NEW TAX RULES
Although I am not a tax attorney, I do believe it’s important for me to stay on top of tax law since I do practice bankruptcy law. Not to mention, it’s April and we’ve all got taxes on our minds. Some more than others. I thought the following tidbits of information may be of interest to those of you who are behind on your taxes. If that’s the case, you are probably trying to figure out what to do. Well, one option would be to file bankruptcy which will free you from your unsecured debt and allow you to pay off what taxes you do owe. Another option would be to negotiate with the I.R.S. Recently there have been some changes in the law, and negotiating with the I.R.S. has become a bit easier. Here are some of those changes…
TAX LIEN CHANGES
■Instead of automatically triggering a tax lien against you for a debt of $5,000 or more, the IRS is raising the limit to $10,000 or more.
■Instead of a tax lien staying on your credit report for 7 years, it will be automatically “withdrawn” once your lien is paid in full (i.e., as though it never never appeared on your credit report at all).
■Instead of waiting until your tax lien is paid for it to be withdrawn from your credit report, it can be withdrawn right now if you enter into a monthly direct debit installment agreement (provided you owe no more than $25,000).
When the IRS extends an offer-in-compromise, they agree to accept less than the full amount of tax debt owed. In the past, eligibility has been limited to those who earn no more than $50,000 a year and owe no more than $25,000 in tax debt. Under the new policy changes, these limits will be doubled. Under the new changes, you may be eligible for an offer-in-compromise if you earn no more than $100,000 a year and your tax debit does not exceed $50,000.
That said, offers-in-compromise are hard to come by, and that’s not expected to change. Your age, education and earning potential in the years ahead all come into play, as the IRS is willing to wait if they think you’ll have the ability to pay in the future.
After speaking to my clients, I really do understand the shame that goes along with carrying debt. It’s not a good feeling… and the worst kind of debt of all is owing on your taxes. I can only imagine how scary and intimidating that must be to a person. But trust me, there is hope. Do whatever it takes to take care of it this year and you won’t regret it.