Find Out How To Get Federal Tax Relief with a Lawyer
Most Americans look forward to the possibility of getting a refund every tax season. However, quite often, taxpayers end up owing money to the IRS. This is especially common among people with multiple streams of income, small businesses and lucrative side gigs. Because many Americans are only just getting used to the changes made by the most recent tax reform, it is common to receive an unexpected tax bill with no money set aside to pay it. A tax lawyer can help you review your options and decide what tax relief options may work best for you.
What Is Federal Tax Relief?
There are two sides to tax relief: The private and the government aspect. The private aspect involves the work of tax professionals to reduce tax bills to manageable amounts. This includes the work of financial advisors during the tax year, the work of accountants when filing taxes and the work of tax lawyers when handling the legal aftermath.
The government aspect refers to federal programs that individuals can use to reduce their tax debt loads. Some examples include tax credits, exclusions, deductions and appeals processes. The IRS also has programs and processes that taxpayers and private tax relief entities can take advantage of.
What Are Some Useful Tax Relief Options?
Americans have come to view the IRS as a greedy government agency that aims to collect as much money from civilians as possible. After all, the federal income tax rate can cause people to lose as much as 37% of their incomes. While taxpayers often have very good reasons for feeling this way, the IRS does have programs in place to help people get their finances back on track.
Employee Retention Credit
During economic struggles, Americans who are personally responsible for paying their own taxes may struggle to do so. This most often includes gig workers and small business owners. Because of this, the IRS launched the Employee Retention Credit program. It allows qualifying businesses to reduce some employment taxes by up to 50% of qualifying wages, based on retaining and paying employees from March 12, 2020, to January 1, 2021. If you fear you will have an unmanageable tax bill next tax-filing season, look into this option.
Earned Income Tax Credit
Yes, wealthy people do pay higher tax rates than others. However, lower-income families struggle more than anyone else to pay taxes and maintain a decent standard of living. Because of this, the IRS allows some lower-income families to reduce or eliminate their tax liabilities. The more children in the family, the higher the income limit. For instance, the IRS sets a qualifying income limit of only $15,570 for single filers. However, a married couple with three or more children could make up to $55,952 and still qualify.
If you do not qualify for any of the existing programs and decide to pay, you could negotiate an installment agreement with the IRS. The Federal Trade Commission explains that the IRS provides this option under its Fresh Start Initiative and sets income limits for qualifying persons. Unfortunately, you may need to owe as much as $25,000 to $50,000 in tax debt to qualify for the five-to-six-year payment plan. If you owe less than this, you may still negotiate a repayment plan.
The principal owed to the IRS is only one of the problems you may face when you have tax debt. When the debt remains unpaid for some time, it begins to accrue interest. The IRS may also add penalties to the principal. All of these can cause the balance to grow over time. In some cases, you may successfully make an argument to have interest and penalties forgiven. It is worth noting that you may have a much easier time getting forgiveness for your penalties than your interest.
Offer in Compromise
When most people hire a tax lawyer for assistance with tax relief, they want to settle the debt. The formal process the IRS has in place for this is known as an Offer in Compromise. The FTC identifies this as another inclusion in the IRS’s Fresh Start plan. Note that the IRS may refuse the offer to settle if it believes you are perfectly capable of paying the full balance owed. An experienced attorney can improve your chances of qualifying for a reduced payment.
How Do Taxpayers Make an Offer in Compromise?
One of the big reasons settlements are so common a pursuit among taxpayers who owe is that it can reduce the debt load significantly. Some people settle for just a few dollars or a few hundred. Others may need to pay several thousand dollars, but it still ends up much less than the original amount owed. The IRS recommends the following steps to increase the likelihood of a successful settlement:
- Take the time to confirm eligibility before filling out an application.
- Set aside as much money as you can to pay the debt, but beware of acquiring too many assets.
- Submit your offer to the IRS by completing the necessary forms.
- Select whether you wish to make a lump-sum payment or periodic payments.
Your tax lawyer can help you with each step of the way. He or she can also potentially stop you from pursuing an unlikely case if your eligibility is in question.
Do You Need To Work With an Experienced Tax Lawyer?
The IRS is unlike other creditors you may have worked with in the past. It has powers that exceed what you may have experienced so far with private lenders. The IRS can withhold refund checks or even revoke your passport in its efforts to ensure you pay your tax debts. When cases continue for some time, representatives may even visit your home as part of the tax collection efforts.
A tax lawyer can help you resolve these issues when they arise. Even better, an experienced attorney can help you tackle your tax debt before the IRS resorts to adverse measures. Finding a good, local lawyer is the hard part.
We can help. Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!