Tax Relief FAQs

What Is Tax Relief?

Tax relief is a program that helps eligible taxpayers make their taxes more manageable through a range of options. For instance, professionals from a tax resolution company may represent a taxpayer and negotiate with the IRS on their behalf. Depending on the taxpayer’s situation, they may be able to settle their tax liability, reduce their taxes or create a more manageable tax payment plan.

What Do I Do if I Receive an IRS Letter?

Contacting a licensed enrolled agent from BC Tax may help you understand what your next steps should be and how to handle the situation. If the letter requests payment of taxes, penalties or interest, these agents may evaluate your financial situation and help you respond accordingly. Similarly, if there is a misunderstanding about your tax return, BC Tax may help you send the relevant proof to support your tax return.

Common IRS Notices Include:

• IRS Notice CP2000: a notice of underreported income or an underreported inquiry
• IRS Notice CP504: a final Notice of Intent to Levy due to unpaid taxes, interest, or penalties
• IRS Notice CP14: a formal letter informing taxpayers of outstanding taxes they must pay
• IRS Notice CP523: a Notice of Intent to Levy and Notice of Intent to Terminate for defaulting on an IRS installment agreement

What Is the Penalty for Not Paying Taxes?

The penalty for late tax payments is 0.5% of your unpaid taxes for each month the tax goes unpaid. If a taxpayer continues to avoid tax payments, the penalty may reach a maximum of 25%. The IRS also charges interest on penalties until your taxes are paid in full. This interest may vary depending on the type of penalty you have.

If you have limited financial means to pay late taxes or it is your first time missing a tax payment, speak with a professional at BC Tax to help you submit a first-time penalty abatement or request an extension.

What Happens if You Don’t File Taxes?

When you avoid filing taxes, the IRS may charge you late penalties with interest, postpone giving back your refunds or seize your Social Security benefits after thoroughly notifying you. If you continue to avoid filing taxes after the IRS has notified you several times, they may file a substitute for return, which may raise your tax bills or you may be charged with tax evasion charges.

This makes it critical to negotiate a payment plan or tax reduction with the help of tax professionals if you are having issues filing your taxes.

How Do You Get Rid of IRS Penalties and Interest?

If you have limited means to pay IRS penalties and interest, it may help to apply for an offer in compromise. This may allow you to settle your debt for less when you can prove your situation. Some other options may include creating an installment agreement to pay your back taxes during a set period, requesting a short extension or taking out a personal loan.

What Is a Tax Levy?

A tax levy is when the IRS gets the legal authority to seize a taxpayer’s business, house, car, wages, bank accounts or other assets to fulfill their outstanding debt. In these cases, it’s best to explore your options for paying off taxes in a way that works in your favor.