Roseville Tax Resolution Lawyer
Making sure that taxes are filed properly and that all records are well-kept is an important part of maintaining financial success and stability. Filing the proper taxes each year and paying any outstanding debts as quickly as possible ensures good standing with the IRS and no penalties.
Some individuals, however, find themselves unable to pay back their taxes or make the necessary payments, so they begin to fall behind. If that continues for any period of time, they could face severe penalties from the IRS including lost wages and significant fines. The team at Coggins Law can help clients discover which tax resolution best meets their needs so that their debt can be cleared as quickly as possible.
What Is a Tax Resolution?
There are certain circumstances when an individual is unable to pay their taxes upfront or gets behind on a payment plan. These situations are frustrating and can feel overwhelming, but the IRS and other governing bodies have anticipated them. There are options and plans in place to provide additional support and options to those who are unable to pay.
These options are considered tax resolutions, which are essentially a way for an individual or a business to resolve their tax debt and return to good standing with the IRS. These resolutions often include payment plans, or other structures, to ensure that the debt is paid in as little time as possible.
Types of Tax Resolution
There are several types of tax resolutions, each one available to those who qualify for it. Some have been created for individuals who are struggling with tax payments for the first time. Others are meant for individuals or businesses that have fallen behind on their taxes in a major way, sometimes not filing taxes for years. The most extreme cases require the most significant responses, so there are also tax resolutions in place if and when it happens.
The following are a few of the most common tax resolutions:
- IRS Fresh Start Program – This program was created specifically to help people who had fallen behind on taxes for the first time. The program was launched in 2011 and has seen a few significant changes since that time. The changes have primarily centered on expanding the program so that it is accessible to a wider range of students. It is available for anyone with a tax debt of $50,000 or less. Fresh Start offers payment plans and other options to help those involved pay off their debt within six years.
- Installment and Payment Plans – Another option to pay off a tax debt is an installment plan. There are two primary types of installment plans, and they each carry their own stipulations. The Guaranteed Installment Agreement is for those who have a clean tax record over the years and currently have less than $10,00 in tax debt. This plan allows those who are unable to pay the full amount the opportunity to make a plan and pay back the debt within three years. The Streamlined Installment Agreement is for those with $25,000 or less in tax debt, but this agreement must be paid off in 5 years. It is important in these agreements that the debt is paid as quickly as possible so that less interest and fees will be collected.
- Offers in Compromise – The option to accept an Offer in Compromise, or an OIC, is a great opportunity for a major tax debt to be minimized. An OIC essentially allows the IRS to come to an agreement with the taxpayer for the total amount of their debt to be reduced. In order to qualify for an Offer in Compromise, an individual must agree to pay all taxes for the year that the OIC is agreed on and keep their tax filing current for five years after the OIC. If they fail to do either of these things, they will be responsible for paying back the original full amount.
- Abatement for Penalties and Interest – Abatement is the rarest and most difficult type of resolution. For many people who are struggling to pay back their tax debt for one reason or another, penalties and interest make it much more difficult because they accrue so quickly, and the rates are often extremely high. The only reasons that the IRS may consider abating any penalties are for military personnel serving in a combat zone, an individual receiving bad advice from a tax adviser, something severe like an illness or accident prevented payment, or incorrect information received from the IRS. Similarly, the only time that they may consider abating interest is if there is a problem with the filing itself.
- Bankruptcy – In some circumstances, no other plan or option has worked, and the tax debt is simply too much. In these cases, it may be necessary for the individual or business to file for bankruptcy. When a business decides to file for bankruptcy, they are aiming to liquidate its assets so that it can remain operational, but also pay back as much money as possible to its creditors. This choice could be spurred on by poor planning, a downshift in the economy, bad products, or unexpected expenses. Individuals also have the option to file for bankruptcy. Chapter 7 bankruptcy will discharge debt, which means that creditors do not need to be paid back. This is beneficial for individuals with excessive amounts of debt. Chapter 13 bankruptcy, however, allows an individual to restructure their assets so that debts can be paid back over time.
There are many different tax resolutions that are available for those struggling to pay back tax debt. It can be difficult to know which one is the best option, but a knowledgeable tax attorney can offer guidance and insight into that decision-making process. A Roseville tax attorney will help you navigate the difficult process of dealing with the IRS and getting any tax debts resolved. The team at Coggins Law has the necessary knowledge, experience, and expertise to walk you through the full process and ensure you get the resolution you need.
Tax Law FAQs
Q: What Is the Difference Between a Tax Relief Attorney and a CPA?
A: Tax attorneys and CPAs deal with similar clients and cases, but they often approach them from very different perspectives. A CPA, or Certified Public Accountant, is an individual who specializes in the organization and filing of taxes from a numbers perspective. A tax attorney, on the other hand, addresses the problem through a legal lens. This means that a CPA will be responsible for any calculations associated with taxes, while a tax attorney will help clients deal with the IRS.
Q: Why Do People Hire Lawyers When Dealing With the IRS?
A: Working with an attorney when dealing with the IRS is not a requirement, but it is recommended in many cases. The process of dealing with the IRS can be confusing, time-consuming, and overwhelming, regardless of the circumstances. An expert tax attorney will know how to approach each client’s case in the most effective way. Many people do not know how to navigate the legal processes associated with audits or tax resolutions, so having the support and guidance of an experienced tax attorney can help ease any anxiety associated with the IRS.
Q: Why Might You Seek the Help of a Tax Attorney Rather Than a CPA?
A: While tax attorneys and CPAs both deal with taxes, they serve very different purposes. Most people who work with a CPA are looking for someone to organize, calculate, and file their taxes for them. These individuals deal almost exclusively with the numbers of tax filing. A tax attorney, on the other hand, is most beneficial for those facing issues such as an IRS audit or a tax resolution. The services of a tax attorney will be helpful for people who do not understand the legal processes associated with tax issues.
Q: What Is the Main Difference Between an Accountant and a CPA?
A: The primary difference between an accountant and a CPA is licensure. Accountants are simply individuals who have earned a bachelor’s degree in accounting. While that is valuable, it does not require that individuals be licensed to complete their work. CPAs must obtain their license, follow much stricter standards and a code of conduct, and complete continuing education training each year to maintain their license. Also, accountants are more equipped to manage everyday expenses and money organization, while CPAs tend to work more directly with only taxes.
Managing money, filing taxes properly, and ensuring that all necessary taxes are paid can be difficult. Money may get tight at times, making it impossible to pay back the amount that is owed. In these circumstances, a tax resolution may be the best response. Payment plans, abatement, and bankruptcy are all options for those struggling with their tax debts. It may be difficult to know which option best meets your needs, so a California tax resolution attorney can help. Contact Coggins Law today for all of your tax resolution needs.