Nowadays, tax resolution has become so much popular that upon searching on the internet, you will find various companies who have mentioned tax resolutions as their specialty and there are even dedicated companies for this section of tax. Tax resolution, which is known by various famous names like IRS representation, tax problem recovery, etc. is simply a service provided by tax professionals in order to the debt of the client with IRS and deal with it in such a manner that the debt is lowered down to minimum amount.
If you are a tax professional then you need to master the art of tax resolution because it has become one of the most important aspects of the tax industry. If you will have the right expertise in this field of taxes then you will be able to help your client in the debt with IRS at state, local and federal level. Most of the tax professionals provide service for tax resolution because they want their client to resolve their debt issue with the IRS. So, in this blog post, we will be looking at some of the most commonly used methods of tax resolution so that you can help your clients in the best possible way and work with them for minimizing their IRS debt.
Installment agreement is one of the most popular used methods in tax resolution and it allows your client to pay the amount of debt in the form of installments over a particular period of time. So, instead of emptying a big portion of savings, the client can choose to plan his debt payment and get rid of it over a particular period of time. Along with this, this method also helps the client to avoid any type of late payment penalties and fines. This method of tax resolution is so popular that in 2015, more than 3 million installment agreements were accepted by the IRS. You don’t need to go through any type of verification process in this type of tax resolution and if your debt is less than $5,000 then you can pay it online without dealing with IRS directly.
Currently not collectible status
If you find out that your client is not able to pay for his basic amenities and his income is very low in comparison to his expenses, then you can put the status of your client’s accounts as currently not collectible status and it will put the debt of IRS on hold. But just your clarification of client’s inability to pay debts will not be enough and IRS will look at the national standards for checking that whether the tax payer can pay for his basic living expenses or not. But you should know that even after putting your account into the CNS status, IRS will keep on charging interest and penalties on your account. In addition to this, if the status of your client is not likely to change and his accounts keeps getting the CNC status then chances are that IRS will cancel his debts.
In this method of Tax resolution, IRS can remove some of the penalties charged for not following tax laws or IRS regulations. You will be surprised to know that there are many cases in which the penalty rose up to 50% amount of the actual tax debt and that’s why penalties can add up quickly into your overall debt. You can suggest your client to go for penalty abatement for various reasons like if IRS agent gives you bad advice, a tax adviser gives you bad advice, if you are new to penalty and have never been gone through any IRS penalty before. But you should also know that becoming eligible for penalty abatement is not that easy as in order to become qualified for penalty abatement, you will have to meet some of the very specific requirements. For example, you can apply for penalty abatement, if you haven’t been imposed with any penalty in the last three tax years otherwise, your application for penalty abatement will be canceled.
If you don’t want to go through all these processes and looking for a simpler way of tax resolution then you can simply get away with all the debts of IRS filing past due returns, but not in all cases. Most of the penalties and fines imposed by IRS are because of the missing returns, and therefore, there can be chances of getting away with debt just by filing missing returns.
So, if your client is having any debts with IRS because of any reason then as a tax professional, it is your responsibility to go for the tax resolution by using the best method. None of the methods of tax resolution are easy and you will have to analyze the situation of your client in order to know which method to use.