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Tax Problems Massachusetts: 4 methods of resolving unpaid taxes.

07th May 2010
By Martin Hatton in Taxes
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People get behind on their taxes for many reasons: divorce, health issues, loss of a close family member, personal bankruptcy, business failing, etc. It doesn't matter how your tax obligations came to be. The question is how will you fix them. There are several alternatives to solving Delinquent Taxes.

Offer In Compromise

It's a fact that the IRS settles a huge number of taxpayer's overdue tax debts for just cents on the dollar every year! Why don't you know this? Well, it's simple. The IRS doesn't publicize that the law allows many taxpayers to negotiate their old tax debts for a small percentage of what they owe. What's in it for them! They'd rather just seize and levy everything you possess. Who qualifies for the Offer In Compromise Program? Taxpayers who are able to show an inability to repay their overdue taxes in a short time.

Payment Plan

For people who don't qualify for an Offer In Compromise, a Payment Plan could be the way to solve your issue. Many individuals have the ability to pay their tax debts but only need a little time to pay it off. Negotiating settlement terms you can accept is the key. Regrettably, penalties and interest will continue being incurred on your outstanding balance while you pay the debt off. However, you could be eligible to have the penalties eliminated or Abated. Interest on the principal tax owed, very rarely can be Abated.

Penalty Abatement

The IRS charges penalties for nearly everything these days-filing late, paying late, underpaying your estimated tax if you're self-employed, negligence if you make errors in preparing your tax return, etc. Its absurd how many kinds of penalties exist. The initial intent of penalties was to punish taxpayers who didn't follow the law and to keep compliant citizens from falling out of line. However, the reason penalties exist today is that they've become a big revenue generator for the government. Many citizens could pay off their tax debts if it weren't for penalties that double, triple, or quadruple their tax bill in so short a time. Well, there is relief for many taxpayers from IRS penalties. The law allows taxpayers who have "reasonable cause" to file for a Penalty Abatement.


Are you aware that taxes may be dismissed in a bankruptcy. Many individuals, and attorneys, are unaware of that! For many who are eligible, bankruptcy often is the means to fix their tax problems. However, not everybody qualifies to eliminate their tax arrears in bankruptcy. Specific guidelines must be met first. Should you file bankruptcy and don't meet the guidelines, you'll be shocked after your bankruptcy is finished once you find that you've still got a tax issue and the IRS is in hot pursuit. Appropriate pre-bankruptcy preparation is critical for figuring out if bankruptcy is or can be a workable option.

Running the Statute of Limitations

Are you aware that the IRS is limited in the time period it has to go after collection of overdue taxes? Typically, the IRS has ten years from the time the taxes are assessed (usually on the filing date) to recover any outstanding taxes, penalties, and interest. Once the ten years goes by, you don't legally owe your debt. Like all tax legislation, you'll find exceptions to the rule. The 10 year time period may be extended in a number of ways. Often the IRS will attempt to recover overdue taxes, either through ignorance or on purpose, after the statute of limitations has run out. You should notify the IRS that they don't have legal power to recover the overdue taxes. Running the Statute of Limitations can often be an economical approach to take care of your past due tax debt.

Lien Subordination

Frequently taxpayers can't get home equity loans to repay their old tax debt as the IRS has filed Federal Tax Liens against their home. These Liens not only become public record but also appear credit profile, thus keeping you from obtaining a loan to repay the taxes that created the Liens to start with. It looks like a Catch-22 scenario. Should you have substantial equity in your residense to pay towards your tax arrears, there's a way out. A Lien Subordination enables the IRS to cut back its Lien priority and provide your financial institution superior Lien priority guarding their loan in exchange for the cash from the borrowed funds. By doing this, the IRS gets the equity it had a Lien against and your lender is safeguarded by their superior Lien. Should you have sufficient equity to full pay your old tax owed, a lot of banks won't even need a Lien Subordination to guard their loan. They'll just pay the borrowed funds straight to the IRS. Once paid, the IRS will end the Federal Tax Lien.

Tax Problems Massachusetts:
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