Tax resolution refers to services which help an individual taxpayer or business resolve his or her debt with the IRS or a state tax agency such as the South Carolina Department of Revenue.
A resolved tax debt can encompass any number of outcomes. However, the two main goals that tax resolution lawyers aim to achieve for their clients is to:
Resolve Tax Debt with Ease
A competent tax attorney can resolve a tax dispute in a manner that reduces the hardship on the taxpayer as much as possible. For example, one of the most significant barriers to resolving tax debt involves the financial difficulty that is paying an unexpected debt over a short amount of time. Tax resolution services in this capacity aim to minimize this hardship as much as possible.
Resolve Tax Debt with Maximum Legal Fluency
A tax attorney in South Carolina should take advantage of all legal options to reduce the amount of tax debt for their client. Although the IRS and South Carolina Department of Revenue are diligent in collecting tax debt, indebted taxpayers have several options to reduce their debt. However, taking advantage of these options requires extensive knowledge of tax regulations and how to effectively advocate on behalf of a taxpayer-client with taxing authorities.
Tools Available to Provide Tax Resolutions
Tax debt can snowball quickly due to penalties and interest on unpaid balances. In many cases, a manageable amount of tax owed to a taxing authority can balloon quickly to an amount beyond the taxpayer’s ability to pay. For example, the IRS imposes a failure-to-pay penalty of one-half of one percent for each month, up to a maximum of 25% of the amount of unpaid tax. The failure-to-pay penalty of one-half of one percent increases to one percent if the total amount remains unpaid ten days after the IRS issues a notice of intent to levy property.
Offer in Compromise
An offer in compromise provides a way for indebted taxpayers to resolve their tax debt by paying a reduced amount, which the taxpayer will pay as a lump sum amount determined by the IRS. A taxpayer applying for an offer in compromise must qualify for this offer generally by showing that it is unlikely the debt may be collected, or collection of the debt would cause economic hardship.
The IRS offers First Time Penalty Abatement relief to qualified individuals. The policy allows the IRS to waive penalties for failing to file a tax return, pay taxes on time. Applicants must not have been subject to penalties for the last three tax years; filed all currently required returns or an extension has been granted; and the taxpayer has paid, or arranged to pay, any tax due.
In cases where a married couple files a joint tax return or a spouse owns a business which owes back taxes, a spouse who may experience hardship by tax collection efforts or may not be involved in the circumstances which resulted in the tax debt may claim innocent spouse relief. If the spouse were unaware of the details that created the tax debt, and it would be unfair to hold the innocent spouse liable.
Garnishments, Liens, and Levies
State and federal tax authorities are authorized to use wage garnishment, levies against bank accounts, and liens against real property to collect a tax debt. In the event any of these collection measures are taken an application may be made to the IRS or state tax authority if these collection efforts will create an immediate economic hardship. Further, appeals may be taken against these collection efforts if they were carried out in error or violation of the law.
Call a South Carolina Tax Lawyer Today
An experienced tax resolution lawyer can offer guidance in several areas of tax law, including the best strategies for managing unpaid tax debt. Our practice can provide advice to individuals across all facets of tax law. Contact our Lexington office today at (803) 271-0909 to discuss how we can assist with your needs.