Tax Relief FAQs

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

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.

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

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.

Back taxes are taxes from a previous year that were fully or partially unpaid in the year they were due. The unpaid amount may include federal, state and local back taxes. Taxpayers are responsible for repaying the taxes owed plus any penalties and interest that accumulate.

Someone might owe back taxes for several reasons, such as not reporting all their earned income or neglecting to file a tax return. When taxpayers have back taxes, the government may press charges or garnish wages. Those who owe money can choose repayment options like a personal loan or installment agreement to ease repayment.

During an IRS audit, the best thing taxpayers can do is give the IRS all the information they ask for. Tax audit professionals like BC Tax can support the process of dealing with the IRS. Above all, don’t ignore an IRS audit.

Here are a few steps to follow when you get a tax audit notice:

1. Read the notice carefully: A notice from the IRS might be an audit, but it could also be a request for additional details on a return.
2. Be prepared: Discover the type of audit, including a mail, office or field audit, so you know how to respond. Consider asking someone knowledgeable to take a second look.
3. Respond quickly and be polite: Taxpayers might become fearful or angry when they receive an audit, but it’s best to remain calm and cooperate throughout the process.

After a tax audit, the IRS will review the submitted information to determine any taxes and penalties owed. If you owe, you can try to appeal the assessment to see whether the IRS is willing to settle. Turn to tax professionals like BC Tax that can work on your behalf to resolve these taxes and penalties.

After repaying tax debt, you can do a few things to avoid future debt, including:

• Lowering yearly tax rates: Actions such as charitable donations or opening a health savings account can lower your annual taxes if you document and itemize them on your returns.
• Budgeting, saving and investing: Reassess your budget and redirect your spending toward savings and investments. These actions allow you to create a comfortable margin for future unexpected expenses.
• Building a system: Create a reliable system for yearly tax filings so you have all your tax documents in order. Track available tax credits and deductions and keep detailed records.
• Preparing and planning: Note your spending and areas that may have contributed to debt. Learn about the tax process so you know the necessary documentation and procedures.

A federal tax lien is the government’s legal claim against a taxpayer’s property when the taxpayer falls behind on payments. This claim aims to ensure the government gets what it is owed. The lien may include real estate, personal property and financial assets.

A lien doesn’t mean the government will seize the property or demand you sell it. Instead, it means the government can claim part of the proceeds if you sell the property. It may precede a levy, which allows the bank to seize property and collect the money owed.

Before creating a legal claim through a lien, the government will notify the taxpayer that they owe taxes. Only after a taxpayer receives a notice and doesn’t pay will the government file a notice to let creditors know it has a legal claim on the property.

After an audit, you may discover you owe back taxes, penalties and interest. If the amount seems impossible to pay, consider tax resolution options, such as an installment agreement from the IRS, that can help you pay off the debt over time.

An installment agreement or payment plan allows you to pay back taxes in monthly installments. Another option might be an application for non-collectible tax status. This application declares that debts are not collectible and stops the IRS from using aggressive tactics like garnishing wages or practicing tax liens. Finally, you may be able to propose an offer in compromise, which lets you settle tax debt for an amount less than what you owe.

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.

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.

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.

A tax relief company can provide many benefits throughout the resolution process for back taxes. Here are a few scenarios where hiring a tax relief company might make sense:

• Gaining additional support and knowledge to understand the rules and forms
• Potentially removing penalties to reduce the balance owed and lessen the pressure
• Helping you avoid aggressive IRS collection techniques like the seizing of assets, bank levies, wage garnishment or a tax lien
• Possibly lowering the total amount owed and making payment terms more straightforward for those with $10,000+ in back taxes
• Supporting relief applications after a prior rejection
• Saving time in a busy schedule by leaving it to a professional

Those hiring a tax relief company must be cautious, as many companies overpromise and underdeliver while charging high fees. Choose a tax relief company with a clean background and avoid scams like companies that charge large amounts upfront. A tax relief company should offer transparent processes, realistic results and knowledge of reputable tax relief programs.

A free consultation is a meeting with a tax professional to review your specific tax issue and options available without paying a fee. The purpose is to help you learn about your options, and determine if BC Tax is right for you.

BC Tax offers various tax resolution programs, from installment plans to offers in compromise. We’ll discuss your situation to find the ideal resolution option. Explore our tax resolution services for more details about the support we provide.

The relief process varies for each individual. Many relief cases take about two to 12 months. At BC Tax, we can assess your particular situation to give you a better idea of a potential timeframe. Some factors that influence the timeframe include the taxpayer’s cooperation level and the taxing authority’s response time. We work with taxpayers to find the best path for resolutions that offer the shortest timeline.