New Jersey taxpayers may be able settle their federal tax debt with one of several tax settlement options offered by the Internal Revenue Service (IRS). The federal government has given the IRS the authority to collect federal tax debt and in some circumstances, settle back taxes by accepting a fraction of the total tax liability in hopes that taxpayers will be able to pay their future tax bills.

New Jersey taxpayers who need information about tax settlement plans offered by the Internal Revenue Service may want to consider contacting a tax professional such as enrolled tax agents, tax attorneys and tax accountants for help. Tax professionals also can help file back taxes, help taxpayers avoid bankruptcy, review a taxpayer’s financial information and help them eliminate tax liability.

Offer in Compromise in New Jersey

Offer in Compromise is one tax settlement option for New Jersey taxpayers to settle their IRS tax debt. Offer in Compromise allows the New Jersey taxpayer to make an “offer” to the Internal Revenue service for back tax settlement. The Internal Revenue Service has the authority to accept or deny the offer. Up to 80% of offers are declined at the initial stage of the OIC offer process. More may be accepted on appeal. Unfortunately, if the taxpayers offer is declined, the Internal Revenue Service will have detailed financial information about the taxpayer and can use this information to continue their collection efforts against the taxpayer for IRS tax debt.

New Jersey taxpayer’s Offer in Compromise offers will only be accepted if the OIC meets one of the following criteria:

1. Doubt as to Liability-  A New Jersey taxpayer may believe the amount of tax debt they have been billed is incorrect. If the IRS believes this is possible, they may accept the Offer in Compromise.
2. Doubt as to Collectibility- New Jersey taxpayers may unexpectedly have a financial crisis and not be able to pay federal tax debt. If the Internal Revenue Service determines collection of the debt is impossible or if the cost to collect is excessive, the IRS may accept the OIC offer. Under this condition, the amount of tax debt is not in question.
3. Effective Tax Administration- For some New Jersey taxpayers, collection of federal tax debt may cause “economic hardship which is unfair and inequitable”. An Offer in Compromise may be accepted in these cases. The handicapped and elderly most frequently use this OIC qualification.

New Jersey taxpayers will also have to meet the additional requirements listed below:

• All responsibilities and considerations outlined in the Offer in Compromise must be completed.
• For the next five years New Jersey taxpayers must pay their IRS tax debt on or before the IRS tax deadline
• All tax returns must be filed on or before the tax deadline.
• Internal Revenue Service will apply all federal tax refunds toward the outstanding tax debt.

Installment Agreement

Offer in Compromise may not be the best method for all New Jersey taxpayers to settle their IRS debt. Installment agreements are another tax settlement option which allows New Jersey taxpayers to pay their federal tax liability in monthly payments. There are several types of installment agreements available and the type used will vary based on the amount of debt owed.

New Jersey taxpayers who owe $10,000 or less (not including interest and penalties) may be able to use the guaranteed installment plan which must be paid in three years. If the debt is less than $25,000, New Jersey taxpayers can use a streamlined installment agreement. Payments for this plan are made with in five years. For debt greater than $25,000, New Jersey taxpayers should contact a tax professional prior to contacting the Internal Revenue Service.

To qualify for an installment agreement, New Jersey residents will have to complete the following:

• File and pay quarterly tax estimates for all self-employed New Jersey workers
• File all federal tax forms
• Pay all IRS tax debt for the five years before the amount outlined in the installment agreement
• Not have an installment agreement with in the last five years

Partial Payment Installment Agreement

New Jersey taxpayers who can not make payments under the installment plan may qualify for another IRS tax settlement option called Partial Payment Installment Agreement (PPIA). The PPIA plan will allow New Jersey taxpayers to settle back taxes paying partial payments. One benefit of the PPIA is the IRS will stop their collection actions if the taxpayer agrees to a PPIA. Interest and penalties will continue to accrue.

The Internal Revenue Service will review the Partial Payment Installment Agreement every two years and may decide to increase the PPIA payments or terminate the plan. It is always less expensive for New Jersey taxpayers to pay their tax liability in total instead of using a payment plan.

Currently Not Collectible

Under certain circumstances the Internal Revenue Service may conclude a New Jersey’s taxpayer’s federal tax debt is not collectible.  If a debt is currently not collectible the IRS will cease all collection actions against the taxpayer which will release levies and stop wage garnishments, but the IRS tax debt will not go away and interest and penalties will continue to accrue.

Penalty Abatement

New Jersey taxpayers who have failed to pay their taxes, failed to file a federal tax return, falsified tax information, or requested a false refund may be assessed penalties. The Internal Revenue Service may be willing, under certain conditions, to allow a penalty abatement. Not all penalties are dismissed and there has to be a valid reason to request the penalty abatement.

Do I Need Tax Professional?

Tax professionals can offer a wide variety of tax help including:

• Filing past tax returns
• Provide help avoiding bankruptcy
• Reviewing tax settlement options
• Lowering personal or business tax liability

New Jersey taxpayers who have had their wages garnished, bank accounts levied, possessions taken or harassing phone calls should contact a tax professional for help.

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Internal Revenue Service Tax Settlement Options

Arizona taxpayers who have Internal Revenue Service (IRS) debt and back taxes that have not been paid do have options. If the Internal Revenue Service is hounding you for payment or if they have begun aggressive debt collection efforts, you may have several tax settlement options to repay your federal tax debt.

The Internal Revenue Service, in an effort to settle the federal tax debt, may be willing to negotiate a reduced payment amount. If you are considering a tax settlement there are a variety of professionals such as enrolled agents, certified public accounts or tax attorneys who may be able to help.

Tax professionals can help answer your questions, review your federal tax returns, help file late returns and determine what options you may have to settle IRS tax debt.

Offer in Compromise

Offer in Compromise (OIC) is one of the most popular options for Arizona residents to settle IRS tax debt. Offer in Compromise may allow you to settle your IRS tax debt for much less than the original debt amount. Unfortunately, the Internal Revenue Service does not accept every offer. Many OIC offers are won after filing an appeal.

Offer in Compromise can be complicated and very time consuming. Experienced tax professionals can help complete the paperwork and help you drastically lower your tax debt. The Internal Revenue Service will consider your Offer in Compromise if you can prove one of the following conditions:

1. Doubt as to Collectibility- The Internal Revenue Service may accept your Offer in Compromise if they think they will not be able to collect the tax debt. Under this rule, there is not a question of the amount or the accuracy of the liability, only their ability to collect.
2. Effective Tax Administration- The IRS may accept your Offer in Compromise if they determine collection of the tax obligation will cause “economic hardship which is unfair and inequitable”. This condition is mainly used for the disabled or elderly.
3. Doubt as to Liability- If your tax debt has been inaccurately assessed, the Internal Revenue Service may accept your OIC application and review the tax liability.

To qualify for Offer in Compromise the following qualifications must be met:

• Individuals must pay all of their taxes on time for the next five years
• The Offer in Compromise plan must be done accurately
• Federal Tax returns must be filed in a timely manner
• All federal tax refunds will be used to pay federal tax debt obligations

Installment Agreement

Another tax settlement option is the installment agreement. Installment Agreements allow Arizona residents to pay their federal tax debt in monthly installments. The Internal Revenue Service will generally agree to an installment agreement if tax debt is $25,000 or less. There are several types of installment agreements which can vary based on the amount of tax debt owed. An Arizona Tax professional should be contacted if you owe more than $25,000 to help negotiate the best installment plan for your tax situation.

How do I qualify for an installment plan?

• You must pay quarterly tax estimates if you are self-employed.
• All tax returns for past Internal Revenue Service tax debt have to be paid
• You must file all of your tax returns and pay all federal tax debt for the last five years before the current federal tax debt you can not pay.
• You are not allowed to have another Installment Agreement with in the last five years

Partial Payment Installment

In the last few years, the Internal Revenue Service has created the Partial Payment Installment plan. The Partial Payment Installment plan will stop IRS collection efforts and allow you to repay your federal tax debt in partial payments. The Internal Revenue Service will review the plan every two years and if your financial condition improves, they may choose to stop the Partial Payment Installment plan or force you to begin paying higher payments.

Currently Not Collectible

Certain Arizona taxpayers have faced unusual financial situations. A job loss, unexpected medical crisis or death may make payment of federal tax debt impossible. In certain cases, the Internal Revenue Service may review your tax debt and determine it is “not currently collectible”.  The debt does not go away and penalties and interest will continue to accrue, but the Internal Revenue Service will cease their debt collection actions and release levies.

Penalty Abatement

If you fail to pay your federal tax debt, the Internal Revenue Service will impose severe penalties. Penalties may also be imposed for under reporting IRS tax debt, failing to file your tax forms, misstating your income or assets on your federal tax return or falsely filing for a tax refund.

Arizona taxpayers may be able to request their penalties be lowered or erased by filing for a Penalty Abatement. There must be a valid reason to not pay penalties and all penalties may not be dismissed. Arizona Tax Lawyers, tax accountants and other tax professionals will be able to help determine your eligibility for a Penalty Abatement.

Do I Need Texas a Tax Professional?

The Internal Revenue Service is not going to forget you owe them money. Aggressive debt collection tactics can include: bank levies, garnishing your wages and taking your assets. Do not ignore the problem hoping it will go away, it won’t. Contact a tax professional to get started on a resolution to your tax problems. A certified public accountant, enrolled tax agent or a tax attorney can help:

• Complete past due federal tax forms
• Avoid Arizona personal bankruptcy
• Reduce your personal or business tax liability
• Review tax settlement options such as: Partial Payment Installment plans, Penalty Abatements, Installment Agreements, Offer in Compromise, Currently not Collectible

Need Help with your Unpaid Taxes?

Complete the Free Tax Case Evaluation form below and an experienced Tax Professional will contact you to discuss your situation. Don't Wait -- Get Help Today!

During these economic hard times many people have chosen to start their own business after being laid off. They’re eager to be their own boss and avoid the corporate environment. Yet some of these entrepreneurs struggle with tax issues foreign to them before they started their own company. Adhering to tax compliance as a business entity is much different than filing for personal taxes.

However a largely unknown ally exists to small business owners. An enrolled agent is the only individual licensed by the IRS to represent taxpayers. While attorneys and CPAs are licensed by states, an enrolled agent is licensed by the United States Treasury Department. Only 46,000 individuals are currently licensed with this title, largely because they must either pass a detailed examination on the current tax code, or they must have spent at least five years interpreting and applying the tax code as an IRS employee.

Having this inside perspective is essential when preparing to address your small business tax issues. Enrolled agents are not only approved by the federal government, they can represent their client regarding any type of tax matter – payroll taxes, back taxes, tax liens, wage garnishment, offer-in-compromise and other tax related issues.

An enrolled agent has earned a level of trust with the IRS since their license is achieved through this government branch. As a small business owner in today’s difficult economy, you need sound advice that will help you move your business forward. Let us help you find a local enrolled agent to proactively address your tax concerns.

Need Help with your Unpaid Taxes?

Complete the Free Tax Case Evaluation form below and an experienced Tax Professional will contact you to discuss your situation. Don't Wait -- Get Help Today!