What to do if you're being sexually harassed

Marianne Cooper, a sociologist, writes that there is no "right" way of responding to sexual harassment even in the age of #MeToo. This is how you can make an informed decision on what to do.

Sexual harassment is something I am all too familiar with as a sociologist who studies gender and work. It affects almost 40% of women. Only 25% report it in writing. Those who do report it are more likely to face retaliation from their employers.

Even experts are not always clear on what advice to give to those who have experienced it. When deciding what to do with their lives, women often have to weigh their ability to pay the bills or their ability to advance in their careers against their desire to be treated with dignity, respect, and compassion.

This type of calculation should not be required, but Michael, an Orange County sexual harassment lawyer at a famous law firm, stated that no one should need to do it. These are the facts you need to know for decisions.

All things should be documented

Federal law makes two types of sexual harassment illegal. However, some behavior could still be a violation of your company's policy on sexual harassment if it has one.

These are quid pro quo harassment when your employment is dependent upon your fulfilling a sexual request ("If I go on a date, I'll give me more hours"), as well as hostile work environment harassment. This is unwanted behavior that disrupts or interferes with our work (unwanted touch, suggestive emails, or texts, sharing explicit images or videos, or unwelcome touching).

It doesn't matter what type of harassment you are facing; everything must be documented. You can write down the following details:

• Date, time, and place of harassment. What was said?
• Take screenshots or keep copies of all relevant emails, text messages, photos, or social media posts.
• Share the details with a friend, family member, or coworker. They may be able to provide support and possibly even corroborating statements if you require them.
• Keep track of your productivity and job performance. If possible, go through your personnel file or performance report to see if you have any. This will ensure that you have proof in case your performance is ever questioned.
• All documentation should be stored outside of your office and on your computer at work.
• Remember: Secretly recording harassment may provide valuable evidence. However, you should check the laws in your state before you do this. It is against the law in some states to record conversations without consent from both parties. the recordings are also prohibited by some company policies.

Evaluate the Situation

These are the questions to ask when you're trying to figure out how to respond to sexual harassment:

• What outcome do you desire? Some may wish to fire their harasser, while others might just like the harassment to end and for them to be able to move on to something better. What you do will depend on what result you get.
• What does your company do about sexual harassment? Does your company regularly declare that sexual harassment is against the law? This could indicate that the company will take your complaint seriously. You may not want to speak up if you work in an environment where you see bad behavior a lot. In workplaces that have a permissive culture, sexual harassment is more common. However, people who report such harassment are less satisfied with the outcome.
• What is your company policy? Learn everything you can about the company's policy on sexual harassment. You should be able to understand the policy, what employees can do if they witness or experience harassment, and how you can report it internally. You should carefully follow the guidelines if you decide to report.
• Are you a party tan an N.D.A. Do you have an N.D.A. These agreements are frequently used to intimidate women into silence.
• Which are your support sources? Take stock of all your support sources, as you can see the financial and emotional toll sexual harassment can have on you. Are there family members and friends that can help you? Are you able to make ends meet if your job is terminated? Think about the support that you receive at work. Are you able to have a productive working relationship with someone in a higher-ranking position? Are there coworkers who can back you up on what has happened?

Get involved

Remember that you are the expert in your situation. So trust your instincts. There are many options that you have.

• Keep going. Many women feel uncomfortable reporting harassment or are hesitant to do so. This is often due to legitimate concerns about retaliation or pushback. You should always keep track of everything, even if you decide not to bring it up.
• Tell the harasser that you are done. This can be done immediately or later. Make sure you are clear about what is bothering you. Sometimes, harassment can be stopped by confronting the harasser directly. Legally, it is also helpful to be able to tell the harasser you intend to end the harassment.
• Solidarity is key. Get to know others who might be being harassed or mistreated at work. Encourage one another to support each other and think about coming forward together. It's difficult to dismiss a pattern of harassment if several people testify to it.
• Talk to a professional Los Angeles sexual harassment attorney. Consultations can be confidential, and most organizations offer financial assistance. Contact the National Employment Lawyer's Association or Legal Aid at Work to find a lawyer.

Making a Claim

There are some things you should consider if you're ready to file a claim.

• If your company has, procedures, this shows that you have taken the necessary steps to inform your employer about the harassment. It may be worth writing out a detailed account about your harassment and sharing it with resources or other supervisors via email. This will act as a record of the date and time. This will ensure that you include all pertinent details and that your employer was informed about the harassment.
• You might consider speaking to a senior leader, or someone in human resources. You should consider speaking to someone in H.R. if your employer doesn't have a harassment policy or if you feel harassed by the person you are reporting to. You can also file a complaint with the Equal Employment Opportunity Commission if this is not possible. The feed is the agency responsible for enforcing civil rights laws that prohibit workplace discrimination is the E.E.O.C.
• Filing with E.E.O.C. You must first file an online complaint of discrimination against your employer before you can file a lawsuit for job discrimination against them. You must file this charge within 180 days of harassment. However, some states may have shorter timelines. After the E.E.O.C. has received your charge, it will be contacted by your employer. The commission will determine the next steps. Once the E.E.O.C. receives your charge they will contact your employer and determine the next steps. These could include mediation with your employer or an investigation.
• Publicizing. People decide to make their stories public by writing blogs like Susan Fowler (an ex-Uber engineer) or going to like media, such as Harvey Weinstein's accusers. There are some things you should consider. You need to make sure that you're not violating a confidentiality or nondisclosure agreement. Defamation lawsuits may be filed against you.

What is an Employment Lawyer?

Employers and employees can both be represented by employment lawyers about issues that involve both federal and state employment law. Employers and employees alike are protected by employment lawyers.

An Orange County employment lawyer can draft and review employee handbooks, help with wage law issues, and represent employers or employees before the Equal Employment Opportunity Commission. If employees claim that they have been denied their rights, they can provide advice on how to protect them.

A professional Orange County labor attorney deal with employment-related legal matters, including:

• False termination
• Workplace discrimination.
• Sexual harassment.
• Violations of contracts
• Questions involving employee benefits, such as retirement savings plans and health insurance.
• Protection for whistleblowers

Many lawyers represent employees that aren't members of a union. They are powerless when employers treat them in ways that are contrary to applicable law.

Should I hire an employment lawyer if I am an employee?

Employers may commit many illegal acts that can put employees at risk or violate their rights. In any of these situations, an employee should consult an employment lawyer:

• The harasser has been at work.
• A protected characteristic (e.g., gender) has led to discriminatory treatment of the person. pregnancy.
• Because the employee exercised a right to request overtime pay, which is a legal right, the employer has retaliated against them.
• The employee's employment was terminated for violating an employment contract, whether implied or explicit.
• The person is forced to sign an agreement that waives their rights.
• The employer of the person has not provided them with the benefits they are entitled to under their employment contract.

An employee may be required to file workers' compensation claims if they are injured at work or become sick. An employment lawyer can help employees file the best possible claim and appeal against denials of benefits.

An employment lawyer may be recommended for employees who work in non-unionized places and want to join a union. An employment lawyer can advise employees on their rights to form a union, and the activities they can participate in. Employees can be informed by them about their rights, including the right to be protected from discrimination due to their union activity.

An employment lawyer can advise employers on the rights and responsibilities of union workers as well as the efforts of employees unionizing at an employer's place of work.

An employee should immediately contact an employment lawyer if they are aware of a problem. A person who waits to call an attorney could be prevented from proving the employer's conduct and thus from recovering damages. There are often time limitations for filing complaints or asserting rights under the law. Any delay could result in losing your right to file a claim.

Should I hire an employment lawyer if I am an employer?

An experienced employment lawyer can help employers with many issues related to employment. Employers can be educated by many employment lawyers about the federal and state laws applicable to their workplace. An employment lawyer can ensure compliance by employers with these laws.

Employers may be assisted by employment lawyers to learn more about their obligations under the guidelines of OSHA and other environmental regulations. Employers can also be represented by employment lawyers before various governmental boards and agencies if they are cited.

Employers should contact an employment lawyer if they have any questions.

• They are entitled to representation in collective bargaining negotiations between a union and them
• A complaint has been filed by an employee alleging discrimination or harassment.
• If an employee files a lawsuit naming them the defendant in a case relating to employment.
• Employer plans to fire or lay off large numbers of employees, end employee benefits, or modify the existing pension plan it offers.

A skilled employment lawyer can help you with other legal issues than disputes between employee and employer. An employment lawyer can review and prepare agreements you use with employees, such as employment contracts, termination contracts, or releases.

OSHA is one example of a variety of regulations that workplaces can be subject to. An employer would want to keep in touch with an attorney who is experienced in the areas of regulation that are relevant to their workplace. An attorney would be expected to regularly assess compliance with regulations.

What Does an Employment Lawyer Cost?

Costs for local employment lawyers vary depending on the lawyer's skill, the case detail, ls, and the law area. The three main types of fees that attorneys charge their clients are hourly, flat, or contingent.

• Hourly rate Most lawyers charge an hourly rate for employment cases. California's median hourly attorney rate is $350 for smaller firs and $450 for more experienced firms.
• Contingency Fee: If a case is won, attorneys will charge their clients a portion of any award of damages. The percentage that the attorney receives will depend on whether the award is won before or after trial.
• Flat Fee - Sometimes, attorneys charge a flat fee to handle less complex legal issues, such as simple wills or uncontested divorces, powers of attorney, and minor criminal cases.

What were Some Common Issues When Hiring an Employment Lawyer?

A person should make some good consumer decisions when considering hiring an attorney. Before hiring an attorney, it is a good idea to speak with several lawyers with the right expertise before making a decision. It is important to find out if an attorney charges for an initial meeting, and if so, on what basis (hourly or flat fee) and what the amount. A person will feel most at ease with the attorney they interview, and they may choose to hire that particular attorney.

A person should prepare a short, concise, and clear description of their problem before meeting with a lawyer. Ask the lawyers about their experience in dealing with their specific problem, their fees, the options available, the chances of success, the cost of the case, who will be handling it, and when they expect to resolve the issue.

Why should I hire an employment lawyer?

For assistance, if you are involved in a dispute about employment or need to make sure you comply with all applicable laws, whether they are local, state, or federal, contact an employment lawyer in your area.

Your lawyer can help you comply with all applicable regulations, depending on the nature of your issue. If necessary, they can represent you in a lawsuit against your former employer or employer.

What does an Employment Law Attorney do?

Are you looking for an employment lawyer? You might also wonder if there is an employment lawyer near you.

Before you look for an employment lawyer in LA, it is important to understand why you are looking.

One reason is that many managers aren't trained for managerial roles. Managers who don't have formal training are more likely not to follow labor standards.

A labor and employment lawyer can help. A lawyer can help employees report any mistreatment by their employers. Employers can also be educated by a lawyer about their workforce limits.

This article will provide more information about the role of an employment lawyer. Let's explore.

Representatives for Employees

An employment lawyer who represents an employee is responsible only for that employee. They can help staff members get fair compensation and work in a safe setting. They can also represent employees in court if their employer has mistreated them.

• Example: An employer deciamperes compensation claims, even though they are entitled to compensation. Employment lawyers can help you fight unfair claims denials and take legal action.

Many employers will try to discourage employees from filing workers' compensation claims to avoid inventions. If the amount of compensation is not sufficient, lawyers can be helpful. A labor attorney can help an employee if they need a large amount of money.

1. They may be able to negotiate with the insurance company for an increase in their coverage.
2. They may be able to seek a large amount of money in civil court

Labor attorneys will negotiate with insurance companies and employers to settle musettes and will advise clients to file a civil lawsuit if negotiations fail.

Malpractices in the Workplace

A lawyer is also a valuable asset in the event of a workplace problem. Here are some signs that your workplace is abuzz with misconduct:

• Bullying and/or intimidation
• Sexual harassment
• Inappropriate touching and physical contact
• Employer retaliation
• Racial discrimination

Discrimination can also be faced by workers based on their gender identity, national origin, religion, or sexual orientation. An attorney can assist employees in filing a complaint to the U.S. in response to workplace misconduct. Equal Employment Opportunity Commission (EEOC).

A lawyer can help you avoid making mistakes that could delay the claims process. Even worse, one mistake could cause your claim to be denied.

A civil court is an alternative option to the EEOC if you are unable to get justice. An attorney can assist you in filing a lawsuit against your employer in the case of discrimination or other hostile work environ hostile work environment

Group representation

Many labor unions need advice from employment lawyers when it comes to group issues. A union lawyer can help with matters such as the formation of a union, its structure, and management.

Legal counsel can also help to combat anti-union activity by employers such as union-busting. An employer can also fire unconstitutionally a union leader.

When it comes to contract enforcement, officers of the court can also be crucial. It could be that an employer did not honor the hourly wage promise in the agreement. However, the job of a union lawyer is to maximize the interests and protection of the union.

Lawyers can also represent groups in labor class action lawsuits. If multiple employees bring a case against the same employer, a labor class action lawsuit is available.

• Example Employees who aren't compensated for overtime work can sue their employer. Employers must pay overtime to employees who work more than 40 hours per week under federal and state law.

A single employer can also represent the group. However, employees have the option to retain their legal counsel.

Protec measures for whistleblowers

A whistleblower from a company will report misconduct by the company to a regulatory agency. They may also inform the media.

They could be subject to employer retaliation and even lose their livelihood. Many whistleblower protection laws can be invoked by employment attorneys.

A lawyer can assist the whistleblower in seeking civil damages if they have suffered any repercussions. Employment attorneys can encourage footcandles and expose wrongdoing in the company.

Representatives for Employers

These types of lawyers can also educate employers about their rights. Employers will be able to deal with employee grievances. An attorney who specializes in labor law can assist the employer in defending against a lawsuit by an employee.

They can also keep employers informed about all labor laws. These regulations include:

• Respecting federal and state discrimination laws
• Respecting OSHA standards
• Follow current environmental regulations

If an employer has to explain itself to a regulatory body or board, they can seek legal counsel The attorney can also speak for the client at hearings and take over the majority of the legal work.

Employers Need Labor Attorneys

Due to the power imbalance, employees must have an attorney. Employers are more financially savvy than employees and have the resources to hire the best lawyers. Employers can therefore hire the best lawyers.

Many companies also have insurance policies that cover them against liability. Employer-based insurance companies exist to save money whenever possible. They will pay very little to victims.

An employment lawyer can also hold insurance companies and employers accountable. They are familiar with all the manipulation tactics used by big companies against workers.

An Employment Law Attorney's Vital Role

An employment lawyer will help you learn about labor laws, regardless of whether you are a boss or a worker. You will be taught when and how to invoke your rights if necessary. They are vital as they protect employees from hostile work environments and employers' misconduct.

How to Qualify For Tax Forgiveness

Tax forgiveness credits are available to low-income taxpayers through the Tax Forgiveness Program. This program allows them to reduce or eliminate their tax liabilities. Tax forgiveness is granted to taxpayers who complete the tax forgiveness schedule. They also need to file a PA-40 tax return. Tax forgiveness levels are determined by the income of the taxpayer as well as the dependents that the taxpayer is allowed to claim.

A dependent is a child that can be claimed as a dependent for federal income tax purposes. A single taxpayer would be eligible for 100% tax forgiveness if they had an eligibility income of $6,000. A married couple would be eligible for 100% tax forgiveness if their eligibility income was $13,000. 100 percent tax forgiveness would be available to a married couple with two children, and an eligible income of $32,000.

Taxpayers must complete a PA Schedule SP, as eligibility income is not the same as taxable income. For every $250 of income, the level of tax forgiveness drops by 10%.

For tax forgiveness eligibility, married taxpayers must use their joint income, even if filing separately.

There are many ways you could get in trouble with your taxes. These relate directly to how the IRS determines what level of forgiveness you should receive. These are the most common tax pitfalls.

• Income on tax forms that are overstated or understated
• Inadequately taking all deductions into consideration
• Bracket creep
• Unexpected income increases without taking steps to reduce tax liability
• Inadequate reporting of income from the side or contractual jobs
• Failure to report earnings from investments

These tax pitfalls have a common theme: you made more than you paid taxes on. The IRS will generally not forgive you for owing them money unless you ask forgiveness.

Most common tax pitfalls and problems

Tax forgiveness doesn't mean that your IRS will eliminate your debt. It's about you disclosing accounting errors and proving extenuating circumstances and then negotiating a settlement. Can a back tax amount ever be forgiven? Many factors can affect the answer.

Ideal Tax Solution's tax professionals often get asked this question by our clients. It's not an easy question to answer. This is why we decided to create this comprehensive guide to tax forgiveness. There are many ways to get in trouble with the IRS. The IRS will determine the amount of tax forgiveness you are eligible for.

Common tax pitfalls and problems.

1. Failure to file on time

According to the IRS, 20% of taxpayers delay filing their income tax returns until one week before the deadline. If they have any issues while filling out their forms, procrastinators may be forced to miss the deadline by waiting too long.

Although you will have more time to file for an extension, you still must pay the taxes due by the original deadline of April 15, 2020, for the tax year 2019.

The IRS may charge interest if you fail to make your payments on time.

2. Incorrect or missing information

The most common mistakes in tax filing are leaving a blank box or fat-fingering Social Security numbers.

Importing last year's returns is the best way to avoid making these mistakes.

3. Math errors

Tax forms can be confusing. Add lines 8 to 32, multiply by.356, if your AGI exceeds $50,000.

Use tax preparation software to save yourself the headache. Ideal Tax is easy to use. All you need to do is answer some simple questions and the software will fill in the required boxes on your tax return.

4. Not keeping up with the most recent tax news

The tax code is complex and Congress makes changes to it every year. The tax reform that took place at the end of 2017 was the most significant overhaul of the tax code in 30 years. This is a huge amount of change.

For important updates, make sure you visit the IRS news page and subscribe to the Ideal Tax Blog. This will ensure that you don't miss any valuable deductions or credits, or claim a tax benefit no longer available.

5. Do not keep a copy of your return

Tax experts recommend that you keep a copy for at least three consecutive years.

This is how long you can legally be audited by the IRS for gross under-reporting income.

You can view and print your Ideal Tax Return for free for seven years after filing.

6. Inaccurate account numbers

If you need your refund to be deposited directly or you are making an electronic tax payment, you should double-check your routing numbers and bank account.

Incorrect information could delay your refund or lead to penalties and interest for late payments.

7. Tax breaks not taken

Although the IRS isn’t known for being generous, there are many tax credits and exemptions that are available, especially to students and families.

Credits such as the Child Tax Credit could lower your tax bill up to $2,000 so make sure that you are eligible.

Before you decide to take the standard deduction, think twice. Particularly homeowners should list their largest deductions to determine if they are more than the standard amount.

8. The wrong tax forms are being filed

All filers can now complete one income tax form from the IRS, regardless of the tax situation. This is Form 1040. Starting in 2018, Forms 1040A & 1040EZ were removed.

Six new schedules were also introduced with the revision of Form 1040. The changes can be read here.

Schedule C is required if you have a business that needs to report profits or losses.

9. Filing under the incorrect status

The IRS has different income tax rates depending on your filing status.

For example, married couples filing jointly are entitled to double the standard deduction for single filers.

Note that married couples who file separately are subject to different rules from joint filers.

If you file separately, for example, both spouses must claim the itemized or standard deductions, but not one.

This calculator will help you determine which tax bracket you are in and calculate your 2019 tax rate.

10. Do not file at all

Even if your tax bill is not paid in full, you can still file a return with the IRS and start an installment plan.

Interest rates are very low and it is far better than not filing, which could lead to penalties or tax evasion charges.

Income on tax forms that are overstated or understated.

It is important to consider all deductions.

Bracket creep.

Unexpected income increases without taking steps to reduce tax liability

Failure to report income earned from the side or contractual jobs.

Failure to report earnings from investments

Take a closer look at these pitfalls and you will see that there is a common theme: you made more than you paid in taxes. When that happens, the IRS won't usually forgive you for any amount owed to them. You can, however, ask for forgiveness to change the outcome of your tax journey.

Let's have a closer look at forgiveness.

Are you facing a tax bill this year from the IRS? You are not the only one. According to a government study, 21% of tax filers might not have received enough taxes in 2018.

What happens if Uncle Sam owes you money but you don't have the funds to pay it? There are options. There are many tax relief options that the IRS can offer you.

You can reduce your tax liability by using tax relief. Tax relief will not eliminate your tax bill. It may also cost you more over the long term. However, it can make it easier to pay what you owe the federal government.

What is Tax Relief?

It's about setting up a payment schedule or negotiating a settlement. This is not about getting rid of your tax obligations. It's more about helping you to pay off your tax debt.

Special tax relief is sometimes available to victims of natural disasters such as wildfires or hurricanes. Disaster victims may be eligible for extensions of deadlines and may be eligible for casualty losses on federal income tax returns. Learn more about tax relief from the IRS.

Remember throughout the article that tax forgiveness does not mean the IRS going into their computer and pressing a few keys to eliminate your debt. It is about disclosing accounting errors and proving extenuating circumstances to negotiate a settlement for the amount owed.

These are some factors that tax debt forgiveness is dependent on income

Be sure to understand that all income must be disclosed, regardless of whether it is taxable, side work, or contract. This is because the IRS will use all of these numbers to determine your ability and financial resources to pay taxes. If they find that you are unable to pay taxes, they will consider that.

Expenses

This is the second part of how the IRS decides your ability to repay your debt. The IRS uses a set of national standards to determine how much income can be taken out. These national standards include:

Health care

Transport

Items for the home, such as food and clothing.

Other living expenses

Your living expenses are usually calculated according to the local standards. There are exceptions to this rule, however, where you can provide enough documentation.

Outcome

The IRS also determines your income taxes in the same manner. They will review all information about your case. They will consider your income and subtract your expense allowances. Finally, they will assess any mitigating factors that could affect your ability to repay your tax debt. The IRS generally follows a six-year repayment schedule. If your offer of compromise is acceptable, it could be accepted.

Other Eligibility Requirements

You may also be eligible for partial or full forgiveness of tax debt. The best way to get total forgiveness is to show that your allowable expenses exceed your income so that regular tax payments are not a financial hardship. This can be a difficult task.

Tax exemptions, forgiveness, and allowances can be different.

All terms are often used in tax time, including forgiveness, allowances, and exemptions. It's important to know that these terms can all be used to reduce your tax liability. They are not the same thing. You may wonder how forgiveness and exemptions differ from one another. Let's take a moment to discuss this with you.

What are allowances?

You're likely to have seen the box on your W-4 where you need to choose how many allowances to claim if you've ever filed taxes. If you're anything like most people, it's not easy to understand the calculations. You may have heard that more allowances mean less tax.

Allowances are withholdings you claim on your W-4. They can reduce your weekly paycheck, but can also cause headaches when it is time to file your taxes at year's end.

What are exceptions?

Exemptions can be a type of deduction you can claim on your tax returns. You can choose to exempt yourself or your dependents. They are designed to help you balance your taxable income with the amount that you withhold from your paycheck each pay period.

Some people do not claim allowances on their W-4s. This allows the IRS to collect more taxes than they owe in a given year. They will be able to claim more of their exemptions on Form 1040.

What forms do I need to file to apply for tax forgiveness?

It might seem unfair that a debt you have successfully negotiated away or canceled comes back to haunt your taxable income. The IRS considers canceled debt income, even though you did not pay for it.

You don't pay taxes on the money you borrow. However, you must repay the contract. The contract is gone and the money is yours. You received the money as a gift and it is now taxable income.

Form 1099-C

The IRS states that almost any debt you have, whether it is forgiven, canceled, or dismissed, becomes taxable income. The lender who forgives the debt will send you a Form 1099C, "Cancellation of Debt." A Form 1099-C is typically issued by a lender that forgives the debt. It can be used to cancel a loan, modify a loan, repossession, foreclosure, return the property to a lender, or abandon, or modification of your principal residence.

It can be difficult to know which forms to complete and submit to the IRS to receive tax debt forgiveness. You probably don't understand the purpose of all the numbers and letters that are flying around.

We have listed a few essential forms that you should know, especially if your goal is to get tax debt forgiveness.

Form 1040

Your primary tax form is the 1040 form. All of the numbers on the 1040 form are directly from the Form W-2 you receive from work. Each line is marked with a number and instructions for calculation. You should be cautious with this form as you could have serious tax problems if you under- or overreport your income.

W-4

When you start a new job, Form W-4 must be completed. This form is essential because you can claim allowances that could increase your salary. You should make sure you don't get more tax exemptions than allowances. Otherwise, you might end up owing more.

Form 656 Booklet

To apply for an Offer in Compromise, you will need to complete the Form 656 Booklet. The booklet contains all the information needed to complete the application. Before you submit Form 656, you should have a tax professional like the ones at Ideal Tax Solution review it. The application is extremely detailed and you will need all documentation to support any claims made in it. For individuals, the booklet contains Form 433 A, Form 433 B, and Form 656, which are the Offer in Compromise applications.

Although it is not a pleasant experience to be liable to the IRS for late taxes, you don't have to worry. Many forgiveness and assistance programs can help you get rid of the tax debt you have. You should understand that you don't want to avoid the IRS as they can garnish your wages and withhold future tax refunds.

Are you ready for the IRS to forgive you?

You may be wondering if IRS debt forgiveness even exists. It sounds too good to be true, doesn’t it? The short answer is that you can get IRS tax debt forgiveness regardless of how much or how long you owe in delinquent taxes.

How Can I Get My Taxes Forgiven?

It can seem impossible to see the light at the end when you are trying to get out of a mountain of back taxes. The truth is that there is help available, and it is coming from the IRS. Many people who are dealing with tax debt and the consequences it has on their lives believe they won't get the help they need. The IRS will work with you regardless of how old your tax debt may be.

There are many misconceptions about tax forgiveness and how to apply it. Some programs can be used in cases where you are not eligible, such as the innocent spouse provisions. The IRS fresh start program allows for tax forgiveness credits to be applied to your earned income to reduce the amount you owe each year. In some cases, you may even be able to reduce your owing amount to zero.

To determine which forgiveness plan is right for you, we will consider your financial situation. These are the steps to an IRS debt forgiveness program:

Acceptance to the right program after applying

Consent to keep current with all tax returns going ahead

Accepting all terms and conditions set forth by the IRS regarding totals due, penalty abatement, and payment terms

Accepting that the IRS periodically reassesses your financial situation

Payment plan or a lump-sum payment to pay off full or amended debts

Based on your financial situation, and your tax debt, the IRS will calculate how much you must pay. The first step in determining if you are eligible is to apply.

Who is eligible for IRS tax debt forgiveness?

What Do I Need to Qualify for IRS Tax Debt Forgiveness?

Without consulting a tax professional, it can be hard to determine if you are eligible for debt forgiveness. If you haven't paid your entire tax bill because of financial hardship, the IRS may be willing to agree with you. These are the key factors that the IRS considers:

Tax balances below $50,000

A single filer income cap of $100,000

For married couples filing jointly, there is an income limit of $200,000

Self-employed people will see a 25 percent drop in their net income

Nearly all applicants will be approved for an IRS repayment agreement. Repayment may not be the best choice for you. An Offer in Compromise, or currently non collectible status may allow you to pay less overall. Both of these options will require you to provide financial information to IRS. You don't want to present any information that could contradict your claim that your tax bill is unpayable.

What Is Tax Forgiveness?

The 1974 Pennsylvania General Assembly decided that some citizens of the Commonwealth needed special tax provisions because they were poor. The General Assembly decided that imposing a personal income tax on these individuals would make it impossible for them and their families to live comfortably. Because poverty is a relative concept that considers actual income as well as the dependents of such income, the General Assembly made special tax provisions to help eligible people ease their economic burden.

Tax forgiveness is a credit that allows taxpayers who are eligible to lower their Pennsylvania personal income tax liability. Tax forgiveness:

• Reduces tax liability
• Some taxpayers are forgiven of their liabilities, even if they haven't paid their Pennsylvania personal income taxes.

If you are reading this article, you will find out if your IRS can forgive your taxes. We have both good news and bad news.

There is no one tax debt forgiveness program. The good news is that there are many IRS forgiveness programs available to help you achieve tax forgiveness. Below we'll discuss several programs in more detail. But first, it's important to remember that tax debt forgiveness doesn't work for everyone. It is important to take the time to find the program that works best for your situation and financial situation.

Ideal Tax Solution's tax experts can help you find the best forgiveness options for your situation and help you resolve your tax problems.

Claimant

Eligible Claimant

A person is eligible to claim:

• Who is subject to the Pennsylvania personal tax on income?
• Except as stated in Part 2 Section C, who is not a dependent for Internal Revenue Code (IRC), SS 151? of the 1986 Internal Revenue Code (IRC),
• The income of a poor person does not exceed certain eligibility levels.
• Who is not eligible for a federal, local, or state prison? A patient in a state or federal hospital or a student in a residential school for half a year or more?

How Does Tax Forgiveness Work?

Credits against back taxes are the best way to get tax forgiveness. These credits can help reduce your tax liability. You must ensure that the IRS considers your taxable income and non-taxable income as well as your financial situation and family size.

It's important to understand the process of tax forgiveness as we go along this article. It's not about forgiving your late taxes. They disappear in smoke and are never seen again. Credits against back taxes are a better way to get rid of tax debt. These credits can be used to reduce your tax liability, or even eliminate it. To determine if you are eligible, the IRS considers the amount of your taxable income and non-taxable income. It also considers the size of your family and your financial situation.

What are some of the tax forgiveness programs?

There are many relief options that you have. Your eligibility depends on your circumstances. We'll be discussing a few options for forgiveness and relief in detail in this article.

Installment Agreements

An installment contract is performed over several performances, such as payment, delivery of goods, or performances of service. An installment contract can specify that one or both of the parties must perform each installment. A contract could say that the buyer would pay a lump amount for goods over some time. Or that the seller would deliver the products and then receive payment.

If you are unable to pay the full amount, these agreements allow you to reduce your tax debt by paying it off in smaller amounts. The most common repayment term is 72 months. This option is not available to those who owe more than $50,000 in taxes, interest, and penalties.

Innocent Spouse Relief

The Internal Revenue Service (IRS), which offers relief from joint and multiple liabilities arising out of joint tax returns, has the innocent spouse rule as one of the three types. This rule allows the applicant to be exempted from paying any tax, interest, or penalties due to erroneous information reported by their spouse. Any unreported gross income, incorrect deductions, credit, or property basis claimed or received by the spouse are all considered erroneous. A total relief is available to the applicant if they knew nothing or had any reason to know about the erroneous items, or partial relief if the applicant only knew about a part of the erroneous items.

The IRS explains that an applicant for innocent spouse relief must satisfy three requirements. First, the applicant must have filed a joint tax return in which there is an understatement tax due to erroneous items that were not attributable to their spouse. Second, the applicant must not have known or had any reason to know that the tax was understated at the time they signed it. Third, the applicant cannot be held liable for the spouse's understatement tax given their facts and circumstances.

The spouse and the applicant must not have been involved in fraudulent transfers of property. If the applicant meets these requirements, they must file Form 857 with the IRS within two years of the IRS' first attempt to collect the higher tax. Exceptions may be granted for equitable relief.

This program will allow you to avoid penalties resulting from tax fraud or inaccuracies on your spouse's tax returns. This is a very specialized relief program.

Offer In Compromise

These numbers will be taken into consideration by the IRS and you may be eligible to file an Offer in Compromise. This is the closest the IRS can offer to tax forgiveness, except in very specific situations. It allows you to negotiate with the IRS the amount that you can pay.

This is a settlement program that allows you to pay much less than what you owe the IRS.

Not Collectible

Currently Not Collectible (or "Currently Not Collectible") is a relief program designed to provide a fresh start for taxpayers who can prove they can't pay their tax debt.

It is not an automatic process to qualify for tax debt forgiveness. Just because you meet the requirements does not mean that you will be granted forgiveness.

Reasons the IRS will remove penalties

If certain criteria are met, the IRS can grant a first-time penalty waiver (FTA) waiver to taxpayers who fail to file, fail to pay, or fail-to deposit penalties. This procedure rewards taxpayers who have a clean compliance record. Everyone is entitled to one error.

FTA may be requested by individuals and businesses for failure to file, failure to pay, or failure to deposit penalties. FTA does not apply to any other penalties, such as the accuracy penalty, returns with an event-based filing requirement, Forms 706 and 709, or information reporting that relies on other filings.

How Does Tax Forgiveness Work?

Refer to IRM20.1.1.3.6, Reasonable Cause Assistant (RCA), and IRM20.1.1.3.3.2.1 First Abate (FTA),.

The following criteria are required for taxpayers to be eligible for an FTA waiver:

Compliance: You must have filed all required returns (or extended the deadline for filing them) and you can't have any outstanding requests for returns from the IRS.

Payment compliance - Must have paid all taxes due (can be made in installments if they are current).

Clear penalty history: There have been no previous penalties (other than a possible tax penalty) in the three preceding years.

Please note that IRM 20.1.1.3, Guidelines for Relief from Penalties, penalties relief under administrative Waivers, including FTA, must be taken into consideration and applied before reasonable cause.

Phone to request penalty abatement

If the tax practitioner is not being assigned to a particular compliance unit (examination or collection), he or she may call the IRS Practitioner Priority Service line (PPS) at 866.860.4259 and request FTA. To request FTA, the practitioner should contact the unit that is handling the case. To request penalty abatement over the telephone, a tax practitioner will need to have the power of attorney authorization (Form 2848 - Power of Attorney and Declaration Of Representative). The IRS representative who answers the call should have the ability to pull up the client's accounts, determine whether the FTA criteria are satisfied, and apply for the waiver. A letter would be sent to the taxpayer indicating that penalties have been removed based on FTA criteria. It is recommended that the taxpayer follow up with the IRS if the letter does not arrive within 30 days of the date of the call.

Tip Often, calling the IRS to request FTA is the best way to do so. Many penalties can be quickly removed during a phone call. Sometimes, however, the IRS may not be able to reduce the penalty amount over the telephone. To request FTA, the tax practitioner can write to the IRS. It is also advisable to send a letter to IRS to confirm that the IRS has abated penalties by phone. This letter should include the date, agent's name, and identification number.

Send a letter or mail to request a penalty reduction

A tax practitioner can request FTA for his client by writing to the IRS instead of calling the IRS. All relevant information should be included in the request, including taxpayer name, identification number, and tax year/period. It is important to clearly state that the client meets FTA criteria. Attach transcripts from clients that can prove compliance with filing/payment requirements and a clean history of penalties (Form 2848). All pages sent to IRS must include page numbers, the taxpayer's name, and the last four digits of their identification number.

How To get tax relief?

FTA is only applicable to one tax year/period. FTA does not apply to requests for penalty relief for multiple tax years/periods. If the FTA criteria are met, penalty relief will only be granted for the first tax year/period. All subsequent tax years/periods are subject to penalty relief based on other provisions such as reasonable cause criteria.

If the IRS has not assessed the penalty, then a client may file a late return and fail-to-file or failure-to-pay penalties will apply. The taxpayer can attach a penalty request nonassertion to the late-filed returns.

To request a refund, a client who has already paid the penalty may file Form 843 (Claim for Refund or Request for Abatement) to request a refund.

Consider appealing to the Appeals if the IRS refuses to grant penalty relief. The appeals may reach a different conclusion based on other factors such as the risks of litigation.

Although each case is unique, the CPA (client advocate), cannot request abatement for the client. With a simple telephone call or letter to IRS, clients can save thousands on penalties and rely on their tax professional for assistance.

The IRS will owe any amount. What makes it worse is that they can add penalties to the amount due. The IRS will slap you on the wrist for not paying the full amount due. They want to encourage you to use the "stick" approach rather than the "carrot".

Would you believe that your tax penalties could be wiped out? An IRS tax abatement can be applied for. It is not easy, so I cannot guarantee it will work. However, it is worth the effort. Some of my clients have experienced great success, so why not try it?

To be eligible for penalty abatement, the IRS has strict guidelines that taxpayers must follow. Many reasons could be considered for penalty abatement. These include honest mistakes, serious illness, and undue hardship. You should have documentation to support your claim.

Continue reading to find out more about the types of situations that the IRS will accept for a penalty reduction and to see if you fall within any of these categories. I can help you determine if you have a case.

WHY DOES THE IRS ADD PENALTIES TO PERSONS?

As we have already stated, the purpose (or imposing) a penalty was to encourage voluntary compliance. "Voluntary compliance is when taxpayers comply with the law without compulsion, threat or retribution" (IRS.gov "20.1.1.2.1 Encouraging voluntary Compliance," 8/14/2013). When a taxpayer makes good faith efforts to comply with all tax obligations ("Encouraging Voluntary Compliance"), he or she supports the principles of the Internal Revenue Code.

In this situation, the taxpayer is considered compliant if they reply to tax rules written material and complete all forms related to their tax liability. The IRS administers a system that penalizes taxpayers for not complying with tax rules ("Encouraging Voluntary Compliance") to encourage compliance. To encourage compliance in the future, the IRS educates taxpayers.

REASONABLE CAUSE

The IRS will waive or abate any applicable penalty if a taxpayer explains. "Part 20" states that if the explanation applies to any (or all) of the penalties but not all penalties, the IRS waives or abates the relevant penalty.

After the assessment of the penalty has been made, relief may be granted. The appropriate penalty portion is then reduced. There are specific guidelines for adjustments made due to reasonable cause.

Section 20.1.1.3.2 defines reasonable reason in the context of a taxpayer not complying with their tax obligations. The taxpayer is granted relief if the taxpayer "exercised normal business care and prudence when determining their tax obligations." (IRS.gov "20.1.1.3.2 Reasonable Cause," 8/14/2013).

These circumstances are known as "Reasonable Cause", and relief is often granted. The penalty sections of the Internal Revenue Code define reasonable cause as evidence that the taxpayer "acted in good faith" or that the taxpayer's failure to comply with the law was not due to negligence ("Reasonable Cause”).

A taxpayer can have reasonable cause if they have shown that their conduct is justifiable for non-assertion of or abatement. Each case is judged separately; the judgments are made based on the presented evidence, facts, and circumstances.

The specific criterion used by the IRS to determine taxpayers' guilt is used when evaluating the merits. The IRS may ask a question about the taxpayer's attempts to comply with the law after all facts have changed.

This question is one of five that the IRS uses to assess the taxpayer's decision-making ability to determine if "circumstances prohibited the taxpayer from filing a return, paying tax, or otherwise complying with the law" ("Reasonable cause").

The Internal Revenue Manual describes how reasonable cause and other relief provisions can be applied in the context of tax administration. These provisions must be used consistently and should comply with the IRC, Treasury Regulations(Treas) requirements. Regs. Regs.

Not all penalties are eligible for reasonable cause relief. A reasonable cause provision might only apply to a particular section of the Internal Revenue Code. Acceptable explanations do not have to be limited to the sections of the Internal Revenue Manual.

Penalty relief is usually considered when the facts and circumstances reveal that the taxpayer exercised ordinary commercial care and prudence, even though it was not possible to comply within a specified time frame. Once the facts and circumstances show that the taxpayer willfully failed to comply with tax obligations, reasonable cause ceases ("Reasonable Cause")

TAX Penalty ABATEMENTS-REASONABLE CAUSE FACTORS

Many of my clients get upset and take it personally when they are assessed a tax penalty by the IRS.

A balance owing to the IRS can be significantly increased by tax penalties. This is in addition to interest. It can make a small amount seem much bigger. The IRS uses a strict approach to tax penalties. They will often assess penalties without considering the underlying circumstances.

A list of reasons

For some taxpayers, the IRS may be able to reduce their tax penalty.

It is difficult to accept tax penalty abatements as the IRS doesn't like to release them without a justifiable reason. The Internal Revenue Manual has a list of "reasonable causes" that taxpayers can use to challenge their tax penalty.

The IRS defines a tax penalty exemption as a taxpayer who exercises ordinary care and prudential but fails to follow their obligations. [1] I have provided a list of reasonable causes exceptions to tax penalties for the benefit of my readers.

This is not a complete list of circumstances that a taxpayer could use to receive a tax penalty reduction. These are the situations that I believe the IRS will accept, based on the Internal Revenue Manual.

Any reason or justification other than these factors will prove more difficult for the IRS to justify the reasonable cause.

Tax penalty abatement element 1 - Ordinary business management and prudence. (IRM 20.1.1.3.2.2)

It is possible to show ordinary business care and prudence by proving that the taxpayer tried their best to comply with their tax obligations but due to circumstances beyond their control were not able to.

When determining whether to reduce a tax penalty due to reasonable cause, the IRS usually considers four factors.

First, the taxpayer must have compelling reasons to seek the penalty abatement. All explanations must be compatible with the dates and circumstances upon which the penalties were based.

The IRS also looks at the taxpayer's compliance history. While it is not likely that taxpayers who have had past issues with compliance will be denied tax penalty relief; however, bad behavior can sometimes impact the taxpayer's financial situation.

Third, the time it took for the taxpayer's compliance must be reasonable given the circumstances

The circumstances that lead to tax penalty abatement must not be within the control of the taxpayer.

The IRS will carefully examine all these factors and may request supporting documentation from taxpayers to verify the sequence of events claimed.

Tax penalty abatement element 2 - Death or serious illness or unavoidable absence (IRM 20.1.1.3.2.2.1).

A tax penalty reduction from the IRS is possible if there are any death, serious illness, or other serious medical condition. This applies to both individual taxpayers and their families, as well as corporate taxpayers if the sole person responsible for tax compliance is absent.

The IRS will look into the steps taken by a corporation to comply with the condition. While it's not easy to share personal information with the government, it's important to document the circumstances that led to the non-compliance.

This includes details and dates related to:

The severity of the condition

Relationship between the taxpayer and the person with the condition (if it is not the taxpayer).

Additional information that may be of use to the IRS in determining your case

Remember that eventually, a human being will review the facts and circumstances surrounding the tax penalty abatement.

It is perfectly acceptable to ask for sympathy from the IRS when you request tax penalty abatement.

Bottom of Form

Tax penalty abatement element 3 - Ignorance law (IRM 20.1.1.3.2.2.6).[1]

This factor can be used as a reasonable cause argument but it is harder to use. However, ignorance of the law may still be a factor the IRS might consider when determining whether a tax penalty abatement is valid.

Some taxpayers may not know that they must file and pay certain tax obligations due to their past or education. If the taxpayer can comply with the law, they are not subject to penalization for ignorance.

The IRS will consider the educational history of the taxpayer, whether they have been subject to this tax before, and whether they have ever been penalized (the kiss of death to this argument). If there have been recent changes to the law, any reporting requirements, or forms that the taxpayer wouldn't reasonably expect to know about, they will also look at the taxpayer's past education.

The IRS believes that ignorance of the law is not a good thing. They believe that any taxpayer who fails to make a reasonable effort should understand the law. If you want to reduce your tax penalty, it is better to rely on other factors than just this one.

However, ignorance of the law is not necessarily a weakness. You can combine it with other factors to help you position.

Tax penalty abatement element 4 - Forgetfulness and mistakes (IRM20.1.1.3.2.2.7).[2]

Forgetfulness

My professional opinion is that you should not attempt to abate a tax penalty based on forgetfulness. It's better to not mention this in your argument for a penalty reduction than to the IRS.

The IRS does not consider forgetfulness a sign that you did not exercise reasonable care and prudence to comply with your tax obligations. In the IRM, the IRS states that relying on someone else to fulfill your obligations or provide oversight for you is not sufficient to establish reasonable cause.

Mistakes

While mistakes are less likely to be deemed suspicious, the IRS quickly points out that making a mistake does not indicate that you have been exercising ordinary care. These factors are not so important. Instead, you should forget about them and pursue other avenues to argue for your tax penalty reduction.

Tax penalty abatement factor 5. - Unable records to be obtained (IRM 20.1.1.3.2.2.3).[3]

This is a double-edged weapon, but I have personally seen several tax penalty abatements that were accepted because the taxpayer couldn't obtain the records necessary to comply with their tax obligations.

It is essentially about:

1. How reasonable was it that the records were not available?
2. The taxpayer had control over the records.

The IRS sees filing incorrect information as worse than not filing.

It is a sign of diligence that the taxpayer waits until they have all the information necessary to file a complete and accurate tax return. Your argument will depend on how long it took you to discover the records and the efforts you made in rectifying the problem.

This argument can be used to abate tax penalties, but it is dependent on the facts.

Tax penalty abatement element 6 - Undue hardship IRM 20.1.1.3.3.3)

The IRS can also use undue hardship to reduce a tax penalty. Undue hardship is defined by the IRS as " more than an inconvenience for the taxpayer." [1]"

This means that the taxpayer must document and show serious financial or personal hardship to reduce tax penalties as a result. This is not an easy feat, even for a professional.

The IRS will not consider any circumstances severe enough to prevent payment of taxes in very few cases.

1. Personal health is at grave risk (cannot pay for medical bills).
2. Loss of your primary residence (cannot afford rent) or to the detriment of minor children or dependents. (Cannot pay their food or housing costs).

The IRS will not consider any other factors in determining if you have an undue hardship.

Another important point to remember is that in cases where items are tied to failure to pay, undue hardship generally qualifies as an appropriate justification. The IRS does not generally excuse penalties for taxpayers who fail to file due to undue hardship. [2]

According to the IRS financial hardships generally don't affect taxpayers' ability to file. However, I have personally been successful in releasing any penalties that may be associated with failure to file due to economic hardship.

What is most important to me is the context of the taxpayer's request. No matter what penalties are being applied, good facts will prevail over most IRS objections.

Tax penalty abatement element 7 - Bad advice IRM 20.1.1.3.3.4 and errors made by IRS IRM 20.1.1.3.4

Although I won't say bad advice is the best way to get penalties reduced, bad advice from the IRS or tax practitioners is one of the most persuasive reasons to reduce tax penalties.

Tax practitioners often use this tactic to reduce penalties in other areas such as audits. The IRS will look for ordinary care and prudence when granting tax penalty abatement.

Logically speaking, if you believe the IRS, they should be held responsible for any penalties.

Relying on a tax adviser is, however, an indication that you have admitted ignorance about certain tax issues and are putting your faith in someone who has been trained in these matters.

Relying on a tax adviser is only reasonable if the taxpayer is negligent (negligence). The IRS can also prove financial sophistication, which would indicate that the taxpayer should not have trusted them.

This tactic is generally a good one to use, given the facts. In most cases, the IRS will correct any mistakes they make without too much resistance from the taxpayer.

What happens if you combine a few poor financial choices with unemployment, medical costs, and other monthly expenses. The result is a large tax bill you cannot pay.

But you can't afford to pay your taxes. This sounds familiar. You're not the only one.

Internal Revenue Service (IRS), which collected more than $1.8 Billion from delinquent returns and assessed more than $33.8 million in additional taxes for returns that were not filed in time in 2019, has more than 33.8 billion.

However, you don't want your name to be included in that statistic. You can't avoid taxes in exceptional circumstances. This will only make it worse. Instead of letting your tax bill grow, you can find a way that will reduce your tax liability by using a rarely used tactic.

An offer in compromise (OIC) could be the answer you are looking for. This IRS tax relief program is one of the most underused and misunderstood.

Here's all you need to know about compromise offers, who is eligible, how to apply and how it can help you get a fresh start without tax debt.

What's an IRS Offer in Compromise OIC?

An offer in compromise (or settlement) is an agreement between you or the IRS. It allows you to offer a lower amount than your full tax liability. You can be accepted into a partnership agreement. The agreed payments are made, and your tax balance is erased.

The IRS accepted 17,890 of 54,225 offers in compromise requests in 2019 totaling $289.4 million.

This means that you could get a 33% acceptance rate, or 67% rejection rate, depending on whether you are glass-half-full or half empty.

How do I apply for a compromise offer?

The IRS follows a strict process when considering and appraising compromise offers. Here's how it works:

• First, complete and include Form 656, Offer In Compromise ( download).
• If applicable, complete and sign Form 433A (OIC), Collection Information Statement for Self-Employed Individuals and Wage Earners.
• If you are the owner of a business, fill out and sign Form 433B (OIC), Download, Collection Information Statement for Business.
• If you do not meet the Low-Income Guidelines, pay the $205 application fee.
• The payment option that you choose will determine how much of the initial offer payment you deposit. This requirement may be waived if you meet the Low-Income Guidelines.

The IRS won't consider your offer of compromise if the completed and signed forms are not provided.

How to simplify the Offer in Compromise

Like any other creditor, the IRS wants their money fast. Getting some is better than none, especially if your income forecast is uncertain.

Taxpayers who are struggling to pay their taxes may abandon filing their annual returns and give up. A reasonable payment plan can give otherwise productive taxpayers a fresh start and improve the user experience.

They also have only 10 years to collect taxes after a return has been filed. Research shows that the likelihood of a tax debt being paid is lower the longer it remains on the books.

The IRS can garnish your wages, levy bank accounts, or place a lien on your property. Some assets are not allowed. To discuss an installment plan that is based on your ability and to make sure it is accepted, consults a tax professional.

An offer in compromise is a good way to get some revenue from a taxpayer who doesn't have a lot of assets or a large income.

They will not seize your property even if you make an offer in compromise. The lens is not subject to the same restrictions.

Is there an application fee for an OIC payment plan by the IRS?

The IRS charges $205 for application fees (as of February 2021). The fee can be waived if the applicant meets the criteria for Low-Income Certification.

Two types of compromise offers

Based on your payment method, there are two types of compromise offers.

Lump-sum offer

Taxpayers must pay the agreed amount within five-month of approval for the "lump sum" compromise offer. The IRS will consider the offer if taxpayers make a 20% downpayment when they submit it.

Warning! The 20% deposit is non-refundable. You might want to consider whether they will accept the offer. Consult with a tax professional.

Periodic Payment Offer

The "periodic payments" offered in the compromise must not be made after six to 24 months. Include the first installment payment with your application.

What forms are you required to complete?

To determine eligibility, the IRS requires that applicants complete Form 656 as well as Form 433 A (Form 433 B for Businesses)

You will need to give detailed information about your income sources, bank accounts, investments, living expenses, and bank accounts. These forms can be costly if you make mistakes.

Before providing financial information, hire the services of an experienced tax relief company.

How a Back Tax Assistance Company Can Help You with the IRS Fresh Start Program?

Three reasons could make you eligible for an OIC.

You cannot afford the entire amount. The IRS acknowledges that you do not have enough income or assets to pay all of your tax debt by the end of the statute of limits (10 years).

Economic hardship. It is possible to prove that you are in financial hardship by paying the entire amount.

Doubt about what you owe.

It is possible to wonder why someone would pay part of their tax debt if they are unsure if they owe it at all or if the amount is correct.

It would be better to appeal the decision to court if you feel it is unfair or inequitable. Sometimes, it is the best thing to go to court. The IRS can win 80% of its cases. An offer in compromise is not an option if your debt has been determined by a final court ruling.

In other words, paying a portion of your tax bill, even if you disagree with it, can be less expensive and more time-consuming than appearing before a judge. Talk to an experienced tax attorney enrolled agent, or CPA before making a decision. All of the tax relief companies listed below have tax attorneys or enrolled agents.

Compare All Tax Relief Companies

Eligible taxpayers should also:

• All required tax returns must be filed
• Keep up-to-date on estimated tax payments for self-employed as well as business owners
• Keep up-to-date on federal tax deposits for businesses with employees
• Not at the moment in an open bankruptcy proceeding.

How does one determine eligibility for an OIC Application?

The IRS first determines if taxpayers have the financial means to pay off their total tax debt. The IRS has an online tool that calculates its reasonable collection potential (RCP) to do this.

The IRS will accept an offer if the RCP is lower than the total tax debt, and the taxpayer meets any other requirements for an OIC.

The IRS also determines if the offer in compromise is the maximum amount a taxpayer can afford. Compensation is the basis of this calculation. It is important to understand policies, procedures, as well as certification guidelines.

The IRS requires that applicants not participate in open bankruptcy proceedings.

A tax relief expert can help you determine the lowest amount that the government will accept, and then negotiate an installment agreement to avoid your offer being rejected.

What amount should I offer as a compromise to the IRS?

The IRS will not settle for less than what you can afford. It is difficult to know how much you can afford. It all depends on your income, your family size, your location, your health, and how healthy you are. The big question is: How does the IRS determine how much you can afford? And what payment plan is best?

How does IRS determine how much you can afford?

The IRS uses a formula to calculate your reasonable collection potential (RCP). It is also called "net realizable value." It can vary depending on the assets you have, whether you own business assets, the type or offer in compromise that you apply for and payment options.

This calculation should be left to an expert in tax relief, but here is a simplified version to give you an idea.

IRS reasonable collection formula

RCP = Reasonable collection opportunity.

QSV = Quick Sale Value or 80% of the Asset's Fair Market Value.

MDI = Monthly Disposable Income (after you have paid for your living expenses).

Lump-sum

The RCP, if you pay the bills within the due date, is the quick sale price of your assets (property and jewelry, etc.). Add your monthly disposable income to 12.

RCP = QSV+ (MDI x 12).

Periodic payments

The formula for periodic payment offers is where the OIC can be repaid within 6 to 24 months.
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RCP = QSV+ (MDI x24)

What are the most common IRS penalties?

Most penalties are not abated by the IRS. Why? It could be because people don’t know how to ask for penalty relief or that it may seem too difficult. Here are some reasons why it's worth it.

To encourage compliance, the IRS uses penalties a lot. The IRS assesses millions of penalties each year totaling billions of dollars. The IRS offers several options for those who are eligible to have penalties removed or abated.

For not filing and not paying taxes, the IRS has the most severe penalties

The Internal Revenue Code contains almost 150 penalties. However, there are a few more common penalties that make up 74%. These are the most popular penalties:

• Penalty for failure to pay penalty - 56% on all penalties if you fail to pay taxes on time
• Failure to File Penalty - 14% of all penalties imposed if you fail to file a return in time
• Failure to Deposit Penalty - 4% of all penalties imposed on businesses that fail to pay their employment taxes on time or incorrectly

Late-filing penalties for S corporations and partnerships are a common nuisance penalty. Taxpayers often contest the estimated tax penalty by offering an exception when filing their tax returns.

What Is Tax Forgiveness?

For the most common penalty, you can ask for penalty abatement using these four reasons:

1. Statutory exception: Proving a specific, authoritative exclusion to the penalty

Statutory exemptions are rare and can be explained to the IRS easily, usually at tax filing. Examples of such exceptions are combat zone relief and disaster relief.

2. IRS error: Documenting the fact that the error resulted from IRS advice

This penalty relief argument is rarely used and is often unsuccessful. The IRS does not routinely provide tax advice in writing. You must document any erroneous IRS advice that you have relied upon. Although the Internal Revenue Manual says that penalty relief is available for errors in oral advice, it is very rare.

3. Reasonable cause is a reason you can't comply with the request based on your facts.

People often argue that they were guided incorrectly by their tax software or tax professionals. This argument is reasonable.

You must show that you used ordinary business care and prudence but were unable to comply to present a reasonable reason for late payment and filing. Also, you must show that your non-compliance wasn't due to willful neglect.

Most people aren't successful in presenting reasonable cause arguments to the IRS, particularly in court. The majority of penalty abatement decisions never reach court. The IRS makes most administrative decisions.

You must ensure that the IRS takes into account all facts and circumstances to be successful with reasonable cause determinations. You should appeal any penalty abatement rejection letter that does not address all of your facts and arguments.

4. Administrative waiver: Taking advantage of a provision that facilitates tax administration

Under certain conditions, the IRS may grant administrative relief from a penalty. First-time penalty abatement (FTA) is the most common administrative waiver.

FTA can be used for failure to file, failure to pay, or failure to deposit penalties in one tax period if you have a clean compliance record for the last three years. FTA can be used to abate penalties on Form 1040 and Form 1120 as well as payroll and pass-through entities.

FTA is the easiest option for penalty relief. It is possible to request FTA by calling the number listed on your IRS notice. If applicable, your tax professional can also call the designated tax pro hotline and compliance unit to request FTA for any penal amount.

Dear IRS, please no penalties! The IRS is asking for your forgiveness. The defense that a tax position was founded on reasonable cause and that the taxpayer acted in good faith is one of the most important but often misunderstood. These words may seem simple and easy to understand, but they are terms that are art. The IRS might not agree with a taxpayer who believes that he or she followed them as a matter of common sense. This article does not address the IRS's first-time penalty abatement program.

The amount of the penalty is one way that the IRS will determine how to evaluate defense. Some penalty defenses, in addition to reasonable cause, may also include other concepts such as the absence of willful neglect. Does that not prove a negative? It is.

What are some of the tax relief programs available?

This should not come as a surprise. Of course, the IRS does. The IRS does not. Taxpayers bear the burden of supporting their reasonable cause. All taxpayers must use ordinary business care and prudence when reporting their correct tax liability. Remember that all tax returns must be signed under penalty of perjury.

The IRS applies a facts-and-circumstances test on a case-by-case basis to determine whether a taxpayer meets the reasonable cause and good-faith exception. These can result in inconsistent or subjective results. Because the Sec. The Sec. 6662 accuracy-related sanctions, which are typically 20% of the amount at risk

Penalties for civil fraud under Sec. 6663. What is the civil fraud penalty? It is a staggering 75%. If a tax deduction is not correct and amounts to $10,000, then add $7,500 if the IRS claims it was a fraud. Although fraud penalties aren't often brought to light, it is not unreasonable to assume that they can be severe. This makes it possible for taxpayers to avoid them, even though they may end up having to pay all of the tax and interest.

There's more. The IRS may also impose other penalties, including penalties for failing to file a tax return and failing to pay under Sec. 6651; (2) for filing an incorrect claim for refund or credit under Sec. 6676; (3) failure to file Form 1099 and other information reporting returns as required by Sec. 6721; and (4) the understatement by a tax return preparer of a taxpayer's responsibility under Sec. 6694.

The Code is full of penalties. It is possible to cut through all the details by saying that taxpayers always want to claim that they acted reasonably and with cause when claiming every item on their tax return in good faith. But when does a taxpayer not feel the need to argue reasonable cause?

You could have multiple situations. An underpayment of tax due to transactions that lack economic substance as defined under Sec. 6662(b)(6). The same applies to penalties for gross-valuation excess from claiming charitable contribution deductions for properties. However, all is not lost. There can still be penalty relief, but the rules and procedures are more complicated. These two penalties can be applied to highly aggressive transactions, but they do not apply in most cases or for most people.

Reporting on tax returns is key

The IRS states that the most important factor in determining whether taxpayers have reasonable cause and acted in good faith is the taxpayer's efforts to report their correct tax liability. While a taxpayer might be trying to accurately report the correct amount, it is not always possible. But, reasonable cause is not dependent on the legal authority supporting the position on the return. This is in contrast to the taxpayer defense of a "reasonable base".

It depends on the actions of the taxpayer. Let's say, for example, that the taxpayer reported the incorrect amount on a Form 1099 but didn’t know that the Form 1099 was inaccurate. The audit revealed that Form 1099 reported less information than the taxpayer received. This could happen to anyone. People rely on Form1099 data a lot. Therefore, the reasonable cause could apply if the taxpayer reports only the amount that it believes is correct.

What if the taxpayer was paid $300,000. But the Form 1099 stated $300? If the Form 1099 incorrectly stated $285,000., it might be easier to argue that it was reasonable for taxpayers to report that amount. Even with a large error, a taxpayer's behavior and actions may still be acceptable.

What about an error in the computation or transposition of the return? It is possible to make a common error, provided you have reasonable cause and made a good faith effort. It's easy to misinterpret numbers or make other mistakes. It is unlikely that the IRS will be able to understand a return with more than one of these errors.

A few mistakes can be explained even if they are obvious in the end. The IRS also considers the taxpayer's knowledge, experience, education, and trust in tax advisors. The facts and circumstances are important. It is also relevant to consider the taxpayer's education, experience, and knowledge regarding tax laws. Many taxpayers rely on the advice of a tax professional to avoid penalties.

The IRS states that you must rely on a tax professional objectively and reasonably. Taxpayers are required to provide all information necessary for their tax advisor to assess the tax matter. It is wrong to cherry-pick the information that the taxpayer gives the tax adviser to get the right answer.

A tax advisor must also be knowledgeable in the subject matter. According to the IRS, the adviser should have expertise and knowledge in tax matters. It is possible that a taxpayer with a complicated corporate tax problem might not be able to trust a low-income individual tax adviser, regardless of how diligently he follows his advice.

According to the IRS, auditors should decide if the taxpayer acted reasonably and in good faith. This will be done based on each case and all facts. The taxpayer must have exercised reasonable care under the circumstances. The penalty can also affect the meaning of reasonable cause.

Some penalties also require proof that the taxpayer acted in good faith or that the taxpayer failed to comply due to willful neglect. Each penalty provision may not have the same standard for penalty relief. Sec. Sec.

Sec. Sec. The Sec. Finally, the Sec. It is important to examine the penalty you are trying to avoid. Taxpayers are eager to prove that their facts and conduct have met all requirements.

In writing

Do taxpayers have to present their cases orally? Although it is not common, taxpayers may be able to start this way in certain cases. It is best to put it in writing, as with everything dealing with the IRS. Many times, the tax regulations require the taxpayer to request a waiver of the penalty in writing. Secs. Secs.

All facts and circumstances will determine whether the elements of reasonable cause, good faith, or willful neglect are present. When the taxpayer used ordinary business care and prudence, a reasonable cause can be established. Ordinary business care or prudence can be defined as exercising the same level of care as a reasonably prudent person, but not being able to comply with the law.

Key elements

In determining reasonable cause, the taxpayer's efforts to accurately report their tax liability are the most important factors. The IRS instructs agents to consider all relevant factors when assessing taxpayers' efforts, such as the nature of the tax, complexity of the issue, the competence of tax advisers, and so forth. The IRS also considers the taxpayer's education, experience, and reliance upon the tax adviser's advice.

The IRS instructs agents to evaluate all facts and circumstances to determine whether taxpayers exercised ordinary business care or prudence. They also review all information, including the taxpayer's reason, compliance record, length of time, and other circumstances beyond their control. But don't think that this only applies to the one tax year.

The IRS advises agents to also look at the three tax years before them. They examine payment patterns and compliance histories. It is possible that a taxpayer who is repeatedly assessed the same penalty does not exercise ordinary business care. The IRS may have previously assessed the same penalty and forgone it. This is a sign that the taxpayer may not be exercising normal business care when the same thing happens again.

The IRS will, however, consider this if it is the first instance of noncompliance. The IRS must consider all facts and circumstances. This includes the time period between the tax problem and its resolution. The penalty should be correlated with the date and event that caused the error.

Even the IRS will admit that there are circumstances and mistakes beyond taxpayers' control. The IRS asks if the taxpayer could have anticipated or foreseen the problem.

What about getting tax advice from IRS? Is that always reasonable, or? Not necessarily. This is especially true for oral advice. Consider whether the advice was given by the IRS in writing or verbally. Oral advice is usually not worth the paper it isn't printed on. The IRS will evaluate the information and determine if it was written advice that was given to respond to a specific request. The IRS wants to know whether the individual relied on the IRS advice.

Complex tax laws can lead to taxpayers making mistakes. Some things are easy to understand, while others are more complicated. The IRS states that a taxpayer generally does not have reasonable cause to pay a penalty for late filing of a return or payment of tax obligations. The taxpayers claimed that they believed tax returns were due May 15, not April 15. Even though a tax professional said that it is unlikely to save them from penalty.

They claimed that their accountant had filed their tax return. The accountant then forgot to file it. According to the IRS, everyone is responsible for timely filing taxes as well as for paying them. Even if taxpayers have recourse to accountants, bookkeepers, or attorneys, they cannot delegate the responsibility for timely filing tax returns and timely paying their tax obligations. However, they might be forgiven for things such as the inability to access records or the fact that they are not aware of a law change.

Taxpayers may be eligible for penalty relief if they are not familiar with the law. Relevant factors include education and whether the taxpayer is subject to the tax previously. What about forgetfulness as a basis of reasonable cause? According to the IRS, forgetfulness is a lack of reasonable cause.

The IRS Fresh Start program includes the Offer in Compromise program. This program is designed to assist taxpayers who have significant tax liabilities and cannot pay their full debts. OIC can be a useful program for those with significant tax liabilities and who want to get back in compliance.

Most cases will result in an OIC by the IRS or the State of Maryland. This is to ensure that the figure they can recover for the taxpayer over some time is not less than their actual liability.

There are specific eligibility requirements, but generally, people who are not in bankruptcy proceedings and have current tax filings may be eligible for the program. You may not be eligible if you are enrolled in an installment or payment program. The program is also available to businesses, provided that their tax filings are current, and they have paid estimated payments. They must also submit required federal tax deposits.

Continue reading to find out how the IRS calculates OIC repayment figures and how you can save the most.

How much will the IRS settle tax debt for?

Every offer in compromise has two components: 1) The amount that the IRS believes you can pay in monthly installments and 2) Your net realizable equity (NRE).

The IRS uses the "asset equity formula" to calculate your NRE. This formula allows the IRS to take into account the fair market value for each asset and subtract the following:

Quick sale value: To determine the price you would receive if you could quickly sell your assets without having to look at many offers and negotiate the best deal, the IRS reduces their assets' value by usually 20%.

Bank Loans and Mortgages: If you have any liens on your assets or mortgages, the IRS will deduct the value from the quick sale price.

Property Exclusions the IRS may exclude an asset's value for public policy reasons. The IRS won't punish people with income-producing assets (such as a snowplow or video production material) or force them to move into a smaller apartment to pay their tax debt.

Calculating the equity in your assets

Each taxpayer is affected by the asset-equity formula in a variety of ways depending on their circumstances. Here are some examples.

Related: How to get the IRS to accept your offer in compromise

Home Equity Offer in Compromise: The IRS will reduce your fair market value by 20% (multiplying by.8) to $160,000 to determine the fast sale value.

Let's suppose you owe $120,000 in the mortgage. That would make your OIC $40,000 (or 160,000 to $120,000). The IRS cannot accept any settlement offer if there is no equity in your home. This element may also be satisfied if you can show the IRS two rejection letters of different banks from which you tried to withdraw funds to pay your tax debt.

Vehicle Equity to Offer in Compromise: The same formula applies for any vehicle you own, but the IRS requires an additional $3,450 exclusion for all cars and planes.

If you have a $20,000 car but owe $10,000, your net equity is $2,550 ($20,000 x 0.8 - $10,000 + $3,450 = $2,000. You cannot offer anything to the IRS if the vehicle has no equity.

Personal Possession Equity to Offer in Compromise: To determine the quick selling value of each item, subtract 20% from the total value of your possessions. The IRS allows an additional $6,250 per individual exclusion from the quick sale value of these possessions.

If your possessions total $40,000, they will automatically be reduced to a quick sale price of $32,000 ($40,000 x 8.8). Let's suppose that two people live in the house and jointly own the property. This would leave $12,500 ($6,250x2) in total exclusions. The net equity towards an offer in compromise would be $19,500 ($40,000x8 - $12,500 = $19,000.

Offer in Compromise - Cash Equity: The IRS will take into account all cash that you have on your body and in your bank accounts as assets when determining an offer to compromise. The IRS will examine your bank statements for the last three months to determine the average daily balance. For self-employed persons, it may take six months. To determine the total value of your cash assets, they will add any cash that you may have in the house or cash on hand.

To account for living expenses, the IRS allows an exclusion of $1,000. Additional exclusions may be permitted if living expenses are higher than this amount. This is based on IRS guidelines for living expenses.

How to Apply for the IRS Tax Fresh Start Program?

Individuals who owe large amounts of unpaid taxes but are unable to pay can turn to an offer of compromise.

OIC is an agreement between IRS and taxpayers to settle taxpayers’ tax liabilities for less than the amount owed. Before approving an OIC, the IRS examines the taxpayer's income and assets and records every detail of their financial situation. Many IRS applications are rejected because of negligence by the taxpayer. Many taxpayers don't know how to obtain an offer in compromise which can increase the likelihood of rejection. These are the four guidelines that will help you improve your chances of getting approved for your OIC application.

1. Don't accumulate more tax debt

The IRS usually takes 6-12 months to process an OIC request. The chances of getting approved automatically drop if a person continues to accumulate debt. It is not a good idea to put off tax payments while the collection process proceeds. Instead of waiting for their OIC determination, the applicant should pay quarterly estimated taxes.

2. Appeal an unfavorable ruling

Many applicants don’t know how to appeal an offer denial. An appeal can be financially more beneficial even if the IRS has made you a favorable offer. However, it is important to know how to do this. About a third of OICs are accepted by the IRS. The primary reason this happens is that the taxpayer doesn't know enough about the appeal process.

3. Do not withdraw your OIC application

The offer in compromise examiner reviews the information provided by the applicant and sets a date to meet in the office. Sometimes, the examiner may suggest that the applicant chooses an IRS collection alternative. an installment agreement. You can convince the examiner not to accept the alternative and, in the worst case, appeal.

4. Do not submit "junk" offers

To get OIC approval, the applicant must provide supporting documentation for each figure entered on the form. Avoid mentioning junk offers (e.g., a friend lending your money to pay taxes), as they lack documentation and support logic, which can increase your chances of rejection. The mandatory 20% deposit that you must pay with your request will be lost. You will be required to pay an additional 20 percent if you submit a legitimate offer.

Last words

The IRS makes only decisions that are best for the government. To win the game, you must be familiar with the rules. Expert legal advice is the best way to minimize or eliminate your chances of being rejected. Law Offices Of Nick Nemeth, PLLC has a team of dedicated professionals who will take care of all your IRS tax issues. Nick Nemeth is a professional with years of experience helping people and businesses solve major tax problems.

You can offer a lower amount to pay your final tax liability. OIC candidates are individuals or businesses that do not have the income, assets, or means to pay their tax liabilities now or in the future.

The Franchise Tax Board (FTB) generally approves an OIC when it is the maximum amount we can expect to collect in a reasonable time.

While each case is evaluated based on its unique facts and circumstances, the following factors are important to our evaluation:

• Capacity to pay.
• Equity in assets
• Future and present income
• Future and present expenses
• The age and health of the taxpayer.
• Potential for new circumstances
• What are the state's best interests?

Apply process

Complete the application form and submit the required documentation to apply for an OIC. To see a list of items required, visit ftb.ca.gov/forms. Search for 4905

• Use FTB 4905 PIT for Personal Income Tax. Offer in Compromise to Individuals.
• Use FTB 4905 BE, Booklet for Business Entities

Only OIC applications will be processed if they are:

• You have filed all required tax returns. Now you can agree on the amount that you owe. You can note any filing requirements that you don't have on your application.
• Completed the Offer in Compromise Application and submitted all supporting documentation.
• Authorized FTB to access your consumer credit report, investigate and verify the information that you have provided in your application.

All applicants must

To ensure that you cover all areas, complete the checklist included in the application.

• Completing all pages of the application is essential. You can also write "not applicable" in appropriate areas.
• Please complete the justification and the source of the funds. These sections cannot be left out.
• Check that the application has been signed and dated.
• Be sure to include all required copies of bank statements, payslips, and profit/loss worksheets.
• If you have completed or submitted an offer to the IRS, including the application and acceptance letters.
• All information and assets should be included. We will deny an offer if we find any assets that were not included in the evaluation.

Companies

• Before applying, ensure that all returns required are filed. All returns for the current year must be included by business entities. This could include a partial-year return and the marking of the "final return” box on the last return.
• You should also provide proof that all bank accounts were closed.
• Verify that all assets are liquidated.

Individual income tax

• For amounts claimed, including three months of billing statements
• Include a current rental agreement.
• Attach copies of bank statements and payslips. Provide profit and loss worksheets if you are self-employed.
• You must show documentation if you can justify the offer because of a medical condition.

How is IRS interest calculated?

The interest rate is simpler to calculate than the penalties and interest. The IRS interest rates are determined using the Federal short-term rate plus 33% for most people.

As of January 2022, the federal short-term rate is.44%. The federal short-term is based on a one-month average market yield from US marketable obligations with maturities less than three years.

The Internal Revenue Service has announced that interest rates will not change for the first quarter of 2022. These rates are:

• Overpayments: 3% (two (2) percent for corporations)
• 0.5% on the number of corporate overpayments exceeding $10,000
• 3% for underpayments
• 5% for large corporate underpayments

Remember that interest rates are expected to increase in 2022 so these numbers could and will change. The interest rate is calculated daily. If you delay paying taxes, you will owe more.

If you owe $10,000 to the IRS and are 90 days late, your total interest costs would be around $75.

Why does the IRS charge penalties?

The IRS is not kind to those who don't have enough money to pay their tax liability. Your penalty amount will depend on what type of penalty you have and how long it takes to repay it. According to the IRS, penalties are intended to encourage voluntary compliance.

How can you tell if the IRS owes you a penalty?

The IRS will send you a notice by mail if they charge you a penalty. You will receive a notice or letter detailing the penalty, the reason for the charge, and the next steps.

Every notice will contain an identification number. In some cases, the penalty may be waived if you can resolve your problem.

How Can I Get My Taxes Forgiven?

Interest is charged by the IRS on penalties. The penalty type and amount will determine the date at which interest is charged. The amount you owe will increase gradually until it is fully paid off.

Types of IRS Penalties

There are many types of IRS penalties that you could be subject to. You will be able to navigate the IRS penalties better if you are faced with them, or even avoid them entirely.

There are many reasons why the IRS may charge penalties, but the most common is if you don’t:

• You must file your tax return by the due date
• All taxes owed must be paid on time and promptly
• Make sure you have a complete return
• Give accurate information

What is tax relief?

If you fail to file your tax return within the deadline, the Failure To File Penalty will apply. The penalty is a percentage for taxes not paid on time.

Based on the time you filed your tax return late and the amount of unpaid taxes as of the original due date, the penalty will be calculated.

The total tax that remains unpaid is the tax you are required to show on your return, minus any amounts paid through withholding or estimated tax payments and allowed refundable credit.

The Failure to File Penalty is calculated as follows:

• For each month, or portion of a month, that your tax return is late, you will be charged 5%. The penalty is not to exceed 25% of total unpaid taxes.
• A Failure to pay penalty can also be accessed. This reduces the Failure To Pay Penalty by the amount for the month. For a total penalty of 5% per month or part thereof, that you have late returned,
• After five months of nonpayment, the Failure to Pay Penalty will be maximum. However, the Failure to Pay Penalty continues until the tax has been paid up to 25% of the amount due date.
• The minimum penalty for failure to file a return more than 60 days late is $435, or 100% of the tax due on the return.

How much will the IRS settle tax debt for?

Taxpayers who fail to pay the tax due by the due date, or approve the extended due date, are subject to the Failure to Pay Penalty. The accessed penalty represents a percentage of taxes not paid.

Based on the amount of unpaid taxes, the IRS calculates the Failure To Pay Penalty. Unpaid tax refers to the amount of tax that must be shown on a return, minus any estimated tax payments or withholding.

The 25% Failure to Pay Penalty is not more than 25% of the total amount of unpaid tax. The Failure to Pay Penalty can be calculated in the following manner:

• The Failure to Pay Penalty amounts to 0.5% of unpaid taxes per month or portion of a month that the tax balance remains unpaid. The penalty will not exceed 25% of unpaid taxes.
• The Failure to File Penalty is reduced by the amount that the Failure To Pay Penalty was applied to the month. Instead of a 5% Failure To File Penalty, the IRS will apply a 4.5% Failure To File Penalty as well as a 0.5% Failure Not to Pay Penalty.
• If your tax return was filed on time and you have an approved payment program, the Failure to Pay Penalty is reduced by 0.25% per calendar month (or partial) if you follow your approved payment plan.
• You can be penalized for failing to pay your taxes within 10 days of receiving a notice from the IRS with an intent to levy.
• Even if you have paid your taxes in full by the end of the month, the IRS will still charge full monthly fees.

How to Apply for the IRS Tax Fresh Start Program?

If you fail to pay the tax due on your return, an Accuracy-Related Penalty is applied. Underpayments may occur when you fail to report all your income or claim deductions and credits that you are not eligible for.

Two types of Accuracy Related Penalties are applied by the IRS to individuals.

1. Negligence in disregard of the Rules or Regulations
2. Substantial Understatement in Income Tax

If the IRS finds that you didn't make a reasonable effort to comply with tax laws while preparing your tax returns, they will apply negligence. You disregard the tax regulations or rules because you act carelessly, recklessly, or inadvertently.

Neglect is an example of this:

• You don't keep records that prove you are eligible for the credit or deductions claimed
• Income not included on your tax return if it was reported in an information return, such as income reported on Form 1099
• It is important to verify the accuracy of any credit or deduction that appears exaggerated.

If you underestimate your tax liability by 10% or more of what is required on your tax return, or $5,000 respectively, it will be considered a substantial understatement of tax.

IRS Underpayment of the Estimated Tax Penalty

If you fail to pay estimated tax on your income or pay it too late, the Underpayment of the Estimated Income Tax Penalty may apply. Even if you are owed a refund, the penalty could apply.

The IRS calculates the penalty amount based on the tax you have paid on your original return and any subsequent returns that were filed before the due date. The total tax you owe less your refundable credits is the tax shown on your return.

The following factors are used by the IRS to calculate the penalty:

• The underpayment amounts
• The time when the underpayment was due.
• The quarterly published interest rate for underpayments by the IRS

IRS Failure to Deposit Penalty

Employers who fail to make the required deposits in time and in the correct amount or the proper manner will be subject to the Failure to Deposit Penalty.

Federal income tax, Social Security, Medicare, and Federal Unemployment taxes are all taxes that employers pay. A penalty is a percentage tax not paid on time, in the correct amount, or the correct manner.

The IRS calculates the amount due to failure to deposit penalty based on how many calendar days you have been late with your deposit, beginning at the due date.

The IRS does not add 10% to the earlier 2% or 5% late penalties if your deposit is more than 15 days late. Your new total penalty would instead be 10%

IRS Information Return Penalty

If you fail to file or provide payee statements in time, an information return penalty may be applied. For each incorrectly filed information return and for each failed payee statement, the IRS will impose penalties.

For small businesses and large companies, the maximum penalties can be different. Intentional disregard is not punishable by a maximum penalty.

Is the IRS ever willing to forgive penalties?

If you act in good faith and can provide reasonable explanations for your failure to pay taxes, the IRS may reduce or remove some penalties. The penalty must be removed or reduced before the IRS can remove or reduce interest.

After analyzing all facts and circumstances, the IRS will determine if there is reasonable cause. The IRS says they will consider any reason that establishes you used all reasonable business care and prudence to comply with your Federal tax obligations but were unable to do so.

Any of these reasons will be considered valid by the IRS as valid reasons to not file a tax return.

• Fire, accident, natural disaster, or other disturbances
• Inability to obtain records
• Death, serious illness, incapacitation, or unavoidable absence from the taxpayer or a member his immediate family
• Another reason is that you tried all normal business care and prudence to comply with your Federal tax obligations, but were unable to.
• Not a reason for not filing or paying on time. The reasons for the absence of funds could be considered reasonable causes for the failure to pay penalty.

The IRS will ask for facts to prove reasonable cause.

• What happened?
• What circumstances and facts prevented you from paying your tax or filing your return during the time you didn't file your taxes?
• What factors and circumstances have impacted your ability to file, pay and/or submit your taxes?
• What actions were you able to take to file your taxes and/or pay them after the facts and circumstances had changed?
• If the corporation, estate, or trust is involved, was the only person able to execute the return or deposit the payment or give instructions?

Common documents that the IRS may request to establish reasonable cause

• Hospital records, court records, or a letter from your physician to prove illness or incapacitation with specific start and end dates.
• Documentation of natural catastrophes and other events that prevented compliance

How do you dispute an IRS Penalty?

You have the right to contest the penalty if you disagree with the amount that the IRS has determined you owe. You can call the IRS to dispute the penalty or send a letter explaining why the IRS should reconsider. Send your letter and any supporting documents along with your notice to the IRS address.

These details should be included in your letter, or on hand if possible.

• The IRS notice or letter
• You want them to reconsider the penalty
• An explanation explaining why you believe the penalty should be lifted is required for each penalty

What is the IRS First Time Penalty Abatement?

If certain criteria are met, the first-time penalty waiver (FTA waiver) is an administrative waiver that may be granted by the IRS to taxpayers to exempt them from failing to file, failing to pay, or failing to deposit penalties.

The procedure's purpose is to reward taxpayers who have a clean record of compliance and to allow everyone to make one honest mistake.

FTA does not apply to any other penalties, such as the accuracy-related penalty and underpayment of the estimated tax penalty.

You must meet these criteria to be eligible for penalty abatement.

• Compliance filing: You must have filed all required returns (or filed an extension). There cannot be any outstanding requests for returns from the IRS.
• Compliance with payment: All tax payments must be paid or arranged to be paid (can be made in installments if they are current).
• Clear penalty history: There must be no previous penalties, except for an estimated tax penalty, in the three preceding years.

What happens if I miss a year of filing taxes?

Many people wait years to file their tax returns. They become anxious about the consequences if they don't file their tax returns for the year.

It is best to act now and not let it happen again. Neglecting it will only make things worse, no matter how dire your situation.

These are the facts to keep in mind when considering what is at stake if you decide not to file.

It's illegal:
Every year you are subject to a filing obligation, the law will require you to file. Failure to file your return can result in civil or even criminal penalties.

You will be punished:
Late filing penalties are 5% of the tax due per month for the first five calendar months. This penalty can be up to 25% of your tax bill. The IRS will continue to charge interest until the balance is paid. Late payment penalties can add up quickly, so it is always better to file even if your taxes are not due.

You can lose your refund:
You may lose your refund if you fail to file the return within three years. You must return the refund within three years of the due date to receive your refund.

You don't have to worry about late filing penalties if you miss one or more years of filing taxes. A tax professional can assess your situation and help you make a plan to get you back on track as soon as possible.

What is a Penalty Abatement?

A penalty abatement, at its most basic, is when the IRS eliminates penalties that were assessed against you. The IRS can assess penalties for many reasons. However, the most common are failure to pay, late filing, and accuracy. Even if they have been granted a penalty abatement, taxpayers are still responsible for any unpaid taxes.

Taxpayers are not automatically issued abatements by the IRS. It is necessary to request one. The IRS is not likely to reduce penalties. Recent statistics show that about 11% of tax penalty penalties are reduced. The IRS does not consider fairness or the ability of the taxpayer to pay the tax, penalty, interest, or tax due.

The IRS charges interest for any penalties it assesses. Getting your penalty reduced will also eliminate interest.

What are the requirements to be eligible for a Penalty Abatement?

The IRS states that you could be eligible for penalty relief if your compliance with tax laws is not possible due to circumstances beyond your control. The IRS states that the majority of penalties abatement grants fall into four categories.

• Don't rely on incorrect IRS advice
• There are statutory and regulatory exceptions to the tax law penalty
• Administrative waiver to assist tax administration, including hardship failure to pay penalty relief and penalty abatement for the first time
• Reasonable cause

Taxpayers who have not had any previous compliance problems can get a first-time penalty abatement.

These qualifications are also required:

• There were no penalties for any tax years before the year in which you received the penalty, or weren't required to file a tax return.
• You have filed all required returns.
• You have either paid or arranged for the payment of tax.

Reasonable Causes for Penalty Reduction

The IRS will grant a reasonable cause penalty abatement to most taxpayers who don't file for first-time penalty abatement. When deciding whether you are eligible to receive a reasonable cause reduction, the IRS will first consider whether you acted in good faith. The IRS will also consider whether you tried to accurately report your tax liability, but failed due to unforeseeable circumstances beyond its control.

Reasonable Cause Examples

The IRS accepts the following reasonable causes:

• Relying on the advice of a tax professional is reasonable
• Ignorance of tax laws
• Medical illness
• Financial hardships that can be severe
• Death in the family
• Natural disasters
• Destruction of records
• Incarceration

Keep in mind that the IRS will often require documentation to support your claim for a reasonable reason for penalty abatement.

How do I file a Penalty Abatement request?

You can call the IRS to request penalty abatement for the first time if you are interested in pursuing it. You may need to contact the local IRS office if your case is being handled by them. The IRS will mail a letter stating that the penalties have been removed if your request for a phone abatement is granted.

Other types of IRS penalty abatement such as reasonable cause abatements are not often granted by the IRS over the telephone. Therefore, it is important to request them in writing. You can also use Form 843 to request a penalty reduction for reasonable cause or an IRS error.

Are you denied a Penalty Abatement Here's what to do

Most penalty abatement requests are rejected by the IRS so don't be surprised if it is denied. If you feel that the IRS rejected your request in error, you can still appeal or have a hearing. An IRS appeals officer can conduct hearings and conferences that will assess all the facts and circumstances surrounding the abatement request.

You have 30 days to appeal the rejection letter issued by the IRS in most cases.

For assistance in filing a penalty abatement, please contact us

The Hillhurst Tax Group has the expertise to help you if you feel the IRS is forcing your to pay unfair penalties because of circumstances beyond your control. Our knowledgeable staff will help you determine if you are eligible for an IRS penalty reduction and can represent you throughout the entire process to protect your rights.

It is safe to assume that most taxpayers dislike paying taxes and hate paying IRS penalties, especially when the penalties seem unjust. While penalties can also seem arbitrary to taxpayers, IRS policy is clear and deliberate on their reason for existence: to deter taxpayer noncompliance, not to generate revenue.

The IRS established the first-time penalty abatement administrative waive (FTA) 12 years ago. This allows generally compliant taxpayers, both individuals, and businesses, to request the abatement or removal of penalties the IRS has assessed against them. The IRS offers a one-time penalty waiver (FTA) to taxpayers who are typically compliant. This can help taxpayers save hundreds, sometimes thousands, of dollars.

According to a 2012 Treasury Inspector General for Tax Administration report (TIGTA), few taxpayers are eligible for FTA. The problem is that both tax professionals and taxpayers don't know FTA exists. Additionally, IRS representatives frequently incorrectly deny an FTA by using the flawed automated decision tool the IRS to make penalty determinations.

FTA is a secret to tax professionals and taxpayers. They may not know how it works, what to do to request it, or even if it exists. This article explains the IRS FTA waiver, and how clients can remove certain penalties by using it.

Penalties and Abatement

The IRS assessed 37.9 Million penalties to taxpayers in fiscal 2012. This is 74% of all penalties assessed for 2012. Most penalties are assessed automatically by the IRS, regardless of the taxpayer's financial situation.

Methods to Request Penalty Relief

Taxpayers have three options to request relief from penalties for failure-to-file, failure-to-pay, or failure-to deposit penalties depending on their circumstances:

• The taxpayer can request that the IRS not automatically impose a penalty before the IRS assesses it.
• The IRS can assess a penalty and the taxpayer can request abatement. This is usually done by sending a letter to the IRS or calling the IRS. The IRS e-services allow tax professionals to request abatement.
• After paying the penalty, taxpayers can ask for a refund by completing Form 843, Claim For Refund, And Request For Abatement. The return must be filed within three years from the due date or filing date.

There are reasons to request abatement

There are generally four categories of relief from penalties: reasonable cause, statute exceptions, administrative waivers, and corrections by the IRS. The administrative waiver is a category in which the IRS can formally interpret or clarify any provision to provide administrative relief from penalties it would otherwise assess. An IRS administrative waiver can be addressed in a policy statement or news release. It may also address other formal communications stating that the IRS policy is to provide relief from penalties under certain conditions. FTA is the most common administrative waiver.

Waiver of Abatement for the First Time

FTA was established by the IRS in 2001 to ensure that penalties are reduced consistently and fairly. It also rewards past compliance and encourages future compliance. An administrative penalty waiver is available to first-time taxpayers who are not compliant with tax laws. It allows them to request the abatement of penalties for a single tax period: one tax year for an individual or business income taxes, and one quarter for payroll taxes.

TIGTA reported that for 2010, the average tax year 2010 individual failure to file abatement under FTA was $240 and the average failure to pay abatement was $84. However, more than 90% of people who were eligible for FTA in 2010 did not get it. The IRS doesn't make FTA available as a relief option in its penalty-related notices and on its website.

This article will discuss how to determine if a client is eligible for FTA, and how to request it at the IRS.

Penalties that are eligible for an FTA

FTA is only applicable to certain penalties or certain returns. Determine first if FTA applies to the client's particular situation.

• An individual taxpayer can apply for an FTA to waive penalties and fail-to-pay or file late fees. FTA waivers are not available for estate and gift tax returns.
• FTAs may be requested by payroll taxpayers and business taxpayers for failure to file, failure to pay, and/or failure to deposit penalties. Although the Internal Revenue Manual (IRM) does not specify, in practice, FTAs can be requested by business and payroll taxpayers to cover late-filing penalties for S corporations and partnerships.
• FTA does not allow taxpayers to waive the estimated tax or accuracy-related penalties.

Clean Compliance Criteria

The practitioner must determine if FTA applies to the client's case. This involves the most complex part of requesting an FTA. The client must show compliance with filing and payment requirements and have a clean record of any penalties.

The client must comply with the filing compliance rule by having filed or extended all required returns. There must also not be an IRS request for unfiled returns. The client must have also paid or arranged for payment of any tax due to meet the payment compliance requirement. As long as the client is current on their installments, an open installment agreement can be entered into by him. The IRM states that the IRS should offer a taxpayer who is not in compliance with the payment requirements and opportunity for compliance and thereby be eligible for an FTA. Before the IRS determines whether the penalty can or cannot be reduced, a reasonable cause must be shown.

The client must not have had any penalties exceeding a "significant" amount in the three prior years. This is required to meet the requirement for clean penalty history. IRS procedures do not publicly define a "significant" amount. The IRS does not publicly define a "significant" amount in practice. If the IRS denies a client's request due to a small penalty assessment, they should remind them of the IRM "significant" qualification.

If the client has a clean record of penalty violations, they will be disqualified from an FTA.

• A penalty that was assessed more than three years before the tax return in question.
• Any reasonable cause relief from penalties received in the past.
• Have received an FTA for more than three years before the tax return in question.
• Penalties for subsequent tax years.

Requesting an FTA

Per phone or e-services: A practitioner can request an FTA if they determine that the client is eligible. There are many ways to request this FTA. Begin with the simplest methods. Start with simple methods. Accounts Management representatives have the authority to grant an FTA.

An IRS compliance unit will assess the penalty. This means that you cannot request an FTA from a PPS representative, or via e-services. A taxpayer with an IRS Collection or Appeals case, or who is underreported inquired, will be subject to penalties based upon the facts and circumstances. Penalty relief must usually be requested from the unit that assessed the penalty.

Remember that the IRS has an unpublished ceiling on how many penalties the IRS can abate under FTA via phone or e-services (known as oral statement authority). For tax administration purposes, the IRS removes the threshold amount for oral statement authority in its IRM.

The IRS may require taxpayers to submit documentation to support their claim to make reasonable-cause determinations. An IRS representative will accept "credible information" either orally or in writing. The representative will be prompted by the automated Reasonable Cause Assistant of IRS (see below) to request documentation. If penalties are greater than the threshold, waivers will still apply. However, IRS procedures require that FTA requests be made in writing. 23 When requesting an abatement of penalties amounts exceeding ten thousand dollars, it is advisable to ask for an FTA in writing.

In writing To increase your client's chances of having the penalty lifted, include any other relevant penalty relief arguments including reasonable-cause arguments.

If there is clear and reasonable cause for the penalty, the client should present the reasonable-cause argument first. The IRS will then abate the penalty based on these grounds. This is a good practice as the client might need to use FTA waivers for subsequent years. An abatement due to reasonable cause will not prevent the client from receiving an FTA.

The IRS may refuse to grant an FTA if the client is technically ineligible for one because of a penalty within the last three years, but the client is otherwise compliant. The IRS should be reminded that FTA is not applicable and the client's compliance history, excluding the one instance of noncompliance, is clean.

If the client has multiple years' worth of penalties, you can request an FTA for that first year. The previous three years must have had a clean compliance record. Other arguments such as reasonable cause can be used if applicable.

Example: C late-filed returns with a balance due from 2010 through 2012. The IRS assessed C's failure to file and failure to pay penalties for all years. In addition, she has assessed an estimated tax penalty in all years for not having paid enough estimated taxes and withholding. These were the first instances of noncompliance by the taxpayer. C The tax professional for the taxpayer determines that there is a reasonable cause for her 2012 noncompliance based on her facts, circumstances, and the application reasonable-cause criteria. The tax practitioner requests an FTA to abate the penalty of failure-to-pay and failure-to-file penalties for 2010. FTA waivers cannot reduce the estimated tax penalties.

The IRS service center should receive the written FTA request.

IRS Abatement Decisions Often Flawed

The IRS uses an automated tool to evaluate the request of a taxpayer or practitioner who calls or writes to it. The Reasonable Cause Assistant (RCA) is a software program that aids in the application of penalty abatements uniformly. This program was created to assist IRS employees in making penalty relief decisions for individuals (failure-to-file penalties and failure-to-pay penalties) as well as businesses (failure–to-deposit penalties). This program is required by the IRS to be used by employees to determine penalty abatement requests.

Although the IRS tried to apply penalty abatement determinations uniformly and consistently, the IRS's use of the automated RCA led to inaccurate determinations, including the FTA decision. A 2011 IRS Advisory Council report found that 55% of penalty abatement requests were incorrectly determined by the RCA. A TIGTA 2012 report found that 89% of the abatements made using the RCA were incorrect. TIGTA employees did not correct any of the incorrect determinations in the TIGTA sample. This was even though the determinations were inconsistent with IRM penalty abatement procedures. IRS employees have the right to abort the RCA process if it conflicts with penalty abatement policies. If an IRS employee cancels the RCA process, he/she can make a decision based upon whether the facts of the taxpayer meet the requirements for FTA qualification.

Before contacting the IRS, be prepared to research the client's compliance history and apply the qualification rules. If the representative claims that the client qualifies, but the client is not, the representative can override the RCA determination. Ask the representative for his manager if he refuses to override it. If all other options have failed, you can contact the Taxpayer Advocate Service for assistance. Remember that IRS representatives are often not trained in the use of the RCA and can make mistakes. A practitioner who is certain the client is eligible can call back to request an FTA if the IRS representative is not clear about the program.

A practitioner can, in most cases, obtain an FTA from the IRS PPS representative if they have the facts and qualifications.

Confirmation of FTA

An FTA is a letter that the IRS sends to a client. It includes Letter 3502C or 3503C for an individual failure-to-file and failure-to-pay penalty abatement, and Letter 168C (or an equivalent) business failure-to deposit penalty abatement. The letter is usually delivered within four weeks of the IRS granting the FTA.

Future of FTA

As it works to close the $450 billion annual tax gap, encouraging compliance is one of its main goals. Penalties have been used by the IRS to achieve this end. The number of penalties imposed has increased by 34% over the past 11 years from 28.3million penalties in 2002 to 37.9million in 2012. But, to encourage voluntary compliance, the IRS must enforce penalties fairly and consistently.

Why not grant an FTA to all taxpayers who are eligible in the interest of consistency? To promote fairness, the TAS suggested that this concept be implemented. The TAS suggested that the FTA waiver should be applied automatically before the penalty is assessed in its 2010 report to Congress. This would replace the requirement for taxpayers to request one. FTA waivers are intended to encourage compliance in the future and reward compliance. TAS's 2010 report noted that the number of penalty abatements has declined as penalties have been assessed. This shows that FTA and other penalty relief options are not encouraging compliance.

However, the FTA could be denied to all eligible taxpayers. This could lead to a weakening of penalty administration. For the IRS to encourage compliance, it is a tangible opportunity to provide abatement notices to taxpayers. The IRS communicates with taxpayers through the abatement notice and associated discussion. This is a quantifiable way that the IRS can make sure they understand the consequences of non-compliance in the future.

In its response to the 2010 TAS report to Congress, the IRS stated that it is examining whether FTA improves compliance and whether a system should be developed to allow FTA waivers before penalty assessments. The IRS has yet to conclude the study.

The IRS must create a uniform policy that eliminates errors due to reliance on its RCA. It also needs to train the personnel who will be reviewing penalty abatement requests to ensure consistency. In 2011, the IRSAC Small Business/Self-Employed subgroup recommended that the IRS develop a clear penalty abatement request form that would guide taxpayers in evaluating their circumstances against penalty abatement criteria, including FTA. This form would clarify the requirements for penalty abatement and allow taxpayers to request it. It also will make it easier to be fair and consistent. This form should be available to practitioners in the future.

Report points out that Form 843 Claim For Refund can be used to reduce penalties. However, it was not created for that purpose as it doesn't direct taxpayers on how to comply with abatement requirements. IRSAC stated that the Form 843 instructions regarding penalty abatement are "confusing at worst." It is not intended for unpaid penalties. It is meant to be used for refund requests after payment, and not for penalty nonassertion. Form 843 Instructions were updated in December 2012. However, they did not allow it to address potential penalty abatement arguments or simplify abatement requests.

TIGTA and TAS report highlight the inconsistent application of penalty reduction by the IRS. The IRS is likely to make changes in its procedures and requirements for requesting and granting penalties abatements. If the client is eligible, the practitioner can request and obtain relief from the client's penalty charges using this beneficial, but a largely unexplored administrative waiver.

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