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Tax Relief TipsRead these 100 Tax Relief Tips in 12 categories ranging from Business Tax Relief to Wage Garnishment. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Tax Relief tips and hundreds of other topics. Become a Guru or Become an Advertiser. When The IRS Gives Incorrect InformationWhenever you rely on IRS written advice which results in you receiving tax penalties, you are entitled to a penalty abatement. The penalty will only be abated if you reasonably relied upon the IRS incorrect advice, The written advice was in response to your request for advice, and the advice was not the result of your failing to supply information to the IRS. You simply request this penalty abatement by filling out IRS Form 843. Across the top, simply write “ Request for Abatement of Penalty or Addition to Tax Under Section 6404(f) ”. On Line 5 you will explain in detail your reasons for filing this claim and show your computation for the credit, refund, or abatement. If you attach an additional sheet(s), include your name and SSN, ITIN, or EIN on it. Also, attach to Form 843 any appropriate supporting evidence such as:
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Stop IRS Wage GarnishmentDebtHelp.com Tip: How do you stop an IRS wage garnishment? As in an IRS attachment situation, you have just a couple of options. First, keep in contact with the IRS. It has been mentioned in this tips book many times, but this is important. The IRS simply wants to know what is going on with you and truly wants to work with you. Do not ignore them. Second, arrange repayment of unpaid taxes. Enter in a tax resolution method that is most appropriate for you. Installment agreements, penalty abatements, offer in compromise – all are there to help you repay your tax debt. Third, keep current with your payment arrangements. If you fall behind in any of them, the IRS may cancel the agreement and move forward in its collection efforts. Fourth, do not take it out on your employer. They are simply following instructions. It is your fault you are in this situation, not theirs. Fifth, live on less. Learn to live on less as your wages are taken away from you to pay your back taxes. Sixth, you can request a release from your wage garnishment. The best way to stop an IRS wage garnishment, is to communicate willingly with the IRS. Too many taxpayers believe that by ignoring the IRS, they will go away. That is not true. The IRS can be the most persistent and annoying creditor you will ever have. They have a knack of popping up years later, when you thought it was safe. Taxpayer Bill Of Rights & Penalty AbatementOne of the rights you have under this IRS statute is the fact your penalties can be waived. In order to have your penalty waived (abated), however, you need to show the IRS that you acted reasonably and in good faith. Or, you must show you relied on an IRS employee's incorrect advice. The IRS will also waive any applicable interest that is a result of any incorrect information of an IRS employee that you rely upon. Federal Tax Lien ProcessDebtHelp.com Tip: Having a federal tax lien filed against you does not happen overnight. It is part of a legal process ending with the IRS attaching the tax lien to your property. Here is an easy way to understand the tax collection process leading to a federal tax lien: Tax return. When you file your tax return you are expected to pay your entire tax bill in full. You will enclose payment along with your tax return. Or, if you are filing your tax return online, you will pay electronically. Bill. If you do not pay your tax bill in full, you will receive a bill from the IRS stating the amount of unpaid taxes due. Titled ‘Notice and Demand for Payment'. This bill will also contain an explanation of your balance due amount. You are given the chance to pay your unpaid tax bill (within 10 days of receiving the first Notice) by submitting payment to the IRS. You can do this by check or money order. Or, you can pay via credit card (a convenience charge may apply). Call 1-800-272-9829 or 1-888-729-1040 for this purpose. If you do not contact the IRS to voluntarily pay your taxes, you will cause the tax collection process to be taken to the next step. This next step is an enforced collection effort to secure payment. Notice. When you do not pay your tax bill in full, and have not contacted the IRS to arrange a satisfactory payment arrangement, the IRS will file a ‘Notice of Federal Tax Lien'. You will receive this notice when it appears you have neglected or are avoiding the IRS. The Notice of Federal Tax Lien will give your creditors notice about the IRS having a claim against your property. The tax lien also applies to any property you acquire after the lien is put in place (this is known as a future interest). It also may negatively affect your credit history. The tax lien attaches to your personal and real property and any future interests you may obtain in any property. If you are a business owner, it will attach to any rights you have in property. Dispute. If you dispute the amount of your unpaid tax bill (Notice and Demand for Payment), contact the IRS as soon as possible. You can visit your local IRS office, or write to the IRS address on your Notice. When you contact the IRS either in-person or through the mail, have a copy of the bill and copies of any records regarding your tax bill amount. Obviously, you will not be mailing any original documents. Only mail copies of documents that support your position. You can take originals into the IRS office, but be sure to have them returned to you upon your leaving the office. They are your permanent records. You can also call the IRS 1-800-829-1040 to discuss the Notice. Be sure you have your Notice will you and any supporting documents you need to dispute why you believe the amount is incorrect. IRS tax laws state you can ask the IRS to review your federal tax lien case, if you seek an appeal on your federal tax lien filing. If you are not satisfied with that, you are entitled to a Collection Due Process Hearing. Contact. Do not be afraid to contact the IRS. They are there to help you. They want to resolve your unpaid tax bill as quickly as you do. Plus, you are protected during the entire collection process under the Taxpayer Bill of Rights. See IRS Publication 1 (Rights as a Taxpayer) for more information. Sample Request LetterTo: Penalty Abatement Coordinator Re: Request for Penalty Abatement From: Jane Nutsy 12 Crazy Road July 4, 2007 To Whom It May Concern: I am requesting an abatement of penalties totaling $2,345.20 as asserted in the IRS Notice dated 6/2/XX, of which I have enclosed. The reason I paid late, filed late, did not report income (choose your reason) was that __________(fill in your reason, such as:) My husband passed away Enclosed is a (describe your supporting documentation, such as): Death certificate confirming my husband's death I have also enclosed payment that covers the amount of the underlying taxes I owe. (It is a good idea to send at least something as a good faith deposit). Please abate these penalties for “reasonable cause.” If you have any further questions, please feel free to contact me at 960-985-8564 from 8a to 5 pm. Thank you in advance for your time and consideration. Sincerely, Manual signature Jane Nutsy Enclosed: IRS Tax Notice, death certificate, doctor's letter, photograph. Back Property TaxesDebtHelp.com Tip: Whenever you do not pay your property taxes (real or personal), you are facing the chance of having your state start the process of placing a tax lien on the property affected by the taxes. Your individual state, where the property is located, will define and determine what your legal property interest is with respect to the affected property. It also will determine what your property tax is based upon two items. The first is your property's assessed value. The second factor determining your property taxes is the current tax rate. Once your property tax interest has been determined by your state, it is then up to the federal government. The IRS will start the federal tax lien process. Your federal tax lien will be for the amount of any property taxes owing on your property. Each state will have details about their tax collection process. Usually, the Department of Revenue is the taxing authority. Check with your individual state to see how they handle the tax collection process. Overall, you will first be given the opportunity to pay your unpaid property taxes of your free will. If you fail to do this, the next step in the collection process begins. The government will start the enforced collection route (a lien). A property tax lien is filed in the county courthouse where your property is located. It is a public record for all to see. It will remain a public record until the tax debt has been paid in full – including interest and any additional charges. Even though the federal tax lien is not required to be filed, filing it provides the IRS with priority over other creditors you have. The IRS tax lien attaches to your personal and real property and any future interests you may obtain in any property. If you own a business, the tax lien will attach to any rights you have in your property. Interest Abatement RequestYou are allowed to request an interest abatement whenever you have had interest applied to your account as a result of:
Form. To request the interest abatement, you will need to fill out IRS Form 843. Across the top of the form, you will write “Request for Abatement of Interest Under Section 6404(e)”. On Line 5 you will put:
Unpaid Payroll TaxesDebtHelp.com Tip: One area which you need to concern yourself about is paying your payroll taxes on time. Be certain that you pay them on time, by the due date, or you will face stiff consequences from the IRS. The IRS may allow leniency regarding other taxes, but current payroll taxes is not one of them. If you are late paying your current payroll taxes (making your payroll tax deposits), the IRS will shut down your business. Make certain that you make your current payroll tax deposits on time to avoid this. For past due payroll taxes, you may be allowed to keep your doors open only if you make arrangements to pay off your past due balance. Requesting A Penalty AbatementTo give your penalty abatement request a professional appearance, thereby increasing your success of receiving the abatement, the following steps are recommended:
Ø Explain your reasonable cause Ø Be brief Ø State you are requesting a penalty abatement Ø Sign and date the letter
Ø Copy of the original IRS notice Ø IRS Form 843 (Claim for Refund and Request for Abatement) The mailing address for penalty abatements is the same IRS service center where you mail your 1040 series tax return. Wait about 45 days after originally mailing your letter to the IRS. Then, send another copy of your request letter, if you have not heard anything. Simply change the date on the request letter. The IRS should respond to your request within 60 days. When requesting your penalty abatement make certain to emphasize your positive IRS record, if it applies. Remind the IRS items such as not being late with taxes, not having pain any previous penalties, etc. The IRS may take this into consideration and help you out. Example Of A Penalty AbatementJane Widget had an unpaid tax bill totaling $30,000, including $7,500 in penalties. Jane entered into a tax resolution program known as an offer in compromise. The IRS wanted to enter into an installment agreement whereby Jane would repay the entire $37,500. Jane, however, wanted to have the penalty abated due to her husband passing away three months ago. Jane prepared a request for penalty abatement letter and submitted it to the IRS. The IRS agreed to it. Jane and the IRS entered into an Offer in Compromise agreement whereby Jane repayed a total tax bill of $30,000. Jane had her penalty abated. |
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