How Does IRS Tax Resolution Work?

by IRS Logics Tax Resolution Software for Tax Professionals

IRS tax resolution includes numerous financial solutions, documents, and applications that reduce IRS penalties for late tax payments. Contacting a tax specialist to identify IRS resolution strategy that fits your budget and tax position is the best way to start. Strategies for tax resolution include:

• Instalment contract

Instalment agreements are the simplest tax resolution. An instalment arrangement involves paying the IRS a set monthly amount for up to six years. This is an ideal repayment strategy because the monthly payment is usually based on the taxpayer's income, allowing small tax payments. You agree to repay taxes with this agreement fully.

• Instalment partial payment agreement

A partial payment instalment plan is suitable for taxpayers who cannot pay their taxes in full. The IRS cannot collect taxes for more than ten years after the tax liability was assessed with this payment agreement. The monthly instalments usually depend on your salary.

The IRS accepts partial payments for whole obligations because some taxpayers cannot fully settle their debts. If you owe taxes, you won't have to pay when your monthly instalment agreement expires.

• Currently uncollectible

CNC is a unique IRS resolution instrument that lets taxpayers make their accounts uncollectible. Once your account is CNC, you will comply with any tax agreements you are part of without wage garnishments. This resolution helps you recover from heavy payments that endanger your finances.CNC is often utilised when instalment agreement payments are expensive. This may be because your income cannot cover your living expenditures and instalment arrangement.

• Innocent spouse relief

Most married couples pay taxes jointly, although both are responsible for tax obligations. You may only owe back taxes if you report income correctly or claim appropriate deductions or tax credits. Innocent spouse relief needs a joint tax return with the current tax payable and other forms to request relief for the taxpayer who did not understate the tax.

Innocent spouse relief is a viable alternative for married couples who filed taxes jointly without knowing any of the information was incorrectly filed. You and your ex-spouse must pay joint taxes after divorce unless you obtain innocent spouse relief.

• Abatement of penalties

Penalty abatement reduces IRS taxes. Tax debt usually results in fines for late payments or underreporting income. These fines are assessed and removed from the debt using penalty abatement.

• Compromise offer

An offer in compromise is another way taxpayers can settle their tax liability for less than the IRS. This is the best IRS fresh start. This technique involves negotiating a tax settlement with your tax adviser that won't strain your finances.

• Release of IRS wage garnishment

Finally, the IRS can release wage garnishments and place your account on collection hold while analysing your tax status. Wage garnishments are forced payments by the IRS to pay off your tax debt. However, significant wage garnishment can make it hard to pay your bills.

By requesting for IRS wage garnishment release, you can work with a tax adviser to create a financial strategy. This is ideal for people overwhelmed by wage garnishment and requiring time to file IRS forms for other tax relief solutions.

Conclusion

Preparing tax returns is another IRS tax resolution. The IRS resolution may have submitted a substitute return for a taxpayer, and filing a correct tax return may fix it. The taxpayer could also request innocent spouse relief or equitable remedies to resolve the issue.