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Should I Pay Off IRS Taxes With a Credit Card?

Paying taxes with a credit card may seem like an easy way to resolve your tax debt, but there are several factors to consider before making this decision.

One of the main benefits of paying taxes with a credit card is that it can help you resolve your tax debt quickly. By using a credit card, you can make a payment to the IRS right away and avoid any potential penalties or interest charges that may accrue if you are unable to pay your taxes on time. Additionally, many credit card companies offer rewards or cash back for using the card, which could help you earn some extra money while paying off your tax debt.

However, there are also several downsides to consider before paying taxes with a credit card. One of the main disadvantages is that credit card companies typically charge a processing fee for each transaction. This can add up quickly, especially if you owe a large amount of taxes. In some cases, the processing fee can be as high as 2-3%. Additionally, credit card interest rates can be quite high, which means that if you are unable to pay off your tax debt in full, you may end up paying a lot more in interest charges over time.

Another important consideration is the impact on credit score. paying taxes with credit card can have a negative effect on your credit score. Because paying taxes with a credit card is considered a cash advance, it is often not included in the credit utilization ratio which is a major factor in determining your credit score. Additionally, the interest rate for cash advances is typically higher than for regular credit card purchases. So, if you're unable to pay off your credit card balance in full, you could end up with high interest charges and a lower credit score.

Furthermore, there are other payment options, such as installment agreements, that you can consider before paying taxes with a credit card. An installment agreement is a payment plan that allows you to pay off your tax debt over time. It's important to consider all your options and choose the one that best fits your financial situation.

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What is an IRS Offer in Compromise (OIC)?

An Offer in Compromise (OIC) is a program administered by the Internal Revenue Service (IRS) that allows taxpayers to settle their tax debt for less than the full amount they owe. The program is designed to provide a way for taxpayers who are unable to pay their tax debt in full to resolve their tax problems and become compliant with their tax obligations.

To qualify for an OIC, a taxpayer must demonstrate that they are unable to pay their tax debt in full, and that the amount offered in compromise is the most the IRS can expect to collect within a reasonable period of time. The IRS will consider a taxpayer's income, expenses and assets when determining their eligibility for an OIC.

There are two types of OIC: a lump-sum cash offer and a short-term payment plan offer.

  1. Lump-sum cash offer: Under this option, a taxpayer makes a one-time payment to the IRS in exchange for the IRS agreeing to forgive the remaining balance of the tax debt. This option is typically for those taxpayers who are able to make a lump-sum payment and want to resolve their tax debt quickly.

  2. Short-term payment plan offer: Under this option, a taxpayer agrees to pay the IRS a certain amount of money over a period of time in exchange for the IRS agreeing to forgive the remaining balance of the tax debt. This option is typically for those taxpayers who are unable to make a lump-sum payment and want to pay off their tax debt over time.

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What is the IRS Fresh Start Initiative?

The IRS Fresh Start Initiative is a program that was launched by the Internal Revenue Service (IRS) to help taxpayers who are struggling to pay their taxes. The program aims to provide taxpayers with more flexible payment options and increased access to hardship relief. The initiative has several key features, including:

  1. Increased Income Tax Return Filing Thresholds: The Fresh Start Initiative increased the income thresholds for taxpayers who are required to file a tax return. This means that more taxpayers may now be able to avoid filing a tax return and paying taxes altogether.

  2. Expanded Installment Agreement Eligibility: The Fresh Start Initiative also expanded the eligibility for installment agreements. Under this program, more taxpayers may be able to enter into a payment plan with the IRS to pay off their taxes over time. Additionally, the IRS has reduced the minimum monthly payment for certain installment agreements, making them more affordable for taxpayers.

  3. New Hardship Relief: The program has also added new hardship relief measures for taxpayers who are unable to pay their taxes. The IRS will consider the individual's financial situation, including the taxpayer's income, expenses and assets, to determine if they qualify for hardship relief.

  4. Lien Filing and Release Thresholds: The Fresh Start Initiative raised the dollar threshold for the filing of a Notice of Federal Tax Lien and expedited the process for releasing a lien once the tax debt is satisfied. This will help taxpayers to avoid some of the negative credit impacts that come with a lien.

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How to Get Out of IRS Debt

If you find yourself owing money to the Internal Revenue Service (IRS) for unpaid taxes, it can be a stressful and overwhelming situation. However, there are several ways to get out of IRS debt and resolve your tax problems. In this blog post, we'll discuss some strategies for getting out of IRS debt, including paying off the debt in full, setting up a payment plan, and settling the debt for less than what you owe through the Offer in Compromise (OIC) program.

  1. Pay off the debt in full: The easiest way to get out of IRS debt is to pay it off in full. If you have the money to do so, you can simply write a check or make a payment online to the IRS. If you're unable to pay off the entire debt at once, you may be able to set up a short-term payment plan, known as a “partial payment installment agreement,” to pay off the debt in full over a period of time.

  2. Set up a payment plan: If you are unable to pay off the debt in full, you may be able to set up a payment plan with the IRS. This can be done through an installment agreement, where you pay off your debt in monthly payments over a period of time. There are several types of installment agreements, including regular installment agreements, streamlined installment agreements, and partial payment installment agreements. Depending on your income, you may be able to get a reduced payment plan.

  3. Offer in Compromise: The Offer in Compromise (OIC) program is a way to settle your tax debt for less than the full amount you owe. The IRS will consider your ability to pay, income, expenses and assets to determine if you qualify for this program. This is a good option for those who are unable to pay their tax debt in full or through a payment plan. However, it's important to note that the acceptance rate for OIC is low and the process is quite complicated.

  4. Seek Professional Help: It can be helpful to seek out professional help from a tax attorney or CPA to navigate the complex process of resolving IRS debt. They can help you understand your options and assist you in dealing with the IRS.

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What is the Difference Between a Tax Attorney and a CPA

A tax attorney and a certified public accountant (CPA) are both professionals who specialize in tax-related matters, but they have different areas of expertise and handle different types of tasks.

A tax attorney is a lawyer who has specialized in tax law. They have a Juris Doctor (JD) degree and are licensed to practice law. Tax attorneys are experts in interpreting tax laws and regulations and can help individuals and businesses navigate the complex legal system. They can help with a wide range of tax-related issues, including:

  • Representing clients in tax disputes with the Internal Revenue Service (IRS) or state tax agencies
  • Advising clients on tax planning and compliance
  • Assisting clients with tax-related transactions, such as mergers and acquisitions
  • Helping clients with international tax issues
  • Dealing with criminal tax matters

In contrast, a CPA is an accountant who has passed the Uniform CPA Examination and met other state requirements. CPAs are experts in accounting and finance, and are responsible for preparing and reviewing financial statements, as well as providing accounting and tax services. They can help with a wide range of financial matters, including:

  • Preparing and filing tax returns for individuals and businesses
  • Providing advice on tax planning and compliance
  • Assisting with financial forecasting and budgeting
  • Reviewing and analyzing financial statements
  • Providing assurance services (such as audits)

In summary, Tax Attorneys are specialized in interpreting tax laws and regulations and can help individuals and businesses navigate the complex legal system, and handling criminal tax matters, on the other hand, a CPA is more focused on providing accounting and tax services. It's important to note that a CPA can also have JD degree and have knowledge of tax laws and regulations, but they will mostly handle accounting and finance matter and not legal matters.

When choosing a professional to help with tax-related matters, it's important to understand the differences between a tax attorney and a CPA and to select the one that best fits your needs. In some cases, it may be necessary to work with both a tax attorney and a CPA. For example, if you are facing a tax dispute with the IRS, you may want to work with a tax attorney who can represent you in court and a CPA who can assist with the financial and accounting aspects of the case.

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Choosing the Right IRS Tax Attorney for Your IRS Tax Debt

Choosing the right IRS tax attorney is an important decision, as you want someone who can help you navigate the complex and often confusing world of tax law. Here are a few key things to consider when looking for a tax attorney:

  1. Experience: Look for an attorney who has significant experience handling tax matters, particularly those similar to your own. This will ensure that they have the knowledge and skills needed to help you resolve your tax issues.

  2. Credentials: Check to see if the attorney is a member of the American Bar Association's Taxation Section or the National Association of Tax Professionals. This can be an indication that they stay current with the latest tax laws and have a strong understanding of the tax code.

  3. Reputation: Look for an attorney who has a good reputation in the legal community. This can be determined by asking for references from other clients, or by checking online reviews.

  4. Communication: Choose an attorney who is easy to communicate with and who will keep you informed throughout the process. You want someone who will take the time to explain things in a way you can understand and will be responsive to your questions and concerns.

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How to Take Advantage of the IRS Back Tax Forgiveness Program or Offer in Compromise (OIC)

The IRS offers several programs to help taxpayers resolve unpaid back taxes and get back on track with their tax obligations. One of the most popular of these programs is the IRS back tax forgiveness program, also known as the Offer in Compromise (OIC) program. In this blog post, we will explain what the IRS back tax forgiveness program is, who is eligible for it, and how to apply for it.

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liability for less than the full amount owed. The purpose of the OIC program is to give taxpayers who are unable to pay their taxes in full the opportunity to resolve their tax debt and become compliant with their tax obligations. The OIC program is considered a last resort after all other payment options have been exhausted or aren’t feasible.

To be eligible for an OIC, taxpayers must first be compliant with all of their filing and payment requirements. This means that they must have filed all required tax returns and made all required estimated tax payments for the current year. Additionally, they must be current with their federal tax deposits, if they are a business owner, and have made all required estimated tax payments.

The IRS will consider several factors when determining a taxpayer's eligibility for an OIC, including their ability to pay, their income, their expenses, and the value of their assets. Generally, taxpayers who can demonstrate that they do not have the financial means to pay their tax debt in full and that an OIC is their best option for resolving their tax debt will be considered for the program.

To apply for an OIC, taxpayers must complete and submit Form 656, Offer in Compromise, along with a non-refundable application fee and an initial payment, called a "proposal." The application fee is $205, or it may be waived for low-income taxpayers. The proposal is a percentage of the total amount owed and is based on how much the taxpayer can pay at the time of the offer, and how they intend to pay the remainder of the offer.

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What Does a Tax Attorney Do to Help Clients Get Tax Debt Relief

A tax controversy attorney is a legal professional who specializes in helping clients navigate the complex world of tax law and resolve disputes with the IRS. If you find yourself facing a significant tax debt, hiring a tax controversy attorney can be a wise move to help you get tax debt relief. In this blog post, we will explain what a tax controversy attorney does and how they can help you get tax debt relief.

One of the primary responsibilities of a tax controversy attorney is to help clients understand and comply with their tax obligations. This can include providing guidance on tax planning, helping clients understand the tax implications of business or personal transactions, and assisting with tax return preparation. If a client is facing a tax audit or other investigation by the IRS, a tax controversy attorney can help them navigate the process and negotiate with the IRS on their behalf.

In addition to helping clients understand and comply with their tax obligations, a tax controversy attorney can also help clients resolve disputes with the IRS. If a client has received a notice of deficiency or is facing an enforcement action such as a levy or lien, a tax controversy attorney can help them contest the IRS's determination and negotiate a resolution. This may involve appealing the determination to a higher level within the IRS or to the United States Tax Court.

When it comes to resolving disputes with the IRS, a tax controversy attorney can help clients explore a wide range of options to get tax debt relief. For example, if a client is facing a significant tax debt, the attorney may be able to negotiate a payment plan or an offer in compromise to settle the debt for less than the full amount owed. If a client is unable to pay the full amount of their tax debt, the attorney may be able to help them qualify for Currently Non Collectible status, which allows them to temporarily postpone collection of the debt.

Another important role of a tax controversy attorney is to help clients understand the appeals process and represent them at administrative appeals. This includes preparing written and oral arguments, managing the discovery process, and representing clients at appeal hearings, mediation, and other proceedings. A Tax attorney also help with understanding your rights as a taxpayer, in regards to what the IRS can and cannot do.

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Recommendation Received on Alignable.com by Ken Kinnear of SuperFix, LLC

5-Star Law Firm Review - Renton, WA - Alignable Ken Kinnear
I retained Theresa to represent me with an appeal and appearance at the US Tax Court. I retained her at the time the IRS had just completed an audit of my personal and business returns covering a 4 year period, where the IRS claimed I owed over $300,000. After a year of work on my behalf, Theresa successfully negotiated a complete and final settlement with the Tax court for $521, a truly spectacular result. She worked tirelessly and produced amazing results resolving complicated issues. I highly recommend her!
- Ken Kinnear (Alignable)
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$3,728,600 in IRS Tax Debts Reduced

$3,718,600 in IRS Tax Debt Relief for Clients of Law Office of Theresa Nguyen, PLLC

At Law Office of Theresa Nguyen, PLLC, our legal team prides itself in being able to create substantial impact and major results for our clients.  We are proud to announce that as of August 24th, 2018, our law firm and tax attorneys helped our clients with IRS back tax debt save $3,728,600 in owed back taxes.

Results like this is the reason why we enjoy the representing individuals and small business owners to help them settle their disputes with the IRS, DOR or LNI.
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Theresa Nguyen J.D. LL.M. Presents 'Advising the Client with IRS Tax Debt' on Behalf of LawPro CLE

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Theresa Nguyen J.D. LL.M. once again joins forces with LawPro CLE, a national continuing legal education company from Covington, to share knowledge and wisdom with her fellow peers. This time, it's to present 'Advising the Client with IRS Tax Debt' in a live broadcast on Friday, December 1st, 2017 at 10:00 am PST or on-demand recording.
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Taxpayers Needed a Tax Attorney to Address $570,000 in IRS Unpaid Taxes, Interests and Penalties.

Dave and Selma are long into their retirement years, struggling financially, and longed to enjoy the final moments of their lives without worry. When he was younger, Dave made his fortune starting and operating many successful enterprises. Generating revenue was never a problem for him. However, bookkeeping and accounting was his weakness.

Now, he owed nearly $300,000 in unpaid taxes, interest and penalties. His wife was also separately accessed for close to $270,000. Recently, Selma was diagnosed with a severe medical condition and the burden of dealing with the IRS was becoming too much for the both of them.
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