How to Get Rid of Your Back Taxes For Good and Get Relief

3. Offer in Compromise

An Offer in Compromise is an agreement with IRS that reduces your tax debt. The agreement allows you to pay the IRS part of what you owe, and the tax agency agrees to forgive the rest as a compromise.

For instance, if you owe the IRS $100,000, you can offer $60,000 to satisfy your debt. If the IRS accepts your offer, the tax agency will write off the remaining $40,000 debt.

To determine whether you qualify for a compromise, the IRS will review the following:

• Income
• Expenses
• Asset equity
• Your ability to pay

The application fee for an Offer in Compromise is $205, which is non-refundable. IRS can waive this fee if you’re a low-income taxpayer.

To qualify for an Offer In Compromise, you’ll answer a series of questions using the IRS OIC Pre-Qualifier tool. The tool will examine if you:

• Are up to date on all your tax returns 
• Have filled a valid extension
• Made all required estimated tax payments
• Have deposited payroll taxes for the current and past two quarters if you are an employer 
• Are in an open bankruptcy proceeding, which would disqualify from an Offer in Compromise

Applying For An Offer in Compromise

Some things in the IRS Form 656-B you need to know are:

• You’ll incur a $205 fee, which is non-refundable. People in the low-income bracket can get a waiver.
• You’ll need to make an initial non-refundable payment
• You must be current on all your tax returns. If you haven’t filed a tax return for a while, you might not qualify.
• The IRS might file or keep tax liens in place until it accepts your offer and fulfilled your end of the deal
• You can’t qualify for an Offer in Compromise if you’re in an open bankruptcy proceeding
• Once you file your application, the IRS suspends collection activities
• If the IRS accepts your offer, your initial payment has to be either 20% of what you’re offering to pay
• Some information about your Offer in Compromise could go public because the IRS’ inspection file include the taxpayer’s name, city, state, liability amount, ZIP code, and offer terms 

4. IRS “Currently Not Collectible” Status

If you can’t afford what you owe the IRS and your living expenses, you can ask IRS to place your account in “currently not collectible” (CNC) status. With this designation, the IRS will delay its collection. 

The tax agency might ask you to complete a Collection Information Statement for wage Earners, and Selft-Employed Individuals form or Collection Information Statement to confirm you’re in a bad financial situation as you claim.

Even with a “Currently not Collectible” status, penalties and interest on your tax liability will continue accumulating, and the debt won’t go away. Some of the things you need to know about this tax resolution include the following:

• The “Currently not Collectible” status is temporary. The IRS may review your income annually to check if you’ve improved your financial situation.
• The status won’t make your tax debt go away.
• The tax agency can still file a  tax lien against you

To be eligible for CNC status, you need to file any past-due tax returns and give the IRS your financial information, such as income and expenses detail.

Once your account has the CNC label, the IRS will review your finances annually. If your financial situation improves, the IRS may try to collect the balance you owe.

When You Owe The IRS: Do You Resolve IT Yourself or Hire A Tax Attorney?

Resolving tax debts on your own is appropriate in certain circumstances, such as when the cost of retaining the professional outweighs the potential savings your may receive.

You’ll find that most tax resolution attorneys have a minimum debt amount you must meet before they can consider your case. Whichever the case, you need the best approach to resolve the tax debt. 

To understand your options, evaluate the following:

Tax Resolution Resources Available

Many people don’t know how to utilize the available relief programs to secure the best level of relief. You need to check what tax relief programs you qualify for.

The IRS will determine whether you qualify for one relief program using your zip code and measuring your monthly allowable expense against your:

• Income
• Assets
• Extraneous circumstances

Evaluate What a Tax Lawyer Can and Cannot Achieve

While a tax resolution attorney can help you clear all your tax back, they aren’t a magical solution to your tax problem. What a tax attorney can do is help you resolve all your tax debt as effectively and efficiently as possible.

Resolving tax liabilities yourself could mean:

• Hours on the phone
• Months or maybe years communicating with the IRS
• Hundreds or thousands of dollars in penalties or interest fees 

A tax resolution attorney will shoulder all the heavy lifting for you. The qualified professionals at the forefront of your fight can help you resolve your tax problems as soon as possible.

Not All Situations Require a Tax Resolution Attorney

A tax attorney isn’t always the right choice for every type of liability. Most initial tax debts are often relatively low — a few hundred or thousand dollars. While the amount might be enough to cause you financial hardship, it isn’t enough to justify the cost of hiring a tax attorney to resolve the issue.

If your low tax debt amount disqualifies you from seeking a tax resolution attorney, do not hesitate to fix it yourself. Unpaid tax debt attracts daily compound interest and monthly failure-to-pay penalties, which can quickly swell up your tax balance.

How Do You File Back Taxes Yourself

If you’re behind on filing your tax returns and want to file for previous years, here is an approach to resolve it yourself:

• Collect all your tax documents for the tax year in question. For instance, if you’re filing your 2019 tax return, you’ll need your W-2, 1099s, and any other pertinent document from 2019.
• Get a transcript if you don’t have one. You can request an IRS tax transcript for your filing year.
• Use the right forms. Don’t file a 2019 tax return using a 2022 form because tax rules and forms are different every year. Search for older forms and instructions on the IRS site.

Getting a Tax Resolution Attorney

One of the best ways to deal with back taxes is to hire an attorney to walk you through the settlement journey. You should get a tax lawyer when:

• You are confused about the process of settling back tax debt
• You need help to leverage tax relief programs the IRS offers
• An IRS Revenue Office has assigned to you a case
• You owe a tax agency more than $100,000
• The IRS is intimidating, and you are uncomfortable talking with them on your own
• You’re willing to hire a representative to save yourself the time and stress of trying to figure it out yourself
• You have unreported income or other indication of tax fraud
• You have valuable assets you want to protect and keep away from IRS

The relationship your tax relief attorney has developed over the years with IRS agents, and revenue officers can help you quickly come to a resolution with your case.

Let A Tax Attorney Shoulder All Your Burden of Back Tax Negotiations For You

Tax laws are complex, and a tax attorney can help you deal with the IRS and other state tax agencies. An attorney understands the resolution option for a wide range of tax issues and will work to ensure you get the best arrangement for your situation.

Our trained tax attorney can help you:

• Release tax liens
• Settle your tax debt
• Provide IRS Audit help
• Stop bank levies and wage garnishments
• Defend yourself against criminal tax charges
• Manage, resolve, and settle even the most complex tax liability problem

We aim to get you the best possible outcome. Contact us today via (678) 539-0591 for a free, no-obligation consultation to learn about the available back tax settlement options.