What if you owe taxes and are unable to pay.

Education & Training with FoxBerry Accounting Services

Have you found yourself in a position in which you owe taxes to the government but have been unable to pay? Maybe you did not file your taxes and have felt a cloud hanging over you and your family?  We know that this past year has left many people confused about their taxes and many others in financially strained circumstances.  Whatever your situation, Foxberry Accounting Services is here for you.  We have  helped many clients through that exact scenario. Fear not, there is a light at the end of the tunnel.

As it turns out the IRS is usually only too happy to work with taxpayers, but there are some ground rules you need to be aware of and a roadmap to follow.

l. Tax Compliance

The first step in resolving your tax issue is to get into "tax Compliance." Compliance means that you have filed all  tax returns due for the last 6 years and have made your current tax payments. Once you are in tax compliance we can now work on resolving the back-tax issue.

2. Collection Alternatives 

There are three main collection alternatives to resolve a  back-tax debt: Installment Agreement, Uncollectable  Status and Offer-in-Compromise.

Installment Agreement
An installment agreement is an agreement to pay the taxes back over time. There are three variations of the installment agreement: Regular, Streamlined, and Partial Pay. Which type of agreement works best for you will depend upon your personal circumstances and is something we can help you address when you are ready. 

Uncollectable Status 
Uncollectable status is when the IRS determines that you are unable to make current tax payments. When a taxpayer is deemed uncollectable the IRS may still file a Notice of Federal Tax Lien to secure  its position in the  taxpayer's assets but will not otherwise  take    enforcement action to seize (or levy) the taxpayer's assets or income  streams.

An Offer-in-Compromise is an agreement where the IRS agrees to accept less than the total amount owed to it and the taxpayer agrees to pay the amount negotiated, as well as maintain his or her tax compliance for 5 years following the acceptance of the Offer-in-Compromise ("Offer").

The basis for an Offer is a formula referred to as  'Reasonable Collection Potential" or "RCP." RCP is  effectively the net equity in assets plus the taxpayer's excess future income for 12 or 24 months, depending upon how the Offer is structured. There can be significant planning done to help a taxpayer maximize the potential for the Offer's acceptance. 

If you or someone you know has an issue with paying their federal taxes and needs help to end their IRS nightmare, please contact Foxberry Accounting Services.





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