and second, finding a manageable way to get out of the resulting tax debt. If you owe back taxes to the government, you are not alone. One in six taxpayers either has a disagreement over what they owe the IRS, or they simply cannot afford to pay what they owe immediately. More than 26 million US citizens face problems with the IRS, and Community Tax helps our clients determine what they owe and get back on track with payments, often lowering the total cost of taxes due. Coping with unpaid taxes can be a stressful and time-consuming experience. Whether you are looking for income tax debt relief services, need help negotiating an IRS payment plan, or are hoping to settle as little as possible, our team of tax professionals is ready to provide you with advice and assistance.   

What do you need?

Income tax relief for salaried employees

The IRS requires that all people who earn income in the United States pay taxes on that income. If a taxpayer is an employee who has a salary, his employer will withhold federal income taxes from his paycheck and send them to the IRS on his behalf. If the employer withheld more taxes than was needed to pay the actual balance, as is often the case, the taxpayer will receive a refund when they file their return. When an employee improperly completes the W-4 form or claims too many exemptions, an employer may not withhold sufficient taxes to cover the balance owed according to the employee’s income tax return, resulting in a balance owed.  

What if I am self-employed?

All income is taxable, and being an independent contractor can actually make the tax filing process more intricate. If you are self-employed, you should be aware of a large number of tax responsibilities. Self-employed individuals are responsible for withholding their own federal income taxes; these people must pay their income taxes throughout the year by making estimated tax payments. Estimated tax payments are based on taxes due from the prior year and can be made monthly or quarterly. If the Taxpayer does not make enough estimated payments during the year,  

What are the consequences of not filing a tax return?

It is always best for you to file a tax return on your taxable income, regardless of whether you can pay the amount owed or not. There are a wide range of consequences for taxpayers who do not file when they owe taxes; including a penalty for not filing, which can amount to 5 percent of your unpaid tax bill for each month the bill is not paid after the April deadline. You could also have your losses carried over to the next year, along with a number of other damaging consequences, including a federal lien withholding. Although rare, unpaid taxes and unreported returns could result in incarceration. If the government owes you money and you don’t file it, you will lose your tax refund if you don’t file within 3 years of the April tax filing deadline. After you miss your filing deadline, the IRS will start sending you reminders to testify; If you ignore it, the IRS may file a substitute return, which may not give you the credits and deductions you qualified for.  

What is a tax lien?

If you don’t pay off your debt or fail to reach an agreement with the IRS, you may be subject to a tax lien, in which the government confiscates your assets, including garnishing your wages and confiscating your bank holdings. The IRS will send you a series of letters before collecting your assets, including a Notice of Intent to Collect.  

Can I pay off my debt for less?

With the help of a tax professional, it is possible to pay less than the total amount you owe. There are a number of ways this can be accomplished, including the government’s commitment offer program and uncollectible resolutions.  

An offer in compromise

The Offer in Compromise or OIC program is a function of the Internal Revenue Service that allows any qualified taxpayer with an unpaid tax debt to negotiate an agreement that is less than the total outstanding balance. Although rare, if approved, taxpayers may find that the IRS will forgive the debt in hopes of receiving as much of the total bill as possible. In order for the IRS to approve a compromise offer, the taxpayer must meet one of the following three conditions:

• Efficient Tax Administration

If the taxpayer does not contest his collection or liability, but can demonstrate, through certain specific circumstances, that paying your debt would create an unfair financial hardship or financial strain, the IRS may accept the offer in compromise.

• Doubts in collectability

That means that the taxpayer will never be able to pay his tax debt in full. The IRS will examine your assets and current and projected future income to determine if they would potentially raise more through traditional forms of collection than they would if they settled for an offer in compromise.

• Doubts regarding the debt

This condition requires the debtor to demonstrate that there are doubts that the tax obligation is correct. This could be due to an examiner error, missing information, or new evidence that would change the total tax due.  

Currently not collectible

If you are currently declared uncollectible, your tax debt will be suspended for a specified period of time due to your financial hardship status. While your account is in this state, the IRS will generally suspend all collection activities, which means that your assets and income will not be collected. However, your debt may still accrue interest and other failure to pay fines, and the IRS may still file a Federal Tax Garnishment Notice, which may adversely affect your credit rating. Before you can apply for a currently uncollectible status, you will likely need to file any delinquent tax returns. The IRS will also need to examine your financial information in detail, including your income statement. After being placed in CNC status, the IRS can review your income annually to determine if your situation has improved over the course. Please note that the IRS may also attempt to collect your original tax liability up to 10 years after the date you were evaluated.  

Will the government fully forgive my debt?

Full debt forgiveness occurs only in the rarest cases: the IRS will rarely cancel the debt. While partial forgiveness of debt from the Internal Revenue Service is more common, you must meet a variety of qualifications in order to apply for this distinction. You must prove that you do not have the means to pay your tax debt, you have few assets that the IRS could raise, and you do not generate an income greater than the minimum need for essential living expenses. There are strict regulations regarding all the options mentioned above, so it is in your best interest to submit an application with the help of a professional. If you owe an unmanageable amount of back taxes and need to request help with back taxes, talk to a tax preparer at Community Tax and determine the best route to resolve your debt for less.