Tax Relief Solutions

What to Do if You Can’t Afford to Pay Your Taxes

Via LearnVest By Alden Wicker ~

If you owe money to the IRS for taxes this season, but you don’t have enough cash in your bank account to cut the check, all is not lost. First things first: Make sure to file your return. That way, you avoid the failure-to-file penalty.

Next, decide how much you can pay. The more you pay down now, the less you will pay in interest and the monthly late payment penalty.

Then, depending on your circumstances, you can request an extra 120 days to pay, either through the Online Payment Agreement application or by calling 800-829-1040.

It’s important you address this now, because if you don’t pay or get an extension, the IRS will send you a bill for the amount you owe, which starts the collection process, somewhere you don’t want to be–both for your emotional and financial state.

If you don’t think you can make the deadline, you have several options:

If You Owe …

Less Than $300: Put It on Your Credit Card

This is the easiest way to do it. If you are just waiting for a paycheck and can pay it off at the end of the month, there’s no reason not to put it on your credit card. If you think you will be carrying a balance if you use your credit card to pay, use this calculator to figure out how much it will cost you to pay the interest on it. A good rule of thumb is that if you owe the IRS less than $300 and you plan on paying it off within the year, this is a good option.

Between $300 and $1,000: Take Out a Loan

You could consider taking out a personal loan, but make sure you are getting it from a good source such as a credit union, which can give you a loan at about 11%. This is a good choice if what you owe to the IRS is less than $1,000 and you’re planning on paying it back within the year. You’ll pay about $88 a month to pay it off over a year, adding up to $56 in interest.

More Than $1,000: Set Up an Installment Plan

The IRS will charge you a fee for setting up an installment program, so we only recommend this if you owe more than $1,000 or so. If you do a direct debit agreement, where regular amounts are transferred directly from your financial institution, the fee is $52. If you do a standard agreement or payroll deduction, the fee is $105. Or, if your income is below a certain threshold based on the federal poverty guidelines, it will cost you $43. You’ll have to apply to qualify for the reduced fee.

If You Can’t Pay at All

If you are unable to pay the IRS at all for what you owe, you may request a temporary delay in the collections process or apply for an Offer in Compromise. You can only use these options if there is doubt as to whether the amount you owe is correct, what you owe is larger than your assets and future income together or you are currently suffering economic hardship. Call the IRS using the number on your bill to talk to a representative about doing this, or find all the forms here.

Whatever your situation, don’t ever just ignore your tax bill!  Contact the IRS right away so that you don’t get nailed with big penalties on top of what is owed, and you’ll have one less stress in your life!

LearnVest is the leading lifestyle and personal finance website for women.

The post What to Do if You Can’t Afford to Pay Your Taxes appeared first on SuperMoney!.

Have IRS Problems? Know Your Tax Resolution Options

When the Federal Income Tax deadline draws near, there are some circumstances that can lead us to being underpaid or underwithheld by an amount that simply isn’t within our budget to hand over all at once. If you are in this situation, it is not necessarily time to panic or even expect some form of IRS harassment or audit. The IRS only seriously investigates flagrant attempts to commit W-2 fraud or hide income. An honest mistake on a form or forgetting to update a W-2 is simply penalized by the fact that there is an amount owed, plus applicable late fees and interest.

There are options for you to be able to tackle this financial hurdle from the IRS. If the amount owed is similar to what you could afford as a loan within your income level and you can not secure any low-interest credit, an installment agreement may be of help to you. This option has the following pros and cons:


  • You Are Dealing Directly With the IRS Rather than Creditors. Your liability is tracked in detail with each payment. If you opt to use the Electronic Federal Tax Payer System (EFTPS), you can pay online and see exacly what you have outstanding in terms of principle and interest. The IRS tends to be willing to accomadate you – within reason – given your financial situation.
  • The Amount Owed Per Month is Fixed. When the agreement is first made a fixed monthly payment will be set. This can be as high or as low as reasonable provided it will pay off the total amount owed within 120 days. It will not change under you without notice and the terms of the agreement will be well defined.
  • You May Re-Negotiate the Agreement. If the payments do not fit within your budget, it is possible to reach a new installment agreement with the IRS. Though they are not guaranteed to approve your request, they will see to it that you reach a repayment option that is suitable for your economic circumstances.
  • Penalties and Interest May Be Less that That of Consumer Credit. This of course depends on your credit score and access to financing, but compare %11 percent with penalties to the %22+ percent some creditors charge, plus late fees and hidden fees. Since the IRS is concerned more with you repaying than with you locked in a cycle of debt, this may be a better option. However, if your credit is good and you have the means a personal loan, line of credit, or credit card may turn out to be better. However, just consider this: if you receive a tax refund as a result of your return, you have essentially given the IRS an interest free loan. They owe you no interest if you pay to much, but you owe them interest if you pay too little. Do research on your financing options and see what works best for you.


  • You Are Dealing Directly With the IRS Rather than Creditors. Yes, this was the first pro listed, but taken from another perspective it may be a con. If things do not go according to plan with your installment agreements you will have to speak and answer directly to the IRS – exposing you and your finances to their scrutiny. Though you may have nothing to hide, always take care when speaking to them.
  • The Agreement has no Grace Period. If the installement agreement is even a day overdue it is considered delinquent. Though the IRS may give you some leeway, the monthly date of payment set forth in the agreement must be met or you will be considered in violation of the terms – and may potentially be liable for the total amount due all at once unless there is a reasonable explanation for the failure to pay by the agreed montly date.

Do I Qualify for the IRS Fresh Start Initiative?

Earlier this year, the Internal Revenue Service (IRS) rolled out its Fresh Start Initiative, aimed at helping struggling taxpayers. The initiative allows qualified taxpayers to avoid the IRS Failure to File penalty. This penalty is usually placed on unpaid tax balances, with accrued interest. Qualified individuals can request a six-month payment extension in which no penalties will accrue. Late payment penalties will be charged if the balance is not paid by October 15. Secondly, Fresh Start provides a different installment structure, allowing taxpayers to avoid financial reviews and Federal liens.

Recognizing the need for tax relief, IRS Commissioner Doug Shulman said, “This new approach makes sense for taxpayers and for the nation’s tax system, and it’s part of a wider effort we have underway to help struggling taxpayers.” Do I Qualify for the IRS Fresh Start Initiative? is the logical question being asked by many taxpayers. Consider the qualifications below.

  • You must have been unemployed for a minimum of 30 consecutive days during 2011 or before April 15 2012.
  • Married couples filing jointly need to have only one spouse that meets the qualifications.
  • Individuals who are self-employed need to be able to show at least a 25 percent drop in their net income.
  • Taxpayers must not earn more than $200,000 per year for married couples or $100,000 per year for individuals.
  • Fresh Start is also limited to taxpayers whose tax balance was not more than $50,000 at the end of 2011.
  • Taxpayers must file Form 1127A, which is not available electronically.

IRS Levy and Back Taxes: Tax Problems that Can be Resolved

A levy is the seizure of your property to pay a tax debt.  If you receive notice that you are subject to an IRS Levy due to back taxes, this is a problem that can be resolved.

Before seizing your property, the IRS will send you a notice giving you 30 days to respond.  According to the IRS, if you don’t respond and make payment arrangements they can levy your assets, your income, and your social security benefits.

The IRS has two methods to levy social security benefits.  In an Automated Federal Payment Levy Program, the IRS can take up to 15 percent of your benefits each month until the debt is paid in full.  Under the Manual levy, there is no cap on the amount they can take.  They do, however, say that they “take into account money for reasonable living expenses”.  The IRS will not levy children’s benefits, SSI, or lump sum death benefits.

The IRS can also levy your bank account.  Any account with your name on it is subject to levy, even joint accounts.  Once your bank receives a Notice of Intent to Levy, the bank will freeze all of your checking, savings, CDs, and any other accounts in your name.  The bank holds the funds for 21 days, giving you time to work out a payment arrangement with the IRS.  After the money is turned over to the IRS, you won’t be able to get it back even if you later work out an agreement.  Only the funds on deposit at the time of the levy are affected.  Money deposited afterwards, such as if your paycheck is directly deposited, is not subject to the levy.

If the IRS levies your paycheck, it is immediate and it will continue until the debt is paid.  Typically called a wage garnishment, your employer will send a portion of your pay to the IRS each pay day.  Some of your pay will be exempt; the amount depends on your filing status and number of exemptions you claim.


The post IRS Levy and Back Taxes: Tax Problems that Can be Resolved appeared first on Debt America.

Tax Resolution 101

In today’s harsh economy, ever increasing income tax problems are pushing more individuals, businesses, and corporations to the edge of financial insolvency. Ascending unemployment rates, the unavailability of liquid assets, and rising interest rates-the kiss of death in a weakening economy- can all contribute to our current financial problems. As we confront hazy economic times, more and more taxpayers are unable to meet their tax obligations. When businesses go under, they can wind up owing thousands of dollars in unpaid corporate taxes. When individuals face a hardship and strain to pay all of their bills, they may defer paying income and/or business taxes. Bankruptcy is often considered, but unfortunately, federal and state taxes are rarely dischargeable under U.S. Bankruptcy law. All the while, late penalties and interest will continue to add up at a very high rate. The longer taxpayers take to address IRS tax resolution, the more money they will owe Uncle Sam.

If you find yourself in trouble with the IRS and feel lost trying to figure it all out, there is good news for you. First, you are not alone. Second, you have options. Third, you have come to the right place. At Optima Tax Relief, there are a number of tax resolution options that we can review with you. While taxpayers may try to represent themselves in front of the IRS, many turn to professional tax. Professional Resolution experts know taxpayer rights, know who to speak with at the IRS, and can increase the chances of success dramatically.

These are actions we can take to prevent the IRS from taking action against you to collect on your tax liabilities:

  1. Filing our Power of Attorney with the assigned Collection IRS Agent
  2. Pull your complete IRS transcript
  3. Bring Taxpayer into Compliance
  4. Offer in Compromise
  5. Certified Non Collectible
  6. Establish Appropriate Installment Agreement

If you are unsure of what IRS tax solution would work for you, it would be smart to sign up for a free consultation at Optima Tax Relief. Our team of expert tax attorneys, CPAs, and Tax Resolution Specialists will assess your individual case and give you professional advice on which avenue to take. If the below scenarios apply to you, please give us a call!

  1. Wage Garnishment
  2. Bank Levy
  3. State or Federal Tax Lien
  4. Unfiled Returns
  5. Collection Letters (State or IRS)

Get Tax Relief With Earned Income Tax Credit

Annually, the Internal Revenue Service (IRS) reaches out to taxpayers across America who earned $49,078 or less to offer a little tax relief by way of the Earned Income Tax Credit (EITC).

The EITC varies according to your income, family size and filing status. Basically, it is a federal refund for taxpayers with low to moderate incomes. And eligible taxpayers may still get a refund even if they don’t owe taxes.

Eligible workers often miss out on it because they either don’t claim it or don’t file a tax return. This is especially true if their financial situation has changed; something that has happened to a lot of Americans over the last few years.

You can easily find out if you qualify just by visiting and answering a few questions using the EITC Assistant.

To get your EITC refund, you have to:

  • Have had earned income through employment, self-employment or farming
  • Have a valid social security number
  • Be a U.S. citizen or resident alien, or a non-resident alien married to a citizen or resident alien
  • Be 25 years or older
  • Have investment income of less than $3,150
  • Not be claimed on someone else’s tax return
  • File a tax return

There are additional stipulations with regard to how you file (single or married) and whether you have filed Form 2555 (foreign income). However, in this climate of continuing financial struggle, taking the time to determine if you are eligible for some tax relief from the IRS is well worth the time investment.

And if taxes aren’t the only financial obligation that has you struggling right now; if other unsecured debt like credit cards, student loans or a car note have you wondering how you will make ends meet, take the time to ask us about debt settlement. It’s our specialty.

You Have Tax Debt – You Need Relief – Learn Your Resolution Options

If you have tax debt and you need relief, you need to know your resolution options.  If you have trouble paying your tax bill, be sure to stay in contact with the IRS.  Avoiding them could make your situation worse.  Also, file your return on time even if you can’t pay the taxes due.

According to the Internal Revenue Service, the agency may be able to provide tax relief.  There are three programs that they offer:

  • short-term extension to pay
  • installment agreement
  • offer in compromise

Keep in mind that while the IRS may waive penalties, they will not waive interest charges.

Short-term extension

A short-term extension is an agreement that you make with the IRS.  This arrangement will give you up to an extra 120 days to pay the balance in full. You will still be charged interest, but you won’t be assessed any penalties if you pay as agreed.

Installment agreement

If you need longer than 120 days to pay your taxes, you can set up an installment agreement.  You can apply online to set up the agreement if you owe less than $50,000.  Those who owe more need to call 1-800-829-1040 to set it up.

There are fees to set up an installment agreement.  The fees are as follows:

  • $52 for a direct debit agreement;
  • $105 for a standard agreement or payroll deduction agreement; or
  • $43 if your income is below a certain level.

You will need to pay at least $25 per month toward the debt.  Also, be aware that all future refunds will be applied to your debt until it is paid in full.

Offer in Compromise

The last option is an Offer in Compromise (OIC).  An OIC is similar to a settlement.  You will make an offer to pay less than the full amount due as payment in full.  The IRS may either accept or reject your offer.

There is a $150 application fee and a non-refundable initial payment due with your application for an OIC.  There are three payment plans to chose from:

  1. Lump Sum Cash option – You need to send in your application, $150, plus 20 percent of the total offer amount.  Once the IRS accepts your offer, you must pay the balance of the offer in no more than five installments.
  2. Periodic Payment option – You must send in the same initial payment as above, however, you will also make monthly payments while waiting for a written decision.  Once accepted, you continue making payments until the balance is paid.
  3. Low Income Certification – If you meet low income guidelines, you do not have to send the application fee or the initial payment.  You will not have to make monthly installments while waiting for approval.

Financial hardship

The IRS may temporarily stop collection efforts if you are unable to pay because of a current financial hardship.  Once your financial condition improves, collections will begin again. You will also be charged interest and late payment penalties.

The post You Have Tax Debt – You Need Relief – Learn Your Resolution Options appeared first on Debt America.

Need Help With The IRS? Follow These Steps to Take on Your IRS Problems

IRS issues are very disturbing. Many people feel panicked because they never know where to start to tackle these problems. However, there are a few things that they can do that will help them take on their tax issues in a permanent way.

The worst thing that people can do is let their IRS problems sit unresolved. Usually, when the IRS sends out a notice, recipients have up until a certain date to settle it. If that date passes and the issue still hasn’t been discussed with the federal agency, then the individual is guaranteed to face fines in addition to the money that they already reportedly owe.

If you received a notice from the IRS and don’t know what to, follow these steps to take on your IRS tax problems.

First, read the notice a couple of times because it’s generally hard to perfectly understand. Make sure that you take notes regarding the tax year that is referred to on the notice, the specific issue in dispute, and the amount to be paid.

Second, analyze and compare the information written on the notice with the one on the tax return that you sent for that particular year.

Third, call the IRS officer whose contact information is listed on the notice in order to have some advice on how to proceed. Make sure that you write down the agent number as well as any other details pertaining to the conversation.

After that, you ought to get in touch with a certified public accountant to discuss about the IRS notice and see whether they can represent you on this matter. When headed to the meeting with the CPA, gather and bring all the documentation that is related to the case brought by the Internal Revenue Service. For instance, if the IRS notice states that you took money from your 401K and that this ought to be counted as income, you must provide your CPA with forms that show that you rolled over into a new 401K in a tax-free transaction.

Regardless of the issue that you have with the IRS, try to apply the steps listed above and you should be able to solve it easily.

The post Need Help With The IRS? Follow These Steps to Take on Your IRS Problems appeared first on Debt America.

IRS Tax Relief: What are My Options?

If you need IRS Tax Relief, help is available.  Your first step is to notify the IRS if you have trouble paying your tax bill.  Also, make sure you file your return on time, even if you can’t pay the taxes.  If you file late, additional penalties will be added to your total due.  Any amount you send in will help you avoid penalties and interest charges.

The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.

Short-term extension

If you need a short-term extension, you can normally make an agreement for up to an extra 120 days to pay the balance in full without occurring any fees.  Interest charges will still apply.

Installment agreement

If you are unable to pay your tax bill within 120 days, you can set up an installment agreement.  You can apply online; if you owe more than $50,000, however, you must call 1-800-829-1040 to set up the agreement.

The fees associated with setting up installment agreements are as follows:

  • $52 for a direct debit agreement;
  • $105 for a standard agreement or payroll deduction agreement; or
  • $43 if your income is below a certain level.

Your monthly payment must be at least $25 and all future refunds will be applied to your debt until it is paid in full.

Offer in Compromise

If you are unable to set up an installment agreement you may propose an Offer in Compromise (OIC).  An OIC is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability by payment of an agreed upon reduced amount.

An OIC is not for everyone.  The fees for applying include a $150 application fee and a non-refundable initial payment.  The amount of the initial payment depends on the payment option that you select.  If you opt for the Lump Sum Cash option, with your application you must send in 20 percent of the total offer amount.  After receiving written acceptance, you must pay the remaining balance of the offer in no more than five installments

If you opt for the Periodic Payment option, you must send in the same initial payment with your application, however, you must also make monthly payments while you are waiting for a written decision.  If accepted, you continue making payments until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer.

Financial hardship

If you are unable to pay anything because of a current financial hardship, the IRS may temporarily suspend certain collection actions until your financial condition improves. However, interest and late payment penalties will continue to accumulate.

The IRS recognizes that many Americans are struggling in this economy.  To help more tax payers, the IRS has expanded its programs to help a greater number of tax payers make a fresh start.  The worst thing you can do is avoid the issue.  Explore the options listed above, determine which option best fits your situation and apply as soon as possible.

The post IRS Tax Relief: What are My Options? appeared first on Debt America.

Optima Tax Relief Applauds the IRS for Modifications to its Offer-In- Compromise Program

Company Expands to Assist more Clients with Qualifying for Tax Relief

Presenting more flexible terms to their Offer In Compromise (OIC) program, the IRS launched their “Fresh Start” initiative earlier this year and expanded it recently in May 2012. The new program is set up to help the most financially distressed taxpayers to resolve their tax problems more quickly. With the ability to better target qualifying taxpayers, the program makes it possible for debtors to clear up their tax problems in as little as two years. Offer-in-Compromise allows consumers to settle any back taxes for less than the total amount owed.

In the past, many taxpayers found it difficult to settle tax debt. This was due to the strict financial guidelines that were used to evaluate OIC, which many times, would result in offer amounts that were beyond what the taxpayer could reasonably pay. The adjustments to the program come after the IRS recognizes that many taxpayers are still struggling to pay their bills. They wanted to apply a common sense approach to reflect real- world scenarios.

“We are very excited about the implications of the Fresh Start initiative for consumers. We are confident that these changes will enable us to help out many customers who are oftentimes in very challenging situations,” says Harry Langenberg, Managing Partner of Optima Tax Relief.

Among the changes, the IRS has developed a Streamline OIC program. Now, when the IRS calculates a taxpayer’s reasonable collection potential, it will revise the calculation and look at only one year of future income for offers paid in five or fewer months, down from four years. And two years of future income will be looked at for offers paid in six to 24 months, down from five years. The new streamline program minimizes the amount of financial information requests. It also requests information via personal calls and has a quicker turnaround time in the decision process. This program will help Optima Tax Relief to settle tax issues sooner and more easily.

Optima Tax Relief, a full service tax resolution firm has assisted many customers with obtaining resolutions to their tax problems. Optima employs a highly professional servicing team, including in-house attorneys, enrolled agents and CPAs that assist clients with bank levies, tax liens, payroll garnishments and social security garnishments.

“Although the IRS has made qualifying for the Offer-in-Compromise program easier, every case has its challenges. That is why it is so vital to have a team of professionals that have the knowledge and experience to work on your case,” says David King, Director of Operations.


Optima Tax Relief, LLC, headquartered in Orange County, CA, is a nationwide tax resolution firm which provides assistance to those individuals struggling with unmanageable state or IRS tax burdens. The company’s unique two-phase approach to tax relief is revolutionary in the industry, as it allows consumers to have clarity about their options before they pay fees toward a resolution program. Optima received full accreditation by the Better Business Bureau, and it consists of a highly professional team of individuals that have many years of experience helping clients with their financial issues.