Tax Settlement Options

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Do-It-Yourself? Tax Settlement

This Article On Tax Settlement Was Written By Arlene Di Sessa

With the advent of TurboTax, mostly everyone can become a do-it-yourself tax preparer. But as we all know, with any do-it-yourself project, there are sometimes mishaps or consequences of not being fully informed or prepared. Most people can do their own tax returns using some sort of tax software, however, the more complicated the return, the more likely one will make a mistake.

So What Happens When You Make A Mistake?

Most of the tax software programs run error checks and detect any red flags. These processes are not fool proof. So what happens if you make a mistake?Well, many times if you make a calculation error, the IRS will correct the errors for you and will send you a notice. Hopefully the error is not material. More than likely, the IRS will issue a proposed assessment and allow you time to agree or disagree with their revised calculations.  Once the assessment is final the IRS will send you a bill.   If you owe more money than you can pay the IRS has many options available.

Fresh Start

According to the IRS, the Fresh Start Program, tax settlement, is for taxpayers who need to pay back taxes and avoid summary collection actions such as tax liens and/or bank levies.

The features of the IRS Fresh Start Program are:

  1. The new threshold for the IRS to file a tax lien is $10,000, so this means that if you owe less than $10,000, the IRS will most likely not file a federal tax lien against you.
  2. Installment payment agreements have been extended to 72 months from a previous 60 month plan, for taxpayers who owe less than $50,000. Financial statements are not needed and a payment plan can be set up entirely online and is virtually automatic provided the taxpayer is not currently on an installment payment agreement. For taxpayers who owe more than $50,000, financial statements need to be provided, however, if a taxpayer owes more than $50,000, they have the option of paying their liability down to $50,000 so that they may qualify for the payment plan without providing financial statements to the IRS.
  3. Offer in Compromise- An Offer in Compromise is generally considered when the offered amount is the most that the IRS can expect to collect or receive from the taxpayer over a reasonable period of time. Does this sound vague? What is the IRS looking for when you apply for an Offer in Compromise?       They are looking at income, all sources, for the entire household, including earned income, social security, disability, rent received from roommates, social services benefits such as food stamps, and any other source of financial assistance.       They will want to look at your bank accounts, run asset checks, and they want to see if you own real property and whether or not you have equity in your home. It is at the discretion of the IRS and nobody really knows the magic formula, but why not apply? The most that could happen is they say no.   The IRS has an Offer in Compromise pre-qualifier on their website where you enter in your financial information and your monthly debt payment.

You can find the Offer in Compromise Pre-qualifier tool here:

Why Should I Pay My IRS Debt?

If you owe money to the IRS and you are not on a payment plan towards paying the liability, the IRS can and will take summary collection actions such as bank levies, federal tax liens, earnings withhold orders, and many other drastic collection actions. Additionally, if you have unpaid tax liens and owe the IRS money, this can definitely impact your ability to purchase a new home or refinance.

About The Author Of Tax Settlement: Arlene Di Sessa

The author of this article, Tax Settlement, is Arlene Di Sessa who is a senior writer for Gustan Cho Associates Mortgage and Real Estate Informational Center and a licensed mortgage loan originator for The Money Store. Arlene Di Sessa is the branch manager of the Sacramento branch of The Money Store, a national Fannie Mae Direct mortgage banking firm headquartered in Florham Park, New Jersey with offices throughout the United States and licensed in 46 states. Arlene is an expert in all areas of mortgage lending and her expertise is in FHA Loans, VA Loans, USDA Loans, and Conventional Loans with little to no lender overlays. Arlene Di Sessa, based in Rocklin, California, has a national reputation in helping mortgage borrowers who had prior credit issues and had a hard time qualifying for home loans due to prior credit issues and/or debt to income ratio issues. A large percentage of Arlene’s borrowers are folks who could not qualify at other banks and mortgage lenders due to their lender overlays. A lender overlay is when a bank or mortgage lender has higher credit requirements than those of FHA or Fannie Mae. For example, FHA minimum credit score requirements for a home buyer to purchase a home is 580 FICO. However, most banks and mortgage lenders may have FHA Lender Overlays where even though FHA only requires a 580 FICO credit score, they may require a 640 FICO credit score. Arlene, due to not having any lender overlays on FHA Loans, can approve, originate, and fund borrowers who just meet the minimum FHA credit score requirements and other FHA Guidelines .  If you are a home buyer who need to get pre-approved for a mortgage loan, contact Arlene Di Sessa at 530-813-0661 or email Arlene at Arlene Di Sessa is available 7 days a week to take your calls and answer any questions you may have. Looking forward to upcoming blogs in the coming days and weeks by Arlene.

Comments (2)

Gustan Cho NMLS 873293
NEXA Mortgage, LLC | Gustan Cho Associates - Oak Brook, IL
National Managing Director | Branch Manager

Many mortgage borrowers are concerned if their credit scores drop during the mortgage process. When a borrower applies for a home loan and they already have an executed real estate purchase contract and are about to begin the mortgage process, the mortgage loan officer will pull their credit. The credit the loan officer pulls is called a tri-merger credit report where the borrower has three credit scores from each of the three major credit bureaus: Transunion, Experian, and Equifax. The lender uses the middle of the three credit scores and that is the credit score that is used to qualify the borrower. That credit score is valid for 120 days and will be the credit score used throughout the entire mortgage process until the closing of the loan. Unfortunately, if the credit scores go up, it does not matter and on the flip side, if the credit scores drop, the borrower has nothing to worry about. Credit will be pulled prior to a clear to close but it does not matter if the credit scores drop as long as the credit report is not longer than 120 days. Here is a mortgage blog article post on what happens if credit scores drop during the mortgage process that was written by Bob Vogel, senior writer for Gustan Cho Associates, and contributing editor for Credit Fix Advisors, and published on Credit Fix Advisors Informational Center. Bob Vogel is a licensed mortgage loan originator for MLD MORTGAGE, INC. dba THE MONEY STORE, a antional full eagle mortgage banking company headquartered in Florham Park, New Jersey. Here is the link to the article

Jun 21, 2016 08:55 PM
Gustan Cho NMLS 873293
NEXA Mortgage, LLC | Gustan Cho Associates - Oak Brook, IL
National Managing Director | Branch Manager

There are many benefits to own a home rather than rent. Most renters think that they need tons of money to put down on a home purchase. This is not the case at all. All you need is to put down 3.5% down payment for a home purchase with a FHA Loan. Conventional Loans only require a 3% down payment for first time home buyers and 5% down payment for most home buyers on a conventional mortgage loan. Here is an article that was written by Illinois real estate agent Julie Hayward about Reasons To Own Rather Than Rent and published on Gustan Cho Associates Mortgage Information Center Website, Here is the link to the article written by noted author Julie Hayward

Jul 10, 2016 10:08 PM