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How To Pay Back Taxes? What Ways Do You Have ?

admin — Sat, 24 Jan 2009 21:02:00 +0000

When it comes to 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 important factors to figure out prior to deciding what tax debt settlement method to use are your tax amount owed, the greatest 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 Compromise
An offer in compromise 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 difficult way to settle with the IRS. The IRS has strict requirements to qualify for an offer in compromise. The offer in compromise 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 good choice if your total assets is less than the amount of back taxes you owe.

Installment Agreement
An installment agreement is the most common method for individuals to settle their back taxes. With an installment agreement you will be required to pay monthly payments towards the tax amount owed in a period of less than 3 years. With an installment agreement 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 using your understanding of the IRS system to your advantage. When the IRS realizes that you owe back taxes, they will begin their sending their automated notices. There are a series of letters that the IRS sends before it actually takes actions against individuals to collect. Typically the IRS sends an original assessment letter 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 letter). 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 letter 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 ask 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 another 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 times 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 agreement 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 complex that even the highest ranking IRS individuals don’t even understand it. Knowing your options and taking action early is the best thing to do when dealing with a tax situation.

By: Manuel Davis Jr

Article Directory: http://www.articledashboard.com

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 Professional

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Technorati Tags: back federal taxes, how to pay back taxes, offer in compromise settlement

I Owe Back Taxes, What Now?

admin — Thu, 22 Jan 2009 07:27:00 +0000

First of all, if you owe back taxes, don’t be embarrassed. Millions of people are in the same situation as yours. This is especially true for individuals who are 1099′d. No taxes are withheld, which at the time is great because you have more money to yourself. And you think, "By this time next year, I’ll have the money saved up." But unfortunately that is usually not the way it turns out. Instead, saving your money becomes very difficult. Things happen in life that just seem to get in the way of your plan to save up money for your taxes. That’s life. There’s nothing you can do about that now. Instead focus on the present time. You owe back taxes, so what are you going to do about it?

If you owe less than $10,000 the IRS will put you on a payment plan. If you can afford that, then great! But if you can’t afford that arrangement, or if you owe more than $10,000, then you may have to look at alternative methods of resolving this situation. If it comes down to negotiating a settlement, then it’s important that you know this: The IRS will not negotiate a settlement until all of your taxes have been filed.

So for example, if you have not filed for the years 2005, 2006, and 2007, you’ll need to have your taxes prepared. A reputable tax representation firm will prepare your taxes on your behalf if you decide to go that route. If your returns are simple and you have done them before, then you may be able to do these on your own. Frankly however, you may want to put some serious thought into that. Taxes can be very complicated.

If you owe back taxes and simply cannot afford to pay your back taxes in full or via an installment agreement, you may qualify for a Currently Not Collectible Status. This is basically where your overall situation and your current financial situation prove that you just can’t afford to pay on that for now. Often times the IRS will freeze their collection efforts for up to two years in order to give you time to work this out. Other plans include debt reduction plans such as an Offer In Compromise. This is a program that allows you to pay less than what you owe. Keep in mind that this can be a lengthy procedure.

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An interesting point is that sometimes a large percentage of your back taxes are made up of interest and penalty. Under certain circumstances, you may qualify to have your penalties abated. You can request your tax records from the IRS to determine exactly how much you have been charged in penalties. Be forewarned that there is a lot of red tape with the IRS since they are the country’s largest collections bureau. You may want to consider consulting with an IRS Resolution Firm to settle your back taxes if you don’t have the time necessary to devote to the situation, or knowledge required to prepare your documents and file any necessary urgent actions such as stopping or preventing a garnishment or levy. There is much help with back taxes available but first you need to decide to take action.

By: Nigel Galt

Article Directory: http://www.articledashboard.com

Nigel Galt is a partner in Atlas Tax Solutions, the premiere tax resolution firm. With expert CPA’s, Attorneys and Enrolled Agents on staff, we assist with wide ranging needs, from tax preparation, to submitting offers in compromise. If you owe more than $10,000 in back taxes, or are currently having your wages garnished or have received a lien, then apply online at www.BackTaxDefense.com for immediate assistance or call toll free 1-866-892-5036 for a Free and Confidential Consultation.

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