Tax Relief Solutions

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.


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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)

Tax Relief for Taxpayers Affected by Natural Disasters

With hurricanes, floods, wildfires, earthquakes and other natural disasters affecting so many people throughout the United States every year, many are wondering what comes after the clean up.

First, you have to deal with the insurance companies. Then you need to look at what federal tax relief assistance programs might be available.

If you find yourself in the middle of a major disaster area, you generally have two options. You can file an amended tax return and claim the damages on your prior federal tax form. That will probably net you a refund. Moreover, it gets money into your hands sooner. Or you have the option of waiting until next tax season to file a casualty claim.

However, the Internal Revenue Service (IRS) generally offers other tax relief options as well, such as tax-free assistance from programs like FEMA and extended tax-filing deadlines. Additionally, there is the Mortgage Forgiveness Debt Relief Act of 2007 that protects homeowners from higher taxes when they refinance their homes.

Though the Act isn’t for the exclusive use of families in disaster areas, it does provide additional tax relief for those already under great duress. It acts to protect you from higher taxes when you refinance your home. Available through 2012, the law creates a temporary change to the tax code by eliminating taxes you may face if your lender forgives a portion of your outstanding mortgage debt.

Whether you have weathered the storm of past natural disasters or are preparing for what might lay ahead, click here for more federal tax relief information for natural disaster victims.

Notified by the IRS of a Tax Debt – Now What?

You open your mailbox and there it is; a registered letter from the IRS. Your heart begins to race. Your palms sweat. All sorts of thoughts run through your mind; how much you owe, what you forgot, the errors you made on your tax return. Being notified by the IRS that you have an outstanding tax debt can cause many people to panic.

Before you do, keep in mind there are well over 100 notices and letters that the IRS might send you. These include everything from a CP12E (changes to correct a miscalculation) to a CP2005 (information accepted, no further action will be taken).

Typically, there are three reasons the IRS will contact you:

  • An error or omission on your tax return means you owe additional taxes
  • An error or omission on your tax return means you are due a refund
  • There is a question or additional information is required on your tax return
  • If you receive a letter or notice from the IRS explaining an outstanding tax debt or for any other reason, it will contain instructions on how you should proceed. In fact, many IRS communications are easily resolved without having to call or visit an IRS office.

Be sure to review the notice or letter to determine your responsibility. Compare it to any information, such as a tax return, that you have already submitted to ensure accuracy. If there is a discrepancy, notify the IRS immediately. Keep copies of all correspondence.

Additionally, the IRS offers assistance for your tax questions or tax debt needs. You may benefit from the Tax Toolkit, the Taxpayer Advocate Service or a Low-Income Taxpayer Clinic.

The IRS Offers Tax Relief Guide to Tax Payers

If you experienced financial hardships in 2011 that may affect your taxes and now you need some tax relief, the IRS offers “The What Ifs of an Economic Downturn.” This handy guide reviews the tax impact of different scenarios such as job loss, home foreclosure and back taxes.

Some of the more common economic challenges outlined in the booklet include:

What if you lost your job? One of the most important things tax payers need to remember (but can often overlook) is that unemployment benefits, severance pay and final vacation pay are all taxable income. If you don’t have taxes withheld at the time you receive payment, you will have to pay the taxes when you file.

In addition, if you withdraw money from your IRA or 401(k) to cover expenses while you’re unemployed, you’ll have to pay taxes plus, if you are under the age of 59 ½ you’ll owe a 10% penalty. Under some special circumstances – such as medical bills – you may be able to offset the amount you owe.

Keep in mind there are public assistance programs – food stamps and welfare – that you may be eligible for that don’t count toward taxable income.

What if you lose your home through foreclosure? You can generally exclude income from the discharge of debt on your principal residence, mortgage restructuring and a mortgage debt forgiven as part of a foreclosure.

There are limits on the amount of debt that can be forgiven – up to $2M ($1M if married and filing separately) – and only for debt forgiven in 2007 through 2012.

What if you can’t pay your taxes? If you are unable to pay all your taxes, file your return by the deadline and pay what you can. This will help you to avoid incurring more debt through penalties and interest. Then contact the IRS to discuss options.

You may be able to get a short-term extension, an installment agreement or an offer in compromise. In some instances, they may even waive the penalties. They do not waive interest accrued.

Whatever your financial situation, you have tax relief options. One solution may debt settlement. It can help you combine all your outstanding unsecured debt into one monthly payment, generally at a portion of what you currently owe.

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.

Get Tax Help With These Tax Reduction Strategies

Okay, we’re only into the third month of the new year and April 15th isn’t too far away. However, it’s never too early to begin giving some thought to your taxes for next year. Get tax help now with these tax reduction strategies.

  • Donate to Charity. If you’re cleaning out your closets, have an opportunity to give away canned and dried goods to a worthy cause, or can offer up a small financial contribution to a worthwhile charity, be sure to capture the information for tax purposes. Track the name of the organization, their address, the date of the donation and the amount of money or type of items you donated.
  • Add to Your 401(k) at Work. If you have an employer-sponsored retirement plan that allows you to take contributions before taxes, save as much as you can now, especially if your employer offers a matching amount. When you put money into your 401(k), you lower your taxable income for the year and increase your retirement monies. Even an additional 1% can make a difference and won’t hurt your pocketbook.
  • Itemize Deductions. While many people still take the standard deduction each year, consider itemizing deductions. Deductions worth itemizing include a home mortgage, medical expenses, job hunting expenses, charitable contributions, home office, and education expenses.
  • Don’t be Afraid of Knowledge. Make serious, ongoing attempts to become more knowledgeable about your taxes, at least those that most directly affect your personal financial situation. Don’t just accept what a tax expert tells you at face value. Ask questions.

And the other thing you shouldn’t be afraid of is asking for help when you need it. Whether you need tax help or help consolidating your finances. If you have outstanding unsecured debt and want more information about how a debt settlement loan can help you get back on your feet, contact us. We can answer your questions.

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.

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