Tax Resolution: This Is What It Means & Important Reasons You Need It in 2024

tax resolutions

Tax season can be a stressful time for many taxpayers, especially if you owe money to the IRS or a state. However, taking proactive steps, being prepared, and seeking the assistance of a tax resolution specialist, can help you navigate the complexities of resolving back taxes with ease. In this article, we will explore what tax resolution is and how it can help you during the 2024 tax season. 

What is Tax Resolution? 

Tax resolution, also called IRS Representation, is a process of resolving back tax issues with the IRS or states. If you have a tax debt or delinquent tax returns, tax resolution services can offer you means to meet your tax obligations and prevent further collection measures like wage garnishments or liens. These services typically involve the intervention of tax resolution experts. They negotiate with tax authorities to lower the amount owed, establish payment plans, and, in certain instances, waive penalties and interest charges.

There are various options for resolving tax debts, including:

Payment Plan

An IRS payment plan also referred to as an installment agreement, is a tax resolution option that enables you to settle your tax liability over time in smaller, more manageable payments as opposed to a lump sum payment. This agreement is often made between the taxpayer and the Internal Revenue Service (IRS). It must be strictly adhered to in order to avoid further IRS collection efforts. The installment agreement’s terms may vary depending on the amount owed and the taxpayer’s financial situation.

Partial Payment Installment Agreement

A Partial Payment Installment Agreement (PPIA) is a monthly payment plan for taxpayers who owe taxes but can’t pay them in full within the IRS’s remaining collection window, known as the Collection Statute Expiry Date (CSED). Unlike traditional installment plans, PPIA allows you to settle your tax liability for less than the total amount owed.

Offer in Compromise (OIC)

An Offer in Compromise (OIC) is an agreement between you and the IRS to settle your debt for less than the full amount owed. You must meet specific eligibility criteria and demonstrate that you cannot fully pay your tax bill to qualify for an OIC. While deciding whether to accept an OIC, the IRS will consider factors such as the taxpayer’s income, expenses, assets, and ability to pay.

Currently Not Collectible

If you cannot pay your tax bill due to financial hardship, you may qualify for Currently Not Collectible (CNC) status. The IRS will temporarily suspend collection efforts until your financial situation improves. This does not, however, mean that you do not owe what you owe. Rather, it is a temporary suspension of making monthly payments to the IRS.

How Can You Benefit from Tax Resolution?

Here are some ways that tax resolution can benefit you if you find yourself in the unfortunate position of owing the IRS or state back taxes.

1. Avoid or Minimize Penalties and Interest

The IRS charges penalties and interest on unpaid taxes, which can significantly increase your overall tax debt. Tax resolution can help you avoid or minimize these fees, potentially saving you a substantial amount of money.

2. Lower Your Tax Debt

Tax resolution can assist in negotiating a settlement agreement or payment plan with the IRS to reduce your tax debt. This can make it easier to pay off your tax debt and get back on track financially.

3. Secure Your Assets

If you owe back taxes, the IRS may take steps to seize your assets, including your bank accounts and wages. Tax resolution professionals can help you protect your assets and negotiate the lowest monthly payment allowed by law.

4. Boost Your Credit Score

Back taxes can negatively impact your credit score, making it more difficult to secure loans or credit in the future. Tax resolution can help you pay off your tax debt and improve your credit score over time.

In conclusion, tax resolution is a practical way for settling your tax issue and regaining control over your finances. It entails discussing a possible payment plan or settlement with the Internal Revenue Service (IRS) or state tax agency. Tax resolution can help you achieve financial stability and peace of mind by avoiding fines and interest, lowering your tax burden, preserving your assets, and boosting your credit score. Explore your options for dealing with your tax debt as soon as possible.

How Peace of Mind Tax Help Can Help?

Dealing with the IRS can be an intimidating experience, as they can be relentless in their efforts to collect unpaid taxes. However, you don’t have to face them alone. Our firm specializes in tax resolution. We can help even if you have years of unfiled tax returns or owe the IRS over $10,000. We offer a free consultation to discuss your case and find the best solution for your unique circumstances. You won’t have to talk to the IRS. Our firm can provide the peace of mind you need to resolve your tax issue.

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