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When you fall behind on your bookkeeping, it can be even easier to fall behind on your taxes. Regardless of the case, it’s always a good idea to keep records from the IRS and any institutions or authorities together with all your financial records.

You may qualify for relief from a penalty by administrative waiver if it’s your first tax penalty or you meet other criteria allowed under tax law. If you don’t qualify for one-time forgiveness, don’t give up trying. The IRS offers other ways to help you pay down and eventually settle your tax bill through its Fresh Start program.

Tax Relief and Resolution: 5 Ways to Deal with Tax Debt

Here’s an example, imagine you file your tax return a year late and you owe $10,000. You would have incurred a failure-to-file penalty of 4.5% every month for the first five months. Additionally, you would have also incurred a failure-to-pay penalty of 0.5% for every month until this penalty reaches 25% of your balance. Learn everything you need to know about this very important tax relief program below.

PLLC could use a combination of a first-time abatement and reasonable cause arguments to have your penalties and mounting interest erased by the IRS. Similarly, for those who paid their penalties before realizing they may not have to, we can help you recover your hard-earned money from the IRS. A first-time penalty abatement is an effective tool to quickly address tax penalties and potential debt before it accumulates and becomes unmanageable. Unfortunately, due to the fact that many people are unaware of this scheme and how many people are unfairly denied, it is not being used to its full benefit. If you have already paid an eligible penalty, you can request a refund from the IRS by submitting a refund claim for a refund and request for abatement. Your refund request must be submitted to the IRS within three years of when you filed the original tax return or two years from the date you paid the penalty.

IRS Fresh Start Program

The CSED is typically 10 years after the tax liability was assessed. However, there are several actions that suspend the clock and move the deadline. Big tax debt firms emphasize this phrase because they https://kelleysbookkeeping.com/certified-bookkeeper-certifications-licenses-cpb/ try to draw in clients by promising to reduce their tax bills. These companies are notorious for telling taxpayers that they can save money on their bills without learning about their situation.

• You may still be able to recover the costs you have lost by paying the penalty.
• Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.
• While not technically forgiven, the IRS typically will not make any attempts to collect on what you owe it.
• As such, to reduce the risk of rejection, your application must clearly outline your eligibility and include a compelling argument for relief.
• Also called first-time abatement, one-time forgiveness is when the IRS waives penalties for taxpayers with a history of compliance.

Our team of specialized historical bookkeepers can get your books up-to-date and resolve any outstanding bookkeeping issues, helping you find deductions that can even lower your total tax debt. For more information about paying your state tax bill, contact your state comptroller’s office. You can also visit NASACT.Org for a state-by-state listing of auditors, comptrollers, and treasurers. The IRS’s Fresh Start Initiative, What is the Difference Between Bookkeeping and Accounting which was rolled out in 2011 and has since been expanded,  can help troubled taxpayers get into compliance. “No one can get a better deal for taxpayers than they can usually get for themselves by working directly with the IRS to resolve their tax issues,” IRS Commissioner Chuck Rettig said. Installment plans are like home mortgages, but instead of paying a lender every month, you pay the IRS every month.