Do you owe the Internal Revenue Service or the Arizona Department of Revenue taxes? If you do not pay your taxes before the deadline, which is set, the government is able to take several actions against you. These actions are to punish you for not paying them in time. During this process, the government will collect the amount that you own them.
Negotiating Your Tax Debt
Tax laws can be very complicated for those who do not regularly work with them. There is no standard formula which can be used to determine how much will be owed and what penalties you will face or the debt relief mechanism you qualify for. Almost all of the factors related to this will be negotiable.
Knowing how to negotiate is a huge asset to anyone facing massive amounts of debt, but this skill is useless when you do not have leverage. Leverage is what a person can use during the negotiation process to help push the other side into making concessions. Unfortunately for those in massive amounts of debt, they don’t have any leverage as they are the ones that owe money.
A tax debt relief lawyer will generally have the best negotiation skills than other types of tax professionals due to their background and training. This is why many people use them to negotiate on their behalf in tax courts. The IRS does not want to fight an experienced attorney in court. This gives you some leverage.
Does Debt Settlement Have Tax Consequences?
It can be incredibly helpful to use tax relief programs, but only when they are being used correctly. Forgiven debts will be classed as a person’s income. This means that in most cases, forgiven debts will be taxable.
This means that if you borrow $1000, you will not have to pay tax on the amount because it is not income and you are going to repay the loan. If you are able to repay $100 and not the other $900, once the creditor stops trying to collect payment the $900 has technically been given to you. At this point, the $900 will be classed as your income and the IRS will apply tax to this.
This is why it is important that you keep track of any forgiven debt and ensure you report it as income. When you do this, the amount of tax you have to pay will generally be less than the forgiven debt amount. Debt settlement will not completely relieve you of your obligation, but the results will be favorable.
Hiring A Lawyer To Help
A tax lawyer will be able to tell you about the taxes on debt settlements. They will also be able to tell you about the alternatives and if there are any exceptions that you should know about. This could include bankruptcy or insolvency. Of course, there are other solutions that the lawyer will be able to help you find and use.
Hiring a tax lawyer is recommended, as they will be able to help with a range of different tax problems and tell you about different tax solutions. They also offer you a broader range of solutions than other tax professionals. Of course, you will need to ensure that the lawyer you choose to work with has the correct legal knowledge and negotiation skills to help you.
It is important to note that all taxpayers will have the right to have a lawyer represent them as per the Bill of Rights. Consulting with a lawyer can ensure that you do not have to reach court at all. You should be able to contact an AZ tax lawyer for a free consultation if you are worried about your IRS debt and are looking for debt relief.