Tax Benefit Analysis

Imagine sitting down, doing your taxes and the sinking realization hits that you owe the IRS money. A thousand thoughts flash through your head wondering if they are going to seize your bank account, if you will lose your business or your home or even if you will wind up in jail. But, don't worry just yet, there are several tax relief options available to you.

IRS Collection Enforcement Actions

Once you have determined that you owe the IRS money, it is in your best interest to resolve the debt as quickly as possible. After filing your taxes, you receive a bill and a letter explaining the amount owed and a notice of your right to appeal. If you ignore the letter and do nothing about it in a timely manner, the IRS begins to exert collection

actions against you.

Federal Tax Lien

A federal tax lien is the IRS's claim over any property you have, like your home.

A tax lien is generally placed against your property after the full amount is not paid within ten days. This works against all property you currently have as well as any property you acquire in the future, or until the debt is paid in full.

Federal Tax Levy

A federal tax levy is the IRS seizure of any assets or property you own, such as your retirement account, bank account, wages in the form of wage garnishment, houses, boats, cars or other property that applies funds to your tax debt.

Tax Evasion Charges

In some cases, depending on the situation and the amount owed, an individual can have federal charges pressed against them for tax evasion resulting in a criminal investigation and possible incarceration.

Options for Settling Your Tax Debt

Always file your return or ask for a tax extension, the penalty for unfiled tax returns is much higher than paying for filing late. Furthermore, if you do not file a tax return, the IRS has the power to file on your behalf, which usually does not work out very well most of the time. Always be honest on your tax return because if the IRS doubts the accuracy of your claims, you are faced with a full audit being conducted against you. You have several options available to you when settling your tax debt.

Installment

Agreement

If you are unable to pay your tax debt in full and in a reasonable time frame, you can ask for an installment agreement. An installment agreement is a payment plan that involves paying a fixed payment on a monthly basis. Your tax debt is generally spread out over the course of seventy-two months. Many people pay a lump sum within the first ten days and then enter into an installment agreement for the remaining balance.

IRS Fresh Start Program

The IRS Fresh Start program, better known as an offer in compromise, is another option if you are unable to pay your debt in full or cannot financially handle the minimum monthly payment of an installment agreement. An offer in compromise allows you to pay your tax debt for less than you owe.

If you have tax debt and would like it resolved, talk to a tax resolution professional and find out which option is best for you.