Even the IRS understands life happens. That’s why the government offers IRS debt forgiveness when you can’t afford to pay your tax debt.

Under certain circumstances, taxpayers can have their tax debt partially forgiven. When the IRS considers forgiving your tax liability, they look at your present financial condition first. This means the IRS can’t collect more than you can reasonably pay. If any collection action would force you into a financial crisis where you lose all sense of financial security, the IRS can’t collect the back taxes.

Know What You Owe

Before applying for IRS programs, find out how much in taxes you owe to the IRS. Knowing where you currently stand with your tax debt is vital when it comes to asking for IRS forgiveness.

There are many different ways to find out how much you owe, including checking online through the IRS’s new portal, calling the IRS, mailing the IRS a form, and having a tax professional do the research for you. No matter how you figure out how much you owe in back taxes, you’ll need to know before seeking forgiveness. 

Be on the Lookout for IRS Collection Actions

If you can’t pay but you haven’t reached out to the IRS for forgiveness or assistance, you should still expect them to begin taking collection actions against you. These actions can range from seemingly benign, like loads of notices in the mail, to very aggressive, like private debt collection agencies getting involved and tracking you down.  You could also find that your passport is at risk due to tax debt.

Some of the IRS’s often-used collection actions include: 

Tax lien

A tax lien is the government’s claim against your property, which will secure their interest in your assets if you fail to pay your tax debt. Unlike a levy, a lien doesn’t mean your property will be taken immediately. However, you’ll still need to address the lien. Not only can a lien keep you from selling your property, but it can also snowball into a more aggressive action in the future.

Tax levy

A tax levy is the government’s legal seizure of your property to satisfy your outstanding unpaid tax debt. You should receive a notice of levy from the IRS, which will let you know that they are planning to pursue levying actions against you. 

Levies can be placed on personal property like your home, car, or boat. They can also be placed on your assets, like your bank funds, tax refunds, and wages. 

Wage garnishment 

Wage garnishment is a type of tax levy in which the IRS will take part of your income in order to settle your existing tax debt. They will do this through your employer and will continue garnishing your wages until your tax debt is paid or other arrangements are made to pay your tax debt.

For more information about wage garnishment, check out this infographic:

If you find yourself facing these collection actions and they seriously threaten your financial security, tax debt forgiveness could be what you need.

Pay Less Than You Owe with Offer in Compromise

If you have the resources to pay a partial amount of your IRS tax debt, there’s still hope. You can apply for the IRS government payment plan called an Offer in Compromise (OIC) to resolve the remaining amount. Depending on your financial capacity and upon acceptance, the IRS significantly reduces the total debt that you can pay. This reduced amount can be paid in a lump sum or in fixed monthly payments.

There is a catch with the Offer in Compromise program though. It isn’t always easy to qualify for an OIC. The IRS considers your ability to pay, income, expenses, and asset equity when determining your eligibility for an OIC. While it can be a life-changing tax resolution for many people, the IRS doesn’t give an Offer in Compromise easily.

Here are some common reasons for ineligibility:

• You haven’t filed all required tax returns
• You haven’t made any required estimated tax payments
• You’re currently in an open bankruptcy proceeding
• You own a business with employees and haven’t submitted all required tax deposits
• You could pay your tax debt in a lump sum or through an installment agreement and/or equity in assets

But don’t let any catches deter you from seeking back taxes help. If you’re concerned you may not qualify for an OIC, consult a tax professional to see what IRS forgiveness options might be available to you.

See If You Qualify for the IRS Fresh Start Initiative

To make it easier for taxpayers to qualify for an OIC, the IRS has expanded their Fresh Start initiative.

These changes to the Fresh Start initiative make it easier to afford your IRS tax payments. Now, you won’t have to disclose extensive financial details to the IRS to judge your paying ability. 

• Instead of looking at five years of future income to determine reasonable collection potential, the IRS now looks at only one to two year of future income for offers, depending on the payment period. 

• Taxpayers are now allowed to make their student loan’s minimum payments for post-high school education loans guaranteed by the federal government.
• Taxpayers may, under certain conditions including financial hardship, pay delinquent federal and state or local taxes in monthly installments if they cannot pay it in full.
• The IRS has expanded the Allowable Living Expense standards. This allowance now includes credit card payments, bank fees and charges, and other various allowances.
• The IRS has doubled the dollar threshold for taxpayers eligible for Installment Agreements, which will help more people qualify.

What’s Next If You Owe Tax Debt?

Understanding your tax debt and dealing with the IRS isn’t easy to do alone, even with available programs like Fresh Start. Fortunately, there are professionals who can help you navigate your options. In fact, professional help may be necessary for you to get the best outcome for your tax problems.

Tax Defense Network’s team of trained tax professionals has been helping people with IRS issues since 2007. It all starts with a free consultation to get you on your way to a better tax solution.

We couldn’t be more excited to finally announce our first-ever #PayMyTaxes Contest. MoneySolver’s #PayMyTaxes Contest gives entrants a life-changing opportunity to have up to $50,000 in tax debt paid off. Yep, you read that right. $50,000! We’ve even been interviewed by News4Jax about this awesome opportunity.

Here are four ways that the MoneySolver #PayMyTaxes Contest could help you change your life:

1. Winning the #PayMyTaxes Contest = reduced stress and space to finally breathe.

Studies have shown that people who struggle to pay off their debts are more than twice as likely to experience depression and anxiety.  But what if that struggle was lifted off your back?

If you were to win up to $50,000 in tax debt off your back, you’d be able to take much more than just a huge sigh of relief. The winner of the #PayMyTaxes Contest will be able to brush that tax debt stress off and bask in some serious relaxation.

2. Higher likelihood of avoiding unpaid tax debt risks, like wage garnishment and liens.

No one wants to face collection activities. But if the amount you owe decreases (or disappears), it’ll be easier for you to avoid the consequences of unpaid tax debt.

Of course, if you still have some tax debt left over after that $50,000 is paid off, you’ll still have to pay the IRS the remaining amount to avoid collections. However, you’ll be a little closer to freedom from tax debt!

3. Lowered tax burden, which lessens your financial load.

Paying off your tax debt in full can be nearly impossible for some people. But the winner of the #PayMyTaxes Contest will suddenly find themselves free from up to $50,000 in tax debt.

That’s a lot of money that you’ll no longer have to pay, which means a much lighter financial load for you in the long run.

4. Lessened financial load = more freedom.

No more worrying about how your tax debt might affect your spouse or what happens with your tax debt when you die. With less of a financial burden on your shoulders, you’ll be able to explore the things you love and stop worrying about your tax debt.

Instead of having to pay $50,000 towards your IRS tax debt, you’ll be able to use that money to live your life. The cash that you would’ve used to pay the IRS could go towards something much more meaningful to you. And honestly, if given the choice, wouldn’t you rather spend $50,000 on yourself than on your tax debt?

So, what are you waiting for? With the chance to win $50,000 towards your tax debt and change your life, send in your application for the #PayMyTaxes Contest before the deadline of May 31, 2019. We’ll be notifying the lucky winner on or around July 4, 2019.

Click here or click through the image below to learn more and apply.

Marriage is a lot of work. Once you say your “I Dos,” you start to realize just how much more you have to learn about your spouse. Sometimes getting to know your spouse better can be great. Maybe you discover they are an amazing pastry chef or can handle stressful situations with astonishing grace! But other times, getting to know your spouse better can be a little bit more alarming. For instance, what if you discover they have extensive tax debt with the IRS? Even if you are the picture of taxpayer perfection, your spouse’s tax debt and previous history with the IRS can affect you. No matter how much you love your spouse, it’s important to know how their tax debt can impact you.

Can my spouse’s tax debt affect me?

Did you file your return jointly with your spouse? If so, and if your spouse owes back taxes or other federal debts, it can affect your refund. The interested agency can try to recover the debt using your tax refund if they are unable to do so using your spouse’s.

How do I protect my refund?

Why should you lose out on your refund because of your spouse’s mistakes? If you do not want your refund to be taken away to satisfy your spouse’s tax debt, you can file for Injured or Innocent Spouse Tax Relief. This is an IRS relief program that releases spouses from the responsibility to pay a debt entirely owed by their spouse. You can file for Injured Spouse Allocation by completing Form 8379.

How do I retrieve my refund?

Even if your refund has been taken due to your spouse’s tax debt, you may be able to retrieve it by filing for Injured or Innocent Spouse Relief. The following must be accurate to recover your refund:

• You filed a joint tax return with your spouse.
• The return had a refund due, all or a part of which was applied to satisfy your spouse’s debt.
• You reported income (from any source) on the tax return.
• Your spouse owes the entire debt.
• You made estimated tax payments or had your income withheld for paying taxes, and/or you claimed the Earned Income Tax Credit (EITC) or other refundable tax credits on the joint return you filed with your spouse.

You can file Form 8379, Injured Spouse Allocation with your tax return. If you are filing for Injured Spouse relief with your return, it may delay your refund as a result; the IRS will need time to review your return and process your request for relief. It might take up to 14 weeks for your refund to reach you.

If you have already filed your return, you may then file the form separately. The IRS takes around eight weeks to process Form 8379.

If you don’t qualify for Innocent Spouse Relief and are held liable for the due balance, contact one of our experienced tax consultants. We are well-equipped to find an alternative solution for you to resolve your tax issues.

Traveling around the world is already hard enough – and now for those with tax debt, it’s even harder. The IRS is now enforcing procedures that will put your passport at risk if you have “seriously delinquent tax debts.”

How Is My Passport at Risk?

Though the law behind this plan has been in place for over two years, the IRS is now implementing and enforcing the policy. The 2015 Fixing America’s Surface Transportation (FAST) Act states that the IRS can send notice to states to deny, limit, or revoke your passport if you owe delinquent taxes.

Under the FAST Act, an individual has “seriously delinquent” liability if:

1. The IRS has assessed the debt,
2. The debt is over $50,000 in back taxes, penalties and interest, and
3. The IRS has filed a lien to secure the liability or the IRS has issued a levy to recover the liability due.

This amount of debt may seem hard to accumulate. However, one mistake or ill-advised taxable event can land you there quickly. In the same way, failing to plan for your self-employment income or defaulting on a secured loan can cause the debt to pile up. Fortunately, there are ways to prevent having your passport revoked, even if you meet the criteria above.

How to Avoid and Resolve Losing Your Passport

Passport revoked? It’s not the end of your travels. The IRS and State Departments can reinstate your passport if it has been suspended. However, they will only do this if you’ve paid back your debt or made plans to do so.

Your passport will not be revoked under the following exceptions:

• You are already in a formal repayment plan
• An element of your account is pending appeal
• You have requested other administrative relief (e.g. innocent spouse relief; identity theft)

If you received a notice of passport revocation before you established a formal resolution with the IRS, you can resolve it – but it won’t be overnight. Paying your debt back in full is the quickest way to release your liens and get your passport back, but that might not be an option for you.

Resolve the Issue with Professional Help

You can enter into an installment agreement with the IRS, which can take 30 days or longer to process. A successful Offer in Compromise will also reinstate your passport; however, this can be a very lengthy and in-depth procedure with strict guidelines. Unfortunately, Currently Not Collectible status (proof of hardship and inability to pay your debt), will not grant you the passport back.

MoneySolver knows how to deal with the IRS red tape. We can quickly show proof that you’re getting help with your tax debt situation. Avoid having your passport at risk due to aggressive IRS actions and get your life (and travels) back on track.

The IRS has called for backup from the private sector. What does this backup look like? Four private companies that could be coming after your tax debt in lieu of the IRS. Here’s what you need to know about private debt collection agencies (PDCs) to stay informed, lawful and safe.

What’s the deal with Private Debt Collection Agencies (PDCs)?

PDCs aren’t rookies to the federal tax debt collection game – they assisted the IRS in both 1996-1997 and 2006-2009. Despite warnings from the IRS and National Tax Advocate on the unsuccessfulness of these previous efforts – wasting money, yielding half the amount of collections, and contributing to inequities in the U.S. tax collection system – it seems that history is repeating itself.

Congress passed Fixing America’s Surface Transportation Act (FAST Act) in December 2015. The FAST Act includes a section requiring the IRS to use PDCs for outstanding tax debt that the IRS is no longer pursuing. Now, the program is in full swing. The IRS has hired four PDCs: Conserve, Pioneer, Performant Recovery, and CBE Group. Not all tax debt cases are eligible for PDCs to handle (e.g. offer-in-compromise, innocent spouse cases, deceased). However, you may be getting a notice that your account will be in new (private) hands.

What are the risks associated with PDCs?

The problems don’t necessarily lie with the PDCs themselves, but the program’s loopholes. Here are some of the dangers associated with private debt collection:

• Scam magnets. More scam artists can pretend to be PDCs, especially because PDCs aren’t required to identify themselves as IRS contractors. Here’s a smart rule of thumb: Do not disclose any personal information to someone randomly demanding payment over the phone or internet.
• Elevated risk for low-income taxpayers. PDCs have an agenda to push people to make payments, even if the taxpayers can’t afford it. This can create economic hardship for people who would otherwise qualify for alternative payment plans by the IRS. National Taxpayer Advocate reports half of taxpayers outsourced have incomes of less than 250 percent of the federal poverty level (FPL) and nearly a quarter are at less than 100 percent of the FPL. The result is low-income, elderly, and income-restricted individuals are buried deeper in economic woes and unpayable debt.
• A lack of consumer awareness. The IRS wants consumers to know what’s up, but public awareness campaigns are minimal at best due to drastic IRS funding cuts. As a result, consumers are left in the dark and even more vulnerable to scams.

What you need to know to protect yourself:

• How the IRS works – The IRS isn’t like your crazy ex. The agency will never call or text you out of the blue to demand payment. Instead, they will send you notices in the mail that progressively increase in urgency to act. If they have assigned your case to a PDC, the IRS will let you know so it won’t surprise you.
• Don’t pay the PDC directly – Though the IRS hired the PDC to collect your debt, you’re not actually writing out your check to the PDC. All your repaid debt will go straight to the IRS as usual.
• Consult with a licensed tax professional – Turning to a licensed tax professional, which may include CPAs, enrolled agents or tax attorneys, can give you the support and direction you need regarding your tax debt. These experts can negotiate with the IRS on your behalf to relieve tax debt or tie-ups like liens, levies and wage garnishments.

While the lawfulness of PDC use is under scrutiny, it is today’s reality. The key to avoiding trouble is being smart about tackling your tax debt and not going at it alone.

Remember: It’s crucial that you never disclose information to someone calling or messaging to collect immediate payment. Instead, call the IRS directly to see if you owe taxes.

Unfortunately, filing your tax return isn’t always your only contact with the IRS for the year. If the federal tax agency finds errors on your return that lead to an assessment, they will send Notice CP14 for collection. This isn’t a time to freak out as long as you follow the appropriate steps to address the issue.

If applicable, you’ll receive your “balance due” notice within four weeks of your return being processed. This letter is the first contact from the IRS to collect overdue taxes. If you ignore or neglect to pay what’s owed, then the IRS sends additional notices and begin aggressive collection actions, like liens and levies. Here are three steps to take when you get your “balance due” notice:

1. Review the Notice CP14 Details

The first thing to do when receiving Notice CP14 is to know why you received it. The notice includes the following:

• The tax year for which taxes are due
• The notice issue date
• Your Social Security Number
• IRS phone number
• Tax amount owed
• Payments and credits
• Penalties charged on taxes owed
• The final amount due to be paid
• The deadline for paying the amount owed

The Notice CP14 also includes information on payment options, penalties, and interest.

2. Determine If the IRS Is Correct

Before agreeing or disagreeing with the Notice CP14, check to see if your return had errors that led to the assessment of taxes due. If you find errors, you will need to pay the amount owed before the payment deadline in order to avoid further penalties and interest.

If you don’t see any errors or you find a different amount than what the IRS determined, you can call the IRS on the phone number indicated on the Notice CP14. An IRS representative will assist you in resolving the issue.

3. Pay the Amount Due

You can make the payment indicated on the Notice CP14 using IRS Direct Pay, a service that allows you to electronically pay your taxes directly from your savings or checking account. Alternatively, you can pay by credit or debit card.

If you can’t pay the full tax owed, either send a request to the IRS to receive up to an additional 120 days to pay or set up an Installment Agreement payment plan. An Installment Agreement allows you to pay your tax bill in fixed monthly installments. Get help from a tax relief professional before requesting your Installment Agreement to ensure you get the best tax debt resolution for your situation.

Waiting for your refund check can make you feel as excited as a kid the day before your birthday. When you get that envelope from the IRS, you’re ready to tear it open and reveal your hard-earned money. But what does it mean when, instead of your refund check, you get a notice informing you that the IRS applied your refund to unpaid taxes? This happens when the IRS finds that you owe back taxes. They automatically use your refund amount to satisfy the full amount or a part of your tax debt.

What is this notice?

The IRS sends Notice CP49 to inform you about how much tax you overpaid over the last year (i.e., the amount of your refund) and how much of it the IRS used to fulfill your tax debt.

The Notice CP49 means that you have a tax debt or there are other federal taxes that have remained unpaid. If your refund money covered for the entire tax debt, then you don’t need to take further action. If your refund money didn’t satisfy your entire tax debt, then you can either pay the remaining balance in a lump sum or qualify for a payment plan.

Why was my refund applied to back taxes?

Many times, the IRS discovers that a taxpayer is under tax debt after they review their information and make changes to the tax return. In such cases of underpayment of taxes or owing of other tax debts, if the taxpayer has a refund, the IRS will apply the refund to the tax debt.

Simply put, if the IRS discovers that you have any unpaid federal taxes, they will satisfy the maximum amount of debt using your tax refund.

What if my refund didn’t cover the full amount of my tax debt?

Do you still owe federal taxes after the IRS used your refund? And can you not pay the balance in a single payment? Then you can use an Installment Agreement to pay the remaining tax debt in monthly installments. If your financial condition does not allow you to pay the balance, then you can consider applying for tax debt reduction plans such as Offer in Compromise or Partial Payment Installment Agreement.

Already making payments to the IRS under a payment plan? Great! You should continue to do so. The IRS will apply your refunds to your tax debt until your entire tax debt is paid off.

What if I do not have tax debt?

If you don’t have a tax debt, then you should immediately contact the IRS to correct their mistake. Your CP49 notice should have a toll-free number in the top right corner that you should use to call the IRS. Make sure you have your paperwork – including any canceled checks and amended returns – ready when you call.

Did you file jointly with your spouse? It’s also possible that the IRS applied your refund to your spouse’s tax debt. If so, you have options to claim your share of the refund.

Was your refund applied to back taxes? Don’t fret! Give us a call and we can help you figure out the best way to resolve your tax debt problem.