If you live in the state of New Mexico and you owe back taxes, the Internal Revenue Service has several options to negotiate the repayment of your federal tax debt. By contacting a New Mexico Tax Attorney, you can examine which tax settlement option will work best for you.
Do not let the IRS intimidate you. Owing money can be stressful, but you do not have to let the IRS and their aggressive debt collection efforts disrupt your life. Contacting a New Mexico Tax Lawyer can be your best choice to settle your IRS tax debt.
Internal Revenue Tax Settlement Options
In certain cases, the IRS may allow you to settle your tax debt for less than you owe. The IRS always prefers that you pay the full tax debt, but they may allow exceptions if you have an extenuating circumstance. Regardless of the tax settlement you choose, you will have to file all previous unfiled tax returns. A tax attorney can help with this process and also help determine what type of tax settlement option is best for you.
Offer in Compromise
Offer in Compromise is one of the most common tax settlement programs for re-negotiating your federal tax liability. Unfortunately, not all Offer in Compromise applications are accepted. The IRS created the Offer in Compromise or OIC with the goal of helping individuals fulfill all their future tax payments. OIC allows you to make an offer to the Internal Revenue Service for the amount of money you can pay with out creating unreasonable financial hardship for your family. If the IRS accepts your offer, all past tax liability (which the offer covers) is eliminated.
To qualify for the Offer in Compromise program, you must meet certain requirements:
- All federal taxes must be pain on time for the next five years.
- You must complete the full payments outlined in the OIC.
- You must file all your tax returns before or by the tax extension deadline.
- Your tax refunds will be applied to any federal tax liability you owe.
The IRS will accept the Offer in Compromise application if you can prove:
1) Doubt as to Liability- If the amount of tax debt owed is in question, the IRS may agree to review the disputed amount.
2) Doubt as to Collectibility- The IRS does not believe, given your current financial situation, you will be able to pay your federal tax debt.
3) Effective Tax Administration- The IRS agrees paying your federal tax debt will create “economic hardship which is unfair and inequitable”. This is most often applied to the disabled and the elderly.
New Mexico taxpayers frequently use an Installment Agreement to pay IRS taxes, which will allow the taxpayer to pay their taxes in monthly installments. To qualify for the Installment Agreement all prior tax returns must be filed. The IRS generally accepts this option if the amount owed is less than $25,000. If the amount owed is more than $25,000, it is a good idea to consult with a New Mexico Tax Attorney to negotiate the terms of the plan. Penalties and interest will continue to accrue under this plan. If you can pay your tax debt in full, you will always save money.
Partial Payment Installment
In 2005, the IRS implemented the Partial Payment Installment Agreement (PPIA). New Mexico residents who have federal tax liability can use this new payment option. According to the legislation which was passed, New Mexico residents can agree to partial payment plans or full payment plans to settle outstanding federal tax debt. To qualify, you must provide complete and accurate financial data, including information for assets which could be used to reduce your tax debt. The IRS will review the installment plan every two years and the agreement terms may be updated if your financial circumstances improve.
Currently Not Collectible
In some extenuating circumstances, the IRS may decide tax debt is not collectible. The Internal Revenue Service will decide if collecting the debt will cause a “severe economic hardship”. Currently not Collectible is a temporary plan which may allow you to avoid the IRS debt collection, but you will still owe the back taxes. Penalties and interest will also continue to accrue on the outstanding taxes owed.
New Mexico residents may be able to request a Penalty Abatement to eliminate the penalties associated with over due federal tax liability. The IRS may be willing to remove the penalties if you prove you are not able to pay the debt and you have a valid reason for your request. A New Mexico Tax Attorney can file your cover letter and complete Form 843.
Information such as you name, address, tax period for the request and social security number will have to be provided. Many taxpayers choose to establish their plan of payment before they request the penalty abatement, but a New Mexico Lawyer can answer all of your questions regarding the proper filing of the Penalty Abatement.
Do I Need A New Mexico Tax Attorney?
The Internal Revenue Service is a very aggressive debt collector with a variety of methods at their disposal. The IRS can make your life miserable. They do not forget about debt and they do not stop calling. Some of the debt collection techniques you can expect to encounter if you fail to pay your federal tax liability can include:
- Freezing money in your bank accounts
- Seizing business and personal assets
- Seizing your equipment
- Seizing your personal property
- Garnishing your wages
Tax Attorneys in New Mexico have worked for years to stop the harassing actions of the IRS. Tax Attorneys will be able to review all the tax settlement options available and determine if Offer in Compromise, Installment Agreements, Partial Payment plans or Penalty Abatements are best for you. If you need help with any of the following tasks, contact a New Mexico Tax Lawyer today.
- Stopping the Internal Revenue Service harassment
- Completing the forms for a tax settlement plan
- Reducing the need to file personal bankruptcy
- Reducing or eliminating federal tax liability