Whether you call it an IRS installment agreement or IRS payment plan, the idea is the same — you make payments on the tax you owe. For those who cannot pay their back taxes immediately an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of back taxes in smaller, more manageable amounts.
The IRS will give tax relief of penalties when allowed by law if you can show you acted reasonably and in good faith or relied on incorrect advice of an IRS employee. The IRS will give relief of interest that is the result of certain errors or delays caused by an IRS employee.
Tax relief from assertion and assessment of penalties falls into four separate categories. They are:
* Reasonable Cause [most common]
* Statutory Exceptions
* Administrative Waivers
* Correction of IRS Error
In 1995 there were approximately 14 tax penalty provisions in the Internal Revenue Code. There are now more than ten times that number. As a result, a simple letter requesting tax relief from penalties ordinarily will not do and is why a properly prepared, detailed petition is critical to success.
Why request Innocent Spouse Relief? Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due.
Trust fund tax is money withheld from an employee's wages (income tax, social security, and Medicare taxes) by an employer and held in trust until paid to the Treasury. As an employer, you have the added responsibility of withholding taxes from your employees' paychecks. The income tax and employees' share of FICA (social security and Medicare) that you withhold from your employees' paychecks are part of their wages you pay to the Treasury instead of to your employees. Your employees trust that you pay the withholding to the Treasury by making Federal Tax Deposits.
An Offer is an agreement between a taxpayer and the Internal Revenue Service that resolves the taxpayer's tax liability. The IRS has the authority to accept a settlement or Compromise, of federal tax debt by accepting less than a full payment under certain circumstances. An Offer provides for a fresh start by allowing you to reduce or eliminate your IRS tax debt. Or it may allow you the ability to contests a tax liabilities validity that may have been improperly or incorrectly assessed.
One possible enforcement actions the IRS may employ is the filing of a Notice of Federal Tax Lien. The effect of an IRS Tax Lien is that when any person or business fails to pay any assessment of tax, plus interest, penalties, or costs. A tax lien in favor of the United States arises upon all property and rights to property, whether real or personal, tangible or intangible, belonging to the taxpayer.
One possible enforcement actions the IRS may employ is the filing of a Notice of Levy. Generally, an IRS levy is used to take a taxpayer's property held by someone else, if it can be turned over by writing a check. Examples: bank levy, wage levy (wage garnishment), brokerage account levy or levy against business account receivables.
Also, in most states that have state income taxes, an IRS levy can be attached to a state refund check and apply the state refund to a federal tax debt.
D R Sullivan & Company has been providing help with sales, withholding, individual and corporate income state tax problems since 1998. Services include installment agreements (monthly payment plans), offers in compromise and audit representation.