If you have back taxes or any other type of large past-due tax obligation, you may be a prime candidate to benefit from a tax resolution service. Before you go jumping into anything, however, there are a lot of misconceptions about how they operate and what they do, exactly. Here are 5 things that you should know about tax resolution services.
#1. They Do Not Eliminate Your Past-Due Tax Obligations
One of the most common misconceptions about tax resolution services is that they can magically make your past due tax debt disappear by talking with the IRS. Even the best negotiators will not be able to talk the IRS into simply forgiving a debt that you owe them, even when it is potentially several years past due.
What they can do, however, is help you negotiate offers in compromise or installment payment plans to clear up your tax debt. They will act as your representative when dealing with the IRS, though, which can make potential dealings regarding your debt much less stressful than they may be otherwise. In some cases, they can even reverse potential penalties placed on you by the IRS as well.
#2. They Can Often Help File Missing Returns
Many people find that when they need to clear up old tax debt, one of the most confusing, frustrating, and outright difficult things to do is to file returns for missing years. An experienced tax resolution service will be able to conduct historical bookkeeping processes and help fill in the gaps in your tax return filings.
#3. They Are Expert Negotiators That Understand The IRS Processes
While most people dread having to speak with the IRS at all, tax resolution services are experienced in dealing with them and are well-trained in tax law, remedies, and solutions that can help improve your standing with the agency. They can help negotiate offers in compromise with the IRS, which can immediately stop all collection efforts.
They can also help arrange for an installment plan where you pay your debt over time, and they can argue that larger payments will cause you economic hardship, ultimately lowering your monthly payments. In situations like this, they can be the only thing that stands between an individual losing their home due to tax payments. For businesses, they can be the superheroes that help keep the doors open and payroll flowing.
#4. They Can Help Prevent Levy & Liens
If you have a tax debt that is large enough that the IRS is communicating the possibility of levy or lien, then there is no time to waste in contacting tax resolution service. In many cases when an individual receives communication from the IRS that they are going to be starting garnishment, levy, or lien processes soon, overwhelmingly ignore the problem until it’s too late and the penalties are in effect.
Whether the penalties are already impacting your life and finances, or if they are communicating that they are pursuing such action, tax resolution services can help stop or reverse these actions in most common situations.
#5. Tax Resolution Can Improve Your Credit In Some Cases
If you have had a levy or lien placed on you or your property, it causes credit damage in many cases and while becoming current on your taxes will not remove this blemish, tax resolution experts can help. They can file to have the lien or levy officially withdrawn, which makes it look like it was never even part of your credit history.
In cases where this is successful, the individual can see dramatic increases in their credit scores instantly, as it is restored to the state it was in before the IRS action affected it.
Using A Tax Resolution Service
While tax resolution services may be extremely helpful if you have a significant past-due tax obligation or have missing tax returns for multiple years. On the other hand, the cost of their services may not be economical if you only owe a few hundred or a couple of thousand dollars in taxes.
If this is the case, they may still be able to help, and many of the best services will offer free initial consultations so that you can understand what their services would entail and just how much it might cost you to remediate your tax problem. The worst-case scenario is that it won’t be worth it to hire them versus paying your taxes, but in the best-case scenario, they may be able to save you tens of thousands in potential fines, fees, and interest, as well as lowering your payments.