The practice of engaging with the IRS and tax experts to resolve your tax issues is known as tax resolution. For several reasons, the IRS may not be satisfied with your tax return or current tax situation. The IRS may audit you, for instance, if your tax return is difficult, to make sure you are claiming the correct amount of income and making legal deductions.
What are the different types of Tax Resolutions?
1. Currently not collectable
The IRS may report that your account is currently not collectable and temporarily gives you paying back payroll tax deferral until your financial situation improves if it deems that you are unable to pay any of your tax debt.
2. Instalment Agreement
An instalment agreement enables you to have a contract with the IRS to repay the taxes you due over a longer period. If you think you’ll be able to pay your debts fully within the extra time, you should ask for a payment plan.
3. Penalty Abatement
When you are approved for a penalty abatement, the IRS will not charge you for a penalty you incurred for unpaid taxes. Penalties may result from late payments, incomplete tax returns, or inaccuracies in tax returns. These are all typical problems for taxpayers, and as a result, you can be subject to an IRS fine.
4. Partial Payment Instalment Agreement
An IRS payment plan known as a partial pay instalment arrangement enables you to make regular monthly payments on a fraction of your tax debt until it is fully satisfied. You must pay the IRS every month until the remaining balance is paid off. Taxpayers’ monthly payments differ according to how much they owe and their monthly disposable income.
5. Offer in Compromise
You can settle your tax liability for less than the whole amount you owe by making an offer in a compromise. If you are unable to pay your debt then an Offer of Compromise is the most viable option for you. Many variables are taken into account, including asset equity, income, ability to pay, and expenses.
Hopefully, this article has given you a quick introduction to tax resolutions and their types.