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When Not to Deal With The IRS Yourself
Simple resolutions, such as full payment of tax debt or filing an amended return, to correct an error are simple procedures that do not require assistance from an expert. It is a different and difficult road, however, when resolving complex tax issues such as tax debt reduction, penalty abatement, and debt forgiveness. Such issues not only required knowledge but experience and expertise, as well.
Here are occasions when it is best to let a professional handle the case.
Reduction of Tax Debt
The IRS tries to collect the most in taxes. They only reduce the tax debt if they see that there is no other way to collect the full tax debt. The IRS has the power to place liens and even sell a property or asset to satisfy the tax debt. Therefore, you need to review your full financial condition (including bank accounts, retirement accounts, real estate, and other assets) before applying for a reduction.
For maximum reduction, you need to assess the particulars of your case with respect to the tax laws, prepare your case, and hold negotiations with the IRS. For tax debt reduction, there are agreements such as the Offer in Compromise and partial payment installment agreement. After thoroughly studying a case, a suitable agreement should be applied.
For Larger Tax Debt
Resolution of tax debt for smaller amounts is simpler. For amounts more than $50,000, however, the IRS does not allow applications for an established installment agreement. Negotiations with the IRS become necessary, even if you have the full ability to pay and wish to make the payments in installments.
Even when you are paying the full amount, tax lawyers can help in lowering your total tax debt by determining how much to pay in each installment. As the IRS charges penalties and interest even after you have begun to make payments, it is essential to determine beforehand the amount you will be paying in penalties and interest, and adjust your payments.
Penalty Abatement
You can get a reduction in IRS penalties if you fulfill certain criteria. If your tax debt penalties are high or have accumulated to a large amount over the years, qualifying for penalty abatement can drastically reduce your total tax debt.
Innocent Spouse
If you are charged with tax debt when you were unaware of the understatement of income on a return jointly filed with your spouse that led to the debt, you can achieve full relief from paying the debt. The entire responsibility for its payment will fall upon the liable spouse.
The IRS operates under the tax laws laid forth in the tax code. Knowledge of tax laws is essential in resolving any complex issue with the IRS. Experience and expertise achieved over the years can make a big difference in how a case is resolved. Even though hiring outside helps costs, it can help you to reduce your total tax debt and/or get you through to resolution smoothly and quickly.