Do-It-Yourself? Tax Settlement
This Article On Tax Settlement Was Written By Bob Vogel NMLS 1446953
With the advent of TurboTax, mostly everyone can become a do-it-yourself tax preparer. But as we all know, with any do-it-yourself project, there are sometimes mishaps or consequences of not being fully informed or prepared. Most people can do their own tax returns using some sort of tax software, however, the more complicated the return, the more likely one will make a mistake.
So What Happens When You Make A Mistake?
Most of the tax software programs run error checks and detect any red flags. These processes are not fool proof. So what happens if you make a mistake?Well, many times if you make a calculation error, the IRS will correct the errors for you and will send you a notice. Hopefully the error is not material. More than likely, the IRS will issue a proposed assessment and allow you time to agree or disagree with their revised calculations. Once the assessment is final the IRS will send you a bill. If you owe more money than you can pay the IRS has many options available.
According to the IRS, the Fresh Start Program, tax settlement, is for taxpayers who need to pay back taxes and avoid summary collection actions such as tax liens and/or bank levies.
The features of the IRS Fresh Start Program are:
- The new threshold for the IRS to file a tax lien is $10,000, so this means that if you owe less than $10,000, the IRS will most likely not file a federal tax lien against you.
- Installment payment agreements have been extended to 72 months from a previous 60 month plan, for taxpayers who owe less than $50,000.
- Financial statements are not needed and a payment plan can be set up entirely online and is virtually automatic provided the taxpayer is not currently on an installment payment agreement.
- For taxpayers who owe more than $50,000, financial statements need to be provided, however, if a taxpayer owes more than $50,000, they have the option of paying their liability down to $50,000 so that they may qualify for the payment plan without providing financial statements to the IRS.
- Offer in Compromise-
- An Offer in Compromise is generally considered when the offered amount is the most that the IRS can expect to collect or receive from the taxpayer over a reasonable period of time.
- Does this sound vague? What is the IRS looking for when you apply for an Offer in Compromise?
- They are looking at income, all sources, for the entire household, including earned income, social security, disability, rent received from roommates, social services benefits such as food stamps, and any other source of financial assistance.
- They will want to look at your bank accounts, run asset checks, and they want to see if you own real property and whether or not you have equity in your home.
- It is at the discretion of the IRS and nobody really knows the magic formula, but why not apply?
- The most that could happen is they say no.
- The IRS has an Offer in Compromise pre-qualifier on their website where you enter in your financial information and your monthly debt payment.
You can find the Offer in Compromise Pre-qualifier tool here: http://irs.treasury.gov/oic_pre_qualifier/
Why Should I Pay My IRS Debt?
If you owe money to the IRS and you are not on a payment plan towards paying the liability, the IRS can and will take summary collection actions such as bank levies, federal tax liens, earnings withhold orders, and many other drastic collection actions. Additionally, if you have unpaid tax liens and owe the IRS money, this can definitely impact your ability to purchase a new home or refinance.
About The Author Of Tax Settlement Bob Vogel Of CrossCountry Mortgage
The author of this article, Tax Settlement, was written by Bob Vogel NMLS 1446953 who is a senior writer for Gustan Cho Associates Mortgage and Real Estate Informational Center and is a licensed mortgage loan originator for The Gustan Cho Team at CrossCountry Mortgage and is based in Oak Brook Terrance Illinois of CrossCountry.
- CrossCountry Mortgage is a national Fannie Mae, Freddie Mac, Ginnie Mae Direct mortgage banking firm headquartered in Brecksville, Ohio with offices throughout the United States and licensed in all 50 states.
- Bob Vogel is an expert in all areas of mortgage lending and his expertise is in FHA Loans, VA Loans, USDA Loans, and Conventional Loans with no lender overlays.
- Bob Vogel has a national reputation in helping mortgage borrowers who had prior credit issues and had a hard time qualifying for home loans due to prior credit issues and/or debt to income ratio issues.
- A large percentage of Bob’s borrowers are folks who could not qualify at other banks and mortgage lenders due to their lender overlays.
- A lender overlay is when a bank or mortgage lender has higher credit requirements than those of FHA or Fannie Mae.
- For example, FHA minimum credit score requirements for a home buyer to purchase a home is 580 FICO.
- However, most banks and mortgage lenders may have FHA Lender Overlays where even though FHA only requires a 580 FICO credit score, they may require a 640 FICO credit score.
- Bob Vogel, due to not having any lender overlays on FHA Loans, can approve, originate, and fund borrowers who just meet the minimum
- FHA credit score requirements and other FHA Guidelines .
- CrossCountry Mortgage require 580 Credit Scores on VA Loans and has no lender overlays.