The average American taxpayer has paid over $20,000 in federal tax debt in 2021. That’s a lot of
money to owe! But if you’re reading this article, I’m guessing you already know. You probably already feel overwhelmed by the debt burden and anxious about how to pay it back. Good news: there are ways to get out from under your mountain of tax debt without going bankrupt or ruining your life forever. There are several types of tax debt relief programs available that can help reduce your overall balance while making payments more manageable and affordable for
you—without having to file bankruptcy or face criminal penalties for tax fraud!
But first, let’s discuss why it’s time for you to get a tax resolution.
- Your Debt Seems Unmanageable
If you owe taxes, but you’re unable to settle them, there is no shame in asking for help. The IRS will not punish you for asking, and they are often willing to work with financially struggling
people. They understand that life happens, and sometimes unexpected expenses come up. Suppose you have missed payments or been contacted by the IRS because of an unpaid tax bill; you must contact them immediately to find out what options are available to reduce your debt and prevent further action from being taken against you.
- You’re Behind on Your Payments
If you’re behind on your payments, it may be time to take action. The IRS can garnish wages, bank
accounts, and other assets to help collect unpaid taxes. If the IRS cannot collect the total amount due from you and your employer, it will place a lien against all property in your name. If you don’t pay what is owed after receiving a notice of tax lien, federal law requires them to sell off your
property at auction to pay what they say is owed.
A tax debt relief plan offers an alternative way for individuals or businesses who owe back taxes
to resolve their debts with the Internal Revenue Service (IRS). In addition to helping taxpayers get out of debt by paying off their outstanding balances over time rather than immediately settling on one lump sum payment as part of an Offer-in-Compromise (OIC), there are other tax relief programs offered by the IRS and that includes:
- Installment Agreement
An installment agreement allows consumers to repay debts through a series of payments over time. This can be useful for people who need more time to pay their debt or who want to delay their payments because they are having trouble making ends meet.
- Penalty Abatement
This IRS program refers to the process that allows you to reduce or eliminate your tax penalty.
The IRS will allow you to apply for penalty abatement if you can prove that the failure to pay was due to the considered reasonable cause provided by the said agency.
This means that the IRS will consider any circumstances beyond your control, such as:
– Death, serious illness, or inability to pay due to health condition of the taxpayer or taxpayer’s immediate family
– Natural disasters or disturbances
– Inability to obtain documents or records
- You Haven’t Filed Returns in Years.
While it’s not a good idea to ignore your tax debt, your situation is likely to worsen if you
have filed returns in the past and are now behind on payments. Not filing is an automatic red flag for the IRS—there’s a good chance that the IRS has been watching you. You need to understand the consequences of not filing taxes because if your tax debt is big enough, the penalties and interest on it could amount to more than what you originally owed. If you haven’t filed returns in years, the IRS will send you a notice that you haven’t filed your taxes and then another one when it’s past the deadline. The IRS issues a failure-to-file penalty on top of their original demand unless you have a reasonable reason for this action. These penalties can range anywhere from $100 per day up to $25,000 per day depending on how long ago they were due, as well as other factors such as income level and so forth. Another thing to be wary about, as you have been inactive with filing your taxes for years, interests will incur as well.
- For the worst-case scenario, when it comes to an audit or other situation where they need more information from you, they may use this as grounds to investigate further into whether there’s been any criminal activity involved with failure to file taxes.
- You Have Garnished Wages and Bank Accounts
A wage garnishment is a legal order or court order to deduct money from your paycheck and send it to your creditors. It is intended to help you pay back the money that you owe. Meanwhile, a bank garnishment happens when an account manager with the relevant authority orders that a sum of money be withdrawn from your bank account(s) so that it can be applied toward your debts. Generally speaking, wage garnishments are more common than bank levies because they’re easier for creditors to enforce than other methods of collecting debt payments—such as through property seizures or repossessions—which require additional court orders or processes for them to take place.
- You’re Overwhelmed by IRS Communication
One of the most stressful parts of dealing with the IRS is the fact that they can be very aggressive. This is especially true when it comes to collection. The agency has a lot of power and will use it if you don’t get in touch with them immediately.
In addition to this, since there are so many different ways to file taxes, the IRS can also be confusing. Most people don’t know how to navigate through all their options or what information they need from other sources like banks and employers before filing their taxes correctly. It’s easy for mistakes to happen if you’re not careful.
The last problem with dealing with IRS communication is that it’s often overwhelming; between
letters from collection agencies, court summonses, and bills from creditors threatening legal action, there seems to be no end in sight!
Now that we have discussed one by one the best possible reasons for getting tax relief, let us cover the ways to find the best tax debt relief agency:
- Look at credentials and certifications related to their work in this field. Having those credentials shows that they’ve been recognized by experts in the field as being good at what they do, so that’s a great indication that they’ll be able to help you too!
- Check out their reviews. You can check out review sites like Yelp or Google to see what other people have said about the company or individual. This might offer you a sense of how they deal with issues and whether or not they can assist you with whatever situation you’re facing.
- Look at past performance records, if possible. If a company has been in business for a long time with an excellent track record, then it’s likely that they have lots of happy customers with successful tax debt relief settlements.
To sum up, debt relief is an essential option for people facing large amounts of debt. It can help you get out from under the weight of your debts and put you on a path to financial freedom. If you’re struggling with debt, or if your debt is becoming unmanageable, consider consulting with a professional about how best to move forward.