If you owe money to the IRS, your debt, alongside mounting interest and penalties, can begin to feel overwhelming. With the harsh methods of recovering owed debt that the IRS has at its disposal, understandably, this can become a significant source of worry.
The experienced attorneys at Ronald Arthur Stearns Sr. PLLC have an in-depth understanding of the breadth of programs, approaches, and options available to taxpayers to find relief from their IRS debt. Attorney Ronald Arthur Stearns has over 26 years of experience navigating the complexities of the IRS system and its abatements, debt forgiveness, and tax relief approaches.
Penalty waivers, refunds, asset protection, debt forgiveness, and manageable payment plans could all be an option for you. If you are struggling with your tax liabilities, contact Ronald Arthur Stearns Sr. PLLC as soon as possible. The longer you wait to address your tax debt, the more interest and penalties you will receive, and the closer you could get to severe repercussions.
Contact the Ronald Arthur Stearns Sr. PLLC team today by calling 210-853-2135 to schedule an initial consultation.
Consequences Of IRS Debt
You may originally find yourself in debt with the IRS for several reasons, such as an audit that reveals you underestimated your tax liability and owe more than you initially thought or penalty charges for filing your tax return late or missing an initial payment. Once you owe a tax debt to the IRS, they can employ a range of harsh methods to encourage you to pay and recover your debt owed.
You could receive penalty charges from the IRS for several reasons, such as overstating your pension contributions, filing your tax return late, or failing to pay your tax bill. Often, these penalties are imposed on a recurrent monthly basis until the error is corrected. These recurrent penalties can quickly mount up and create a substantial financial burden.
On top of your original tax debt and recurring penalty charges, your tax bill will also be subject to interest for the period your debt is outstanding. Interest will accumulate on your IRS debt on a daily basis while it is unpaid. Generally, the interest rate is the federal short-term rate plus three percent of your debt.
The IRS has a range of potentially harsh and aggressive methods of debt recovery at its disposal. Garnishing your wages, or wage levies, are one method that can be utilized to recover your unpaid tax bill. In this situation, the IRS will work with your employer to deduct a monthly payment directly from your paycheck before you receive your wages. These deductions can continue until you set up a different means of paying your debt or until your bill is cleared.
Wage garnishing can be embarrassing for a debtor whose employer must be informed of the debt and can also result in financial hardship with such a significant reduction to your monthly take-home pay.
Federal Tax Liens
Placing a lien against your property is another method of recovering unpaid taxes for the IRS. A federal tax lien is a court judgment against your personal property, real estate, or financial resources. This judgment states the government’s legal claim to your property, personal or business, as a means of recovering your tax debt.
If you liquidate an asset or sell real estate with a lien against it, you will need to pay your tax debt out of your portion of the sale and satisfy all outstanding liens on the property. Alternatively, the property buyer can pay off the lien alongside their purchase.
Having a lien against your assets does not mean that the IRS will imminently seize and sell the property. For an asset to be seized and sold, your lien must be converted to a levy. If you do not work with the IRS to settle your tax debt, a levy may be enforced against your property. This is the legal right to seize your property to satisfy your debt. In this situation, the IRS could seize assets such as cars, wages, bank accounts, or real estate.
How Can I Get Relief From My IRS Debt: Methods Of Tax Debt Relief
Tax debt can be a significant financial burden and source of concern. However, many people are unaware of how many potential options for tax debt relief may be available to them. With the help of a tax professional, you may be able to access penalty waivers and refunds, IRS fresh start program initiatives, and payment plans to reduce the burden of your tax payments.
The IRS offers penalty abatement waivers in several situations which could apply to your circumstances. If eligible, a penalty abatement will remove a penalty charge you have received from the IRS and any associated interest. Specific penalties, such as failure to file and failure to pay, could be eligible for a first-time penalty abatement if you have a history of tax compliance with the IRS.
Similarly, you could receive a penalty abatement if you can argue that you had reasonable cause for the error. For example, the IRS might waive your penalty if you received incorrect advice from a competent tax professional that led to error, if your records were destroyed due to a flood or fire, or if you were unable to determine your tax owed for reasons beyond your control.
Additional penalty abatements, such as administrative abatements, may also be applicable to your circumstances. If you have received a penalty charge, it is beneficial to look into your abatement eligibility with the help of an attorney before paying the fees.
If you have already paid a penalty charge and now think you might have been eligible for an abatement, an attorney can help. Penalty charges can be significant sums of money and may leave you out of pocket or with financial concerns. If you realize you have paid a penalty when you could have applied for penalty relief, you may be able to request a refund from the IRS.
An attorney can help you retrospectively apply for an abatement for a penalty fine and request a refund of the funds you paid. Generally, the IRS does not publicize that you can request your penalty payments back. However, an attorney can help you identify where this may apply to your situation and successfully navigate the application process.
A spouse may be eligible to claim two different types of spousal tax debt relief from the IRS. Depending on your circumstances, you could apply for innocent spouse relief or injured spouse relief.
Even if you later divorce your spouse, you are responsible for any tax debt and penalties from a joint tax return unless you qualify for relief. You can apply for innocent spouse relief to remove your liability for tax debt incurred from errors made by your spouse on a joint tax return. Provided that a joint tax return was filed and you were unaware of the mistakes made by your spouse, you could be eligible.
The other option for spousal relief from tax debt that you could claim is injured spouse relief. You may be able to recover your share of a tax refund if the refund from a joint tax return was withheld by the IRS to cover your spouse’s debt.
Offer In Compromise
An offer in compromise is one of the most effective and understandably most popular methods of tax relief. If you are approved for an offer in compromise, this IRS tax debt forgiveness program allows you to negotiate and reduce the overall amount of tax debt that you owe to the IRS. If successful, this initiative will settle your tax debt for less than you originally owed.
To be accepted for an offer in compromise, the IRS will re-evaluate your financial means, income, assets you own, and your outgoings and expenses. During this process, the IRS aims to establish if your current tax bill is beyond what you will reasonably ever be able to repay in your current financial situation. Other factors, such as your health and retirement status, may also influence the decision.
You will need to provide a compelling argument and evidence of your living expenses that impact your financial situation in your application. These can include household utilities, loans and credit card debt, food, medical costs, and clothing. If your application is accepted, your total payment amount will be reduced. Your attorney will then work with you to establish a payment plan for this new, lower amount.
While you are being evaluated for an offer in compromise, your penalties and interest will continue accumulating on your debt. Hiring an attorney to assist you with the application process can result in a faster process and ultimately reduce the time you accrue further charges on your tax bill.
An installment agreement allows you to negotiate a realistic payment agreement with the IRS over a longer period, as opposed to paying a large lump sum. Once you have agreed to an installment agreement with the IRS, you will not be subject to harsh debt recovery methods such as property liens. The IRS has total debt thresholds and eligibility criteria for installment agreements. A tax professional can help you understand if this approach could help you manage your tax debt.
The IRS Hardship Program
To apply for the hardship program, the IRS will conduct a similar review as an offer in compromise into your financial situation, including your income and assets and daily living costs. If your application is successful, you will be awarded currently non-collectible status, which can stop the IRS’ collection activity against you.
The hardship program differs from an IRS debt forgiveness program in that your tax bill will not be forgiven under this initiative, and you are still required to pay your debt. However, with currently non-collectible status, you are protected from some of the harsher methods of debt recovery, such as liens and wage garnishment.
How Can I Negotiate Debt Forgiveness With The IRS?
The most important step to negotiating tax relief options with the IRS is hiring an experienced tax attorney. A skilled attorney familiar with the programs and initiatives available from the IRS could leverage several methods to secure effective tax debt relief.
An attorney may be able to negotiate the total amount of debt that you owe and achieve a lower overall tax settlement. Similarly, they might be able to have a wage levy against your income released or have your penalty charges and associated interest waived by the IRS.
Legal representation can further protect you and your assets by applying to have a lien against ineligible property removed or developing a payment plan that results in a withdrawal of a property lien.
Having a skilled tax attorney by your side also increases your likelihood of acceptance of an offer in a compromise or installment agreement. Not only will an attorney increase the chances of a successful outcome, but their legal advice can also ensure that the application process is more efficient and smooth. In turn, this could reduce the amount of time you are accruing further penalties and interest on your debt.
Contact Ronald Arthur Stearns Sr. PLLC For Help Settling Your Tax Debt
Likely you are not aware of the range of potential IRS debt relief options that could be available to you. With the help of Ronald Arthur Stearns Sr. PLLC, your tax bill could begin to feel far more manageable, and you can let go of the worry of losing your wages or property to your debt.
The representation you will receive from Ronald Arthur Stearns Sr. PLLC differs from that of a tax debt relief company in that we take a personal and tailored approach for every client we represent. Large tax relief companies often use a one-size-fits-all approach to tax debt management. Alternatively, at Ronald Arthur Stearns Sr. PLLC, we treat every case and client as an individual and work with you to develop the best strategy to yield results in your situation. We are proud to support Texans to achieve both personal and business taxes tax relief.
Contact Ronald Arthur Stearns Sr. PLLC today at 210-853-2135 to book your consultation and discuss how we can help you.