When it comes to file for tax extension“>solving back taxes owed there are 5 common solutions. It is best that you learn all available options and see what fits your unique situation the best before any steps are taken. Some vital factors to figure out prior to deciding what tax debt settlement method to use are your tax amount owed, the utmost amount you can afford to pay, the amount of assets you have, and if you would be able to pay amount in full if you just had more time. Below are the 5 most common ways to solving back taxes.
Offer in Negotiate
An offer in negotiate is the method that allows individuals to settle IRS back taxes for less than the total amount originally owed. If you have ever heard the saying, "Settle for Pennies on the Dollar", this is the way that is used. It shouldn’t come to a surprise that this is most hard way to settle with the IRS. The IRS has strict requirements to qualify for an offer in negotiate. The offer in negotiate tries to find what amount would work best for both the IRS and for the individual. This means the IRS will only settle for less if you can prove it will cost them more to try to get the money from you. This is a excellent choice if your total assets is less than the amount of back taxes you owe.
Installment Covenant
An installment covenant is the most common method for individuals to settle their back taxes. With an installment covenant you will be required to pay monthly payments towards the tax amount owed in a period of less than 3 years. With an installment covenant you will still have to pay interest on the amounts owed plus and any penalties you may have received, so in the end up paying more than the original tax amount owed. This method should be used if you cannot pay off in full but you can afford to pay off over time.
Stall the IRS
If you need to buy more time to pay the total amount due this can easily by done by by your understanding of the IRS system to your advantage. When the IRS realizes that you owe back taxes, they will start their sending their automated notices. There are a series of letters that the IRS sends before it really takes actions against individuals to collect. Typically the IRS sends an original assessment epistle stating the amount of tax owed plus any interest and penalties then it will send a series of four CP Letters (Computer notice noted by number on top of epistle). These notices go for 4-6 months before the IRS takes action without any action taken on your part. To delay the IRS all you have to do is compose a epistle back to the IRS in response to the assessment notice or CP notices and state that you can’t afford to pay at the current time and politely question for a 45 day extension. If you still cannot pay by this time you can simply repeat the process to buy more time. You must resolve your back taxes before the IRS takes action against you.
Currently Not Collectible
This way won’t resolve your tax debts, but it puts a hold on collections. When you receive currently not collectible status, the internal revenue services will check up yearly on you to see if you have the means to pay at a further time. The statute of limitations is still running during this time and if 10 years passes, you will no longer be liable for those tax amounts.
Tax Expert
Tax specialists are many era the most efficient way to get the best results with the IRS. Tax professionals have the highest success rate for getting offer in compromises accepted and for the least amount of money.
Tax specialists can be the best bet for getting the best installment covenant setup with the IRS as well. Most tax experts give free consultations and free quotes to try to get your business. It is best get several free consultations and quotes before making a final decisions.
Thousands of individuals get into tax debt every year, don’t feel alone. Tax code continues to get more and more complicated that even the highest ranking IRS individuals don’t even know it. Knowing your options and taking action early is the best thing to do when dealing with a tax situation.
By: Manuel Davis Jr
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Back Taxes help is a website with all the information needed to settle back taxes with the IRS and State. More information on finding the best IRS Tax Qualified
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Paying Back Taxes
Is the government going to keep my tax restore to help credit it to what I owe? Or will they not notice and send me back money any ways?
I owe back taxes. I’m paying by installment.
If you owe back taxes, your first option is to set up an installment covenant with the IRS, which you have already done.
