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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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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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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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$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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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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Office Hours:
Mon - Fri: 10AM to 5PM
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Phone:
(425) 998-7295

Fax:
(425) 420-2695

Email:
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1500 Benson Rd. S #203
Altitude Business Center
Renton, WA 98055

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