Consider a Negotiated Monthly Tax Payment Plan or a Settlement with the Indiana Department of Revenue
INDIANAPOLIS, IN, September 15, 2021 /24-7PressRelease/ — Indiana taxpayers who are facing an outstanding tax liability with the Indiana Department of Revenue (DOR) have some options for receiving relief from the tax bill. Taxpayers often are unaware of these rules, leaving them unclear on their best options for making back tax payments.
By hiring an experienced Indiana tax resolution attorney, state taxpayers can learn more about which steps they have available to make back tax payments in the most beneficial manner for them.
“By understanding all of their options for making payments of back taxes, taxpayers can find an option that fits in their budgets,” Indianapolis-based tax attorney and CPA Jerry E. Smith said. “Making payments on back taxes can be a crippling burden without the right relief plan in place.”
By offering payment options beyond making a lump sum payment, the Indiana DOR hopes to make it easier for taxpayers to reduce the balance on the tax bill without causing significant financial problems for them.
The Indiana DOR wants to receive the tax money owed, but it does not want to create financial hardship that leaves the taxpayer facing a potential bankruptcy situation. It uses a variety of back tax payment relief options to achieve this goal.
The state tax authority gives Indiana taxpayers five options for taking care of an outstanding tax bill.
Lump-sum payment. Taxpayers always have the option of making a payment on the back taxes in a single payment. However, this is not practical for many taxpayers.
Payment plan. Indiana allows taxpayers to set up a monthly payment plan to eliminate the tax bill a little bit at a time. Taxpayers must have a balance of $100 or greater to qualify. They can spread the payments over a period as long as 36 to 60 months. However, the DOR will add a penalty to the total liability as part of enacting the payment plan.
Offer in Compromise Program. The DOR’s Offer in Compromise (OIC) Program involves negotiating a settlement between the taxpayer and the DOR for a smaller amount than the current tax balance. In some cases, the DOR may completely waive the taxes owed. To qualify for OIC, taxpayers will have to show an inability to use the monthly payment program.
Hardship Program. When facing significant financial hardship, a taxpayer may be able to receive a waiver from the DOR that pushes back the due date of the tax liability. This program usually applies when an Indiana taxpayer has suffered some sort of medical hardship or disability. A sudden unemployment situation or a forced job change at a significantly lower salary also could result in a qualifying hardship.
Innocent Spouse Relief. If the outstanding tax bill relates to one spouse’s providing false information on the tax return, and if the other spouse had no knowledge of this lie, the innocent spouse may be able to receive exemption from any obligation for the outstanding tax liability.
For taxpayers, trying to determine whether they qualify for any of these programs can create some confusion, Smith said. However, to receive the greatest level of benefit from these tax relief programs, it’s important to select the correct program for each taxpayer’s individual situation.
“Hiring a tax liability attorney is almost like an investment over time,” Smith said. “With the help of a professional, you’ll be certain you’re making the right choice. You’ll avoid additional expense versus making a wrong choice on your own and having to start over later.”
You may also be in a position where you are concerned about past taxes you have not paid and the DOR is not yet aware of those unpaid taxes. In this situation, there is a clear advantage to working with a tax attorney, as opposed to a Certified Professional Accountant (CPA). You can rely on attorney-client privilege to keep that information private, which is in your best interest.
However, when the DOR is aware of your unpaid taxes, they must be addressed. “It is important to begin dealing with the back tax situation as quickly as the taxpayer learns about it,” Smith said. Hiring a professional is a good first step. Waiting only causes the issue to grow in severity. The tax problem will not disappear on its own.
“Taxpayers need to be proactive in dealing with back taxes, and a professional can help them do this successfully,” Smith said. “Ignoring the problem can cause the accrual of penalties and interest, increasing the tax bill.”
Attorney CPA Jerry E. Smith practices bankruptcy law and tax resolution. Smith’s practice focuses on representing consumer debtors and assisting them in getting a fresh start by reorganizing or eliminating their debt and attempting to put them in the best financial position possible.
Mr. Smith has been practicing law since March 1, 2009. Before that, he was and still is a real estate investor. He also previously worked as a Cost Accountant, Financial Analyst, and Internal Auditor for two large multi-billion-dollar international consumer product companies. Smith maintains an active CPA license.
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