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Detaxify knows New York City. We started out in the Financial District; many of our clients are in New York and we’re here to help if you’re looking for NYC tax relief. We are New Yorkers, and we do business like New Yorkers walk; briskly, efficiently, and minding our business. That’s unless the IRS or New York State Department of Taxation and Finance is in your business, then we’re here to help.
Bronx, Brooklyn, Manhattan, Queens, or Staten Island; wherever you come from, Detaxify is ready to serve the fine New York community with any IRS or State tax matter.
New York State and Federal Back Taxes
Taxpayers from all across the country often fail to file their annual returns. There are a myriad of reasons, ranging from personal to medical. Whatever your reasons for falling behind, Detaxify is more than happy to catch you up.
We’ve written articles about New York State back taxes. We also wrote about whether New York City back taxes are different than from how it works with the State.
What Happens if I don’t pay?
You might have heard of the phrase “tax evasion,” with the most prominent example being Al Capone. Mr. Capone, a notorious crime lord, was only ever brought to justice for failing to file his taxes. The IRS can charge individuals with tax evasion, as willingly declining to file tax returns, or refusing to pay taxes owed is a federal criminal violation.
Does this mean the IRS is going to lock up everyone who doesn’t pay up? No, the IRS is more interested in getting it’s money than jailing up every Tom, Dick, or Harry who forgot to file. The IRS likes to save the tax evasion conviction for individuals running a large-scale illegal enterprise. For the average Taxpayer, the IRS has some other penalties they can add to your liability instead.
New York Tax Relief Resolutions
It’s very hard for someone’s tax history to be beyond repair. Our dedicated team in New York is trained and determined to see if you qualify for NYC tax relief for each individual case we take on. One of our first steps is to see if you qualify for any form of penalty abatement. This can often help trim down the outstanding balance to something much more manageable.
How can my penalties be abated?
There are four ways for you to qualify for any penalty abatement. These apply within the framework of the IRS.
- Reliance on inaccurate written advice by an IRS officer or employee
- Reliance on inaccurate written advice by a Tax Advisor
- Reasonable Cause
- First Time Abatement (FTA)
For most situations, reasonable cause or FTA will be that way to go. Within taxes owed to New York State, only reasonable cause is an option.
The IRS defines “reasonable cause” as life circumstances, beyond the control of the taxpayer, that affected their ability to file or pay taxes. Some examples include military service, unavoidable extended absence from the country, serious illness, death, significant family events, or even natural disaster.
What about as it pertains to NYC tax relief? Taxpayers usually owe New York State tax as well when they owe the IRS. Reasonable cause within the realm of New York State uses similar criteria used by the IRA.
First Time Abatement (this is only for the IRS) is available for Taxpayers who are current with all tax filings, have paid or arranged to pay any taxes due, and have not accrued any penalties for the past three years. FTA can only be used sparingly – usually once every three years.
What if I don’t qualify for abatement?
If your outstanding balance doesn’t qualify for any abatements, or you have reduced the balance as much as possible, it’s time to negotiate a collection option with the IRS. If your outstanding balance is less than $10,000, your best bet is to negotiate with the IRS directly. Any higher, and you should probably talk with a tax professional before moving forward.
Installment plans allow you to avoid the status of “default” and being in collections with both the IRS and New York State. They allow taxpayers who are unable to pay off their total balance to cut it down in monthly installments. Interest will continue to accrue — in New York State the level of interest is usually higher than the IRS. The Installment Agreement you are eligible for with the IRS depends on how much you owe. Tax Relief in New York City is a bit different when it comes to owing the state however.
Taxpayers who owe $10,000 or less can get on a “Guaranteed Installment Agreement”. If you owe more than $10,000 then it depends on a variety of factors, including the total amount owed, compliance history, and your assets in order to determine what type of Installment Agreement you are eligible for. If you owe $100,000 or more, it is highly recommended that you obtain representation. This ensures that you can obtain the best possible outcome. For New Yorkers, we’re here to help with NYC tax relief.
Guaranteed Installment Agreement: If your outstanding balance is $10,000 or less, the IRS is guaranteed to agree to an installment plan if you meet the following criteria:
- You filed your taxes
- You’ll pay off your balance in 36 months or less
- You haven’t filed or paid late in the past 5 years
- You’ve had no other installment agreements in the last 5 years
- You agree to file and pay on time for future tax years
Offer in Compromise
This resolution options is often marketed by less-reputable firms as a “guarantee.” Anyone who guarantees an OIC as a done deal may be simply after your money and fees. OICs are agreements between the IRS or New York State and the taxpayer to settle the liability for less than the outstanding liability. To read more about Offers in Compromise, visit our article here. Only roughly a third of submitted OICs are actually accepted by the IRS. With New York State, the criteria is not so well known publically.
Currently Not Collectible Status
This resolution option is a way to defer paying taxes until your financial situation improves, and if placed on this status, the IRS considers you non-collectible. Your monthly payments will be set to $0. To read more about CNC status, visit our article here. NYC tax relief does not include this as an option if you owe the State. New York State does not recognize CNC – and if you owe New York State more than $10,000, they may suspend your driver’s license.
In some cases, taxpayers can clear out most of their tax debt by filing for Chapter 7 bankruptcy. To go with this resolution option, there are some conditions that need to be met first.
- Your taxes owed must be income taxes.
- You did not commit fraud or willful tax evasion.
- Your debt must be at least 3 years old.
- You have filed your tax returns.
- Lastly, you must wait at least 240 days after your debt has been assessed by the IRS.
If you can check off all these boxes, bankruptcy can be a viable option. If it is, we recommend consulting with a bankruptcy attorney.