What is tax resolution?
Tax resolution includes many services and goes by different names (IRS representation, tax relief, tax problem recovery, tax resolution, tax controversy) but in summary, tax resolution is a service in which you help a client resolve their open debt with the IRS in a way that minimizes the debt as much as possible.
Tax resolution services include:
It will generally approve an offer in compromise when the amount offered represents the most it can expect to collect within a reasonable period of time.
The IRS allows taxpayers to pay off tax debt through an installment agreement. Because interest and penalties will apply, however, the IRS encourages taxpayers to pay taxes immediately. Interest and penalties can equal 8% to 10% per year. If paying the entire tax debt all at once is not possible, an installment agreement is an alternative allowed by the IRS. The IRS has four different types of installment agreements: guaranteed, streamlined, partial payment, and non-streamlined.
You may qualify for relief from penalties or Penalty Abatement if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control. Penalties eligible for penalty relief include:
The Innocent spouse rule allows a taxpayer to avoid a tax obligation arising from errors made by a spouse on a joint return. Most commonly, the error involves unreported income or an inflated deduction. Innocent spouse relief only applies to individual income or self-employment taxes. The taxpayer must apply for relief within two years of the IRS initiating collection.
Tax Lien avoidance or removal. A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes. A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.
The Trust Fund Recovery Penalty (TFRP) is a penalty assessed against those who have the responsibility of collecting and paying over trust fund taxes (i.e. payroll taxes) to the government and willfully evade or attempt to evade payment.
Bankruptcy is sometimes the best tool when dealing with delinquent taxes. You can discharge (wipe out) debts for federal income taxes in bankruptcy only if all of the following conditions are true: