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  • Daniel Rodriguez

How can I settle my tax debt in California?

Updated: 6 days ago

Owing back taxes to the IRS can be extremely stressful as they have the power to take your property or even refer your case to the Justice Department in extreme cases. However, the IRS is also willing to work with taxpayers to come to an agreement where the taxpayer can pay off their debt under reasonable terms. If you need legal assistance settling your tax debt in California, contact an experienced Roseville debt forgiveness lawyer today. Dealing with a large amount of back taxes can seem insurmountable, but you may have options that can help you. The NewPoint Law Group, LLP is here to explain how you can settle your tax debt in California.

Options for Managing Your Tax Debt

There are multiple options that a person could take to manage their tax debt. If you owe money in back taxes or have unfiled income tax returns, it is important to reach out to the IRS to handle these problems as soon as possible before you accumulate other tax penalties.

The IRS has several options that it can take if a debtor does not pay off their taxes. For example, the IRS can issue a federal tax lien on property owned by the debtor or their business. A tax lien would encumber the property owned by the taxpayer and would allow the IRS to levy the property if the taxpayer continues to have delinquent tax debt. Fortunately, the IRS would prefer to make an arrangement with a taxpayer in order to ensure the debt they are owed is paid off.

The following is a list of ways to settle your tax debt:

Offer in Compromise in California

An offer in compromise in California (OiC) is a negotiation between a taxpayer and the IRS to eliminate a portion of the debt owed by a taxpayer. This option is generally chosen by debtors that cannot afford to pay the total balance of their back taxes but have enough income to make smaller payments. There are a number of factors considered by the IRS to determine whether a taxpayer is eligible for an OiC:

  1. The taxpayer’s income level

  2. The monthly expenses and other debts the taxpayer must manage

  3. The capability of the taxpayer to pay off their tax debt

  4. The taxpayer’s assets

  5. Whether the taxpayer’s income tax returns are current

  6. Whether the taxpayer is currently involved in bankruptcy proceedings

If a taxpayer’s application for a California offer in compromise is accepted, the taxpayer will be able to choose the type of payments they would like to make. If the taxpayer chooses to make lump sum payments, they must make a large payment with their initial application. If the application is accepted, the taxpayer must then pay off the remaining balance in five payments or fewer. A taxpayer could also make periodic payments over a longer period of time.

Fresh Start Initiative

The Fresh Start Initiative is a series of laws passed by the IRS in 2012 to benefit taxpayers that had fallen behind on their tax payments for the first time. This program allows debtors an opportunity to pay off their debts to have a tax lien removed from their property or to avoid the possibility of a tax lien altogether. There are multiple other benefits associated with the Fresh Start program:

  1. The significant increase of the tax debt threshold that can have a lien placed on your property ($5,000 to $25,000)

  2. Streamlining the process to have a federal tax lien removed from your property

  3. Alleviating the requirements necessary to apply for an installment agreement to pay off your debt

Additionally, if you operate a company that has fallen behind on tax payments for the first time, your company may also be eligible for the Fresh Start plan.

Our firm can help you learn more about the Fresh Start Initiative and other options for settling your debt with the IRS. We will speak about your unique goals and determine the most appropriate option in order to help you eliminate your tax debt. Whether you wish to file for an offer in compromise or you want to make an installment agreement, we are ready to aid you.

Contact Our Experienced Sacramento Tax Lawyers Regarding Your Back Taxes

If you or a family member need legal aid to manage your tax liability, contact an experienced Sacramento tax attorney today. The devoted legal team at the NewPoint Law Group, LLP possess decades of combined legal experience handling a wide variety of tax law issues, and we are prepared to use this knowledge to help with your case. We can help manage your tax debt so that you can regain financial freedom. To schedule a confidential legal consultation to discuss your tax situation, contact the NewPoint Law Group, LLP at 1-800 358-0305, or contact us online.

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