Owing a debt to anyone is not a desirable position. However, it gets scarier when you owe a debt to the IRS or other tax authorities. The tax authorities in the United States have extraordinary powers to collect tax debts, and non-payment may result in further penalties and interests. Even your hard-earned properties can be confiscated by the authorities if you continue to default on your tax payment. So, what to do if you owe a tax and have a constant inability to pay it?
While it is a scary situation, there may be a reliable solution to this problem. Interestingly, the IRS itself allows tax relief to deserving individuals and businesses in Manhattan Beach, CA as well as other parts of the states.
Following is a brief overview of different tax relief programs in Manhattan Beach, CA.
Brief Overview of Different Tax Relief Programs in Manhattan Beach, CA
1: Offer in Compromise:
When you talk about tax relief, the first thing most people often discuss is the offer in the compromise program, and perhaps rightly so. It is among the most common tax relief options usually available for most individuals dealing with tax stress.
An offer in Compromise allows you to pay less than actually owed tax in exchange for full settlement. Factors like expected future income, current assets and overall tax liability dictate the exact amount of discount you may get on your tax liability.
With the right circumstances, most people are able to get anywhere from 30% to 70% tax relief with this option.
If you have a genuine inability to pay taxes in existing due time, but you hope that your circumstances may improve in the near future, it is possible to get a single-time extension, usually up to 120 days. However, the IRS may still impose a small percentage of interest for the extended period.
Normally, the tax authorities impose certain penalties and interest after the due period of tax payment. Though it is not very common, it is still possible to get these penalties removed, if you are able to prove your case in the right manner.
In some cases, individuals were even able to get a refund of the already paid penalties/ interest charges.
4: Covid-19 Relief:
A covid-19 relief package was also announced by the United States government, which allowed various tax relief options to individuals and businesses. As the covid-19 situation keeps on changing along with the relevant relief, it is recommended to check with your tax relief consultant to get a better idea about the currently available relief option under the covid-19 relief package.
5: Innocent Spouse Relief:
Couples who choose to file joint returns are collectively liable for the tax. In some circumstances, a spouse may not be fully aware of the knowledge of errors/ tax positions of the partner, and it may end up with him or her having a huge tax liability.
In such circumstances, the IRS allows innocent spouse relief programs. In order to be eligible, however, the spouse needs to prove their lack of knowledge regarding errors.
Similarly, few other tax relief programs may be available. It is recommended to consult with your local tax relief consultant in order to fully understand various available options in your circumstances, and also to know about the most suited option for you.
In order to successfully get tax relief, it is also important to carefully hire a professional and experienced tax relief lawyer/ firm, as tax relief is a very specialized field within the general profession of tax consultancy.
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.