Tax Relief Solutions

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 IRS.gov 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.

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.

ABOUT OPTIMA TAX RELIEF

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.

The federal deficit is pressuring Americans with tax debt

The United States tax code has grown from its original 900+ pages in 1913 to over 70,000 today. As a political football and vehicle for elected officials to deliver tax breaks to special interests that help get them reelected, don’t look for the tax code to be simpler and more user-friendly anytime soon. In fact, if you’re facing a tax debt look for more aggressive tax enforcement from the IRS as a triad of irresistible forces converges on you:

1.  Government deficits will continue.

Look for a fiscal year 2012 federal deficit up in the stratosphere of $1.33 trillion! If all the government borrowing and interest on the debt is taken into account, we can expect the debt to grow even faster. The deficit provides a powerful impetus to the IRS to be aggressive and relentless in its collections. Even so, the IRS estimates that about 16 percent of people who owe taxes never file. That delinquency costs the government over $500 billion each year and makes the IRS look bad.

2. The IRS will improve its collection enforcement process.

Look for the IRS to do several things in addition to adding to their army of collectors. Their game plan will include speeding up individual collections by:

  • Giving final notice of IRS “Intent to Levy” much earlier in the process. This forces a longer appeal process, but could cause the taxpayer problems if the appeal is not filed quickly.
  • Quicker levies to bank accounts and wages when the IRS feels that the taxpayer’s appeal has not been filed early enough.
  • Dealing with taxpayer levy appeals and “frivolous” Tax court cases. Previously it took 6 to 12 months for such appeals. The IRS has cut that time in half. Moreover, if the IRS can convince a tax court judge that someone has filed a Tax Court case with no merit and for the purpose of delaying the process they will file a motion for summary judgment as well as sanctions.

3. The deficits will not be resolved by less government spending.

Unfortunately, so long as we have a federal government with its millions of people who benefit from government, the deficit will not go away anytime soon. In fact, over half of the federal budget (i.e., entitlements) each year is spent before any government agencies gets their budget. Again, the IRS, as the principal revenue- raising agent, can expect to experience even more pressure from law makers to at least collect what is already owed.

The IRS also has a great argument to resist budget cuts for their own organization in these times of recession: They are the only government agency that actually brings in more money than it spends.)

The good news is…

In view of public pressure and the continuing recession, the IRS will likely be more willing to engage in the “Offer in Compromise.”  Using that process, eligible taxpayers can wipe out a hefty tax debt. Here at Optima Tax Relief we can help with tax negotiation and settlements, back taxes, etc.

Where to Get Tax Relief from IRS Tax Penalties

Did you know that the Internal Revenue Service (IRS) may charge taxpayers with any one of over one-hundred and forty tax penalties? However, some of the more common penalties that you might face include:

  • Failure to file taxes
  • Late payment of taxes
  • Underpaying estimated taxes
  • Substantial understatement of taxes
  • Negligence or intentional disregard for paying taxes
  • Getting tax relief from IRS tax penalties can often be complicated. However, there are places that you can turn to for help.

TAXPAYER ADVOCATE SERVICES

Taxpayer Advocate Services (TAS) is an independent organization within the IRS reporting to the National Taxpayer Advocate. It was designed to assist taxpayers who are experiencing economic harm, such as an inability to provide daily necessities (i.e. housing, transportation, food). TAS offers taxpayers assistance in resolving IRS problems that they haven’t been able to resolve through normal channels.

OFFICE OF IRS APPEALS

Because the IRS is made up of many different departments, each making decisions about tax issues, the Office of Appeals acts as an “informal administrative forum” to help with tax law disagreements. It is independent of the IRS in order to provide “fair and impartial” services, both to the taxpayer and the U.S. government.

TAX ATTORNEY

Depending on your situation, you may need to hire a tax attorney. A tax attorney can assist you with actions such as filing delinquent taxes, dealing with a tax lien, negotiating an offer in compromise, and releasing wage garnishments.