Tax Forgiveness – Do you owe tax debt to the IRS?
You may qualify for tax forgiveness by an offer in compromise with the IRS. It is estimated that there is an outstanding tax debt in the United States at around $527 billion. 14 million Americans owe tax to the IRS and overtime their taxes acquire penalties and interest. Getting behind on taxes can be quite risky; individuals who are not educated to the tax laws can easily fall into tax debt. Many low-income families forget to file their taxes due to lack of knowledge, limited time, financial instability, and no source of education. Tax debt can take a great toll on an individual due to crushing penalties and interest on top of the actual taxes owed. So, the sooner you can pay it off the better.
Many people don’t know what to do after they find out they have tax debt. They ignore the situation in hopes the IRS will back off but unfortunately, that is not the case. There are two ways to go from this:
*Pay the debt in full and additional penalties and additional payments;
*File for tax forgiveness with the IRS and also with the Virginia Taxation Department to reevaluate your file.
You may qualify to have your tax debt forgiven.
Tax forgiveness is an option available to many individuals and families. Under certain circumstances the IRS considers forgiving tax liability, your current financial condition is taken under consideration first which means the IRS CAN’T collect more than you can reasonably pay. It is important to acknowledge your situation and write down the obstacles that are preventing you from paying your tax debt.
Filing for tax forgiveness has requirements such as:
*If you did not file your tax returns then they must be filed with the IRS and Virginia.
*You must disclose in writing your circumstances along with a list of expenses with your IRS and Virginia Offer in Compromise
If you meet these requirements you can then use the IRS Offer in Compromise Pre-Qualifier which determines if you are eligible for tax forgiveness through the Offer in Compromise (OIC).
Once you are determined eligible after taking the Pre-Qualifier then you can draft your offer in compromise documents for the tax forgiveness. The offer in comprise helps you pay less than you have to by offering a specific and realistic amount that can be paid within 30 days. If your tax debt is more than $10,000, this is the best route to take. Consider getting assistance from an attorney to advise you what to do moving forward and come to a mutual agreement with the IRS.
The IRS also has the 10-year Statute of Limitations in place, which states that the IRS has 10 years to collect unpaid tax debt, after that the IRS writes the debt off. Many taxpayers are unaware of the statute of limitations because it is not in the best financial interest of the IRS to make it known. There are many ways the statute of limitations can be tolled that can make the 10-year period longer than it actually is. Some of the setbacks that cause tolling (stopping) the statute of limitations are bankruptcy, filing an offer in compromise, filing appeals, filing a lawsuit against IRS, being out of the country for at least 6 months, etc. To read more on Statute of Limitations refer to the following IRS website.
If there is a failure to pay tax debt the IRS can potentially file a claim against your property which is called a Tax lien. A Tax Levy is when the government can legally seize your property to satisfy the unpaid tax debt. You can also experience wage garnishment which is when the IRS will take part of your income to satisfy unpaid tax.
The IRS can take many steps to satisfy the unpaid tax debt but if you stay cautious and pay on time this can be avoided. If you need help filing for tax forgiveness reach out to Mughal Law Firm. Many people have struggled to get their taxes paid on time due to several reasons including financial instability. If this is the case for you give us a call today!
Forms/Links:
Virginia Financial Hardship Offer in Compromise
You may wish to read our IRS EIN Registration Article here.
