Tax Questions

Get answers to common tax questions from experienced Santa Rosa bankruptcy lawyers, family law attorneys, employment law & real estate lawyers, and trial attorneys at Embolden Law PC. Call us at 707-596-6641 to schedule a consultation and get legal help today.

Yes. Fighting the IRS on tax debt issues is like a chess game. Every move you make or do not make, can either bring you a successful resolution in your favor or have grave consequences for your personal finances

This is why it is important to hire an experienced tax attorney like those of Embolden Law PC who deals with the Internal Revenue Service (IRS) days in and days out. Between our tax attorneys and other tax professionals, we have the experience and expertise you need to fight your tax issues and resolve them.

During the first phase of the COVID-19 pandemic, the IRS temporarily suspended most of its collection activities when it enacted its “People First Initiative” but this expired on July 15, 2020 and the IRS restated collection.

But, as we know, things have not improved and thousands are unable to pay the IRS what they owe. The IRS has adopted a new “Taxpayer Relief Initiative” to help.

If you just need more time to pay all you owe, you can apply for an extension of time to pay with a short-term payment plan. You can do this easily online at the IRS Apply Online for a Payment Plan web page.

Ordinarily, the short-term extension of time to pay is for 120 days. However, the Taxpayer Relief Initiative extends the time to pay to 180 days. Also, the IRS will not bill you for a user fee if you pay all you owe within 180 days.

You will have to pay interest and a late payment penalty for each month you owe the IRS back taxes. When you enter into a payment plan the late payment penalty is 0.25% per month.

If you can’t pay all you owe the IRS within 180 days, you can enter into an installment agreement that allows you to pay your tax debt over a much longer time period. You can also do this online at the IRS Apply Online for a Payment Plan web page.

If you owe less than $50,000 in taxes, penalties, and interest ($25,000 for business taxpayers), you can qualify for a streamlined installment agreement. You don’t have to make detailed financial disclosures to the IRS and your agreement can get approved online in as little as 30 minutes. However, you must agree to pay all you owe within 72 months, or before the statute of limitations on your tax debt expires.

If you owe the IRS more than $50,000 it was more difficult to work out an installment agreement. The Taxpayer Relief Initiative changes this. It establishes a new simplified installment agreement for taxpayers who owe $50,000 to $250,000. All that is necessary is for the tax payer to agree to pay all you owe within the 10-year statute of limitations on IRS tax debts. There is no need for lengthy and intrusive financial statements. This option is available only if your case has not been assigned to an IRS revenue officer.

The Taxpayer Relief Initiative also makes life easier for you if you already have an IRS installment agreement. The IRS won’t automatically revoke your agreement if you miss one or two payments. Instead, it will add the missed payments to the agreement.

Finally, the IRS will now allow you to apply online to alter an existing installment agreement–for example, to change your monthly plan amount or monthly due date. But you can do this only if you have a direct debit installment agreement. This is where your monthly payments are automatically paid to the IRS from your bank account. Go to the IRS Apply Online for a Payment Plan web page.

The Taxpayer Relief Initiative also allows a taxpayer to request suspension of their tax debt due to hardship. “Hardship” means that if you pay the IRS you won’t have enough money left over to pay your reasonable living expenses.

You will probably have to provide the IRS with detailed financial information. If the IRS agrees you can’t pay, the IRS will classify your account as “currently not collectible” or CNC. You shouldn’t hear from the IRS again for six months at least. However, interest (and late payment penalties) still accrue on your tax debt.To request a temporary delay of the collection process or to discuss your other payment options, contact the IRS at 1-800-829-1040 or call the phone number on your bill or notice.