When you owe a substantial and accruing amount of tax debt to the Internal Revenue Service, it can feel absolutely crushing. The prospect of going up against a large federal agency, particularly the IRS, will stress and intimidate most of us. In such cases, it is important that you don’t try to do it all on your own, and seek the counsel and guidance of an experienced Florida tax lawyer.
It would be in your best interest to use your tax attorney’s skill, knowledge and resources to help you contest and clear your IRS tax debt. If you ignore taking prompt action, you may lose your home, wages and other assets. If you are struggling with repaying these large sums, please remember that there are several ways in which you can settle your debt and regain your financial stability.
Lump Sum Payment
Paying your tax debt in one lump sum can be a smart way to get rid of penalties and to reduce the amount you owe to the IRS. While it might be difficult to make a one-time payment, your Florida tax attorney can advise you regarding the best course of action to follow as well as regarding all the options available to you for settling your IRS tax arrears.
One way to settle your tax debt is to enter into an installment agreement with the IRS. So, just like a loan or credit card, this gives you the ability to make monthly payments that you can handle until you pay off the entire amount. The IRS knows they have the power to collect what you owe them. And as these payments are charged interest, they collect more by extending the term.
You may make a payment through payroll deduction, direct debit, check, money order, credit card or you may pay online under such an agreement. The IRS can revoke your agreement if you miss a payment, don’t file a tax return, provide inaccurate information on Form 433-F or pay under a partial payment installment agreement and a review indicates a change in your financial position.
Offer in Compromise
An offer in compromise allows taxpayers the opportunity to settle tax debt usually for a fraction of the amount they actually owe to the IRS. This might be a viable option if you cannot pay your entire tax debt or if doing so creates a financial hardship for you. In such cases, the IRS will consider a number of factors including your income, expenses, ability to pay and asset equity. The IRS will typically approve an offer in compromise if the amount you offer represents the most they can expect to collect from you within a reasonable period of time. You may choose to pay the offer amount in a lump sum or in installment payments.
Filing for Bankruptcy
In some cases, you may be able to discharge your tax debt if you file for bankruptcy. Individuals may be able to discharge tax debt by filing Chapter 7 bankruptcy as opposed to Chapter 13 where they may have to pay off the debt in monthly installments. While you may be able to wipe out debts for federal income taxes in Chapter 7 bankruptcy, there are certain conditions you would be required to meet:
- The taxes owed should be income taxes. Any other type of tax such as payroll tax or fraud penalties may not be discharged.
- If you filed a fraudulent tax return or tried to evade taxes by using inaccurate or false information on your tax return, bankruptcy will not help you erase your tax debt.
- To erase what you owe in taxes by filing for bankruptcy, your tax return relating to the debt should have been filed at least three years prior to the bankruptcy filing.
- You must have filed a tax return for the debt you would like to erase at least two years prior to the bankruptcy filing. You may or may not be able to discharge tax debt that is the subject of a late return.
- The income tax debt you incurred should have been assessed by the IRS at least 240 days before you file for bankruptcy.
Innocent Spouse Relief
If your spouse fails to pay his or her taxes and you have a joint income account, you may not have to pay the debt. This type of assistance may exempt you from your tax debt burden if your spouse or former spouse owes the IRS a tax debt. However, you may be responsible for tax, interest and penalties that might not qualify for this type of relief. The IRS may collect these debts from you or your spouse. Innocent spouse relief applies only to individual income or self-employment taxes. In order to be eligible for innocent spouse relief, you must meet the following conditions:
- You filed a joint tax return in which the tax was understated erroneously.
- You will need to establish that when you signed the joint return, you were not aware of an understatement of tax.
- You also need to demonstrate that it would not be fair to hold you accountable for your spouse’s or former spouse’s understatement of tax.
- You must show that illegal property transfers have not occurred between you and your spouse or former spouse.
Preventing Wage Garnishments
If you owe the IRS money, the agency may begin taking a portion of your hard-earned wages in order to recover the money. Typically, this action known as a wage garnishment will not happen until after your accounts have been frozen and your assets have been confiscated. As part of this action, the IRS can take a portion of your wages for each pay period directly from your employer. If you are being subject to wage garnishment, it is time to speak with an experienced Florida tax lawyer who can help you negotiate a settlement with the IRS. In order to have your garnishment lifted, you must prove to the IRS that you don’t have the funds to meet the basic standards of living.
Contacting a Florida Tax Lawyer
If you are feeling overwhelmed by your IRS tax debt, it is imperative that you immediately contact an experienced Florida tax attorney who can help negotiate with the IRS on your behalf and assist you with resolving your tax problems in a speedy and efficient manner. Do not wait for those penalties to pile up. Please contact our experienced Florida tax lawyers today for a free consultation.