#1 Request by taxpayers!

The #1 thing we hear in the world of taxes from people who are looking to resolve their tax problem is "can I get my liability lowered." Now sometimes this may mean they want to offer a lump sum or they may just want the penalties and interest waived.

The IRS has several guide lines that must be followed when doing either of these things. Both are dependant on each individuals case and the circumstance surrounding the details. The IRS does not like to waive anything so keep in mind the process will be detailed and take some time.

Penalty abatement (waiving the penalties and interest) needs to meet certain criteria to be considered by the IRS. The letters need to be submitted with the returns. There can be an appeal process to go through if denied. The process can take several months.

The offer in compromise (lump sum offer) is the other most commonly asked question. This solution is very detailed. The are many things to consider when looking at this avenue. The IRS will look at assets, ability to work in the future, statues on the liability, payoff dates, etc.... You will also need to put 20% of the lump sum down and $150 to start the offer process. Offers can also take several months to work through and will also extend you statue dates.

The best advice would be to seek help when trying to resolve any tax liability. The IRS has guidelines and rules that they will not volunteer when you call in. Their main goal is to get you into a payment plan to get the liability paid. Do research and get help. Putting it off will only make it worse and the IRS will not just go away.

Melissa, Effectur

Top 10 Important Tax Terms

1. SFR - Substitute for return : The IRS will file a return on your behalf. They will file based on what information is reported. You can file a regular return to try to reduce the liability.
2. Levy - when the IRS issues a bank or wage seizure of property in order to satisfy a tax debt
3. Lien - when the IRS issues a legal claim to your property as a security of payment for your tax liability.
4. Compliance - paying taxes and filing all returns on time. IRS requires that tax payers file the last five years plus the current year and pay all estimated taxes up to date in order to enter into a solution. After an agreement is met, the taxpayer must maintain compliance or the agreement is broken.
5. Estimated Tax Payments - these are payments made to the IRS through out the year on April 15, June 15, Sept 15, and Jan 15 of the following year. These payments are to be made by those taxpayers that do not have taxes withheld from their paychecks (example 1099 employees) Also if you ended up owing over $1000 at the end of the year last year, you need to make these payments.
6. Statue of Limitation - the IRS has set time frames on certain activities that will expire
7. Stay on Collection - the IRS will work with you to give you time but ONLY ONCE
8. Offer in Compromise - option put in place by the IRS that if you qualify, you may be able to settle the debt for less than the amount you owe
9. Audit - The IRS will request you to provide specific documentation as proof of items that you reported on your return. You must show the documentation or it could be taken off the return. Some audits may be in person or by mail.
10. Revenue Officer - this person is specifically assigned to your case and generally lives in your area. This is the highest level of the IRS. Their main agenda is resolve the tax liability issue.

Melissa, Effectur