Failure to meet your tax obligations has an ultimate price to pay which is penalties. Any taxpayer is always afraid of tax penalties. Normally, a person is unable to pay his taxes due to financial problems and being penalized is a burden on top of another burden. These people, however, can have a way of evading the penalties. This solution comes in the name of tax reliefs.
When your tax payments are delayed, the only way to evade the penalties is by tax relief. Making these tax relief methods publicly known is highly avoided by tax collection authorities. But being away from the public knowledge does not imply that they are not accessible. There are seven established methods of tax relief namely bankruptcy, hardships, making partial payments, streamline pay agreements, penalty abatement, offer in compromise and the amendment of own tax obligation. Among the seven listed methods, below are three of the most effective methods of tax relief.
The first and the surest way of getting a tax relief is bankruptcy. Part or the whole of a person’s tax debt may be lifted if a person or institution is declared bankrupt. Being bankrupt, one is perceived to lack the ability to pay the debt he owes the tax collector. Caution should, however, be taken because tax relief may be denied to a person applying to get tax relief when in the process of filing for bankruptcy. To know when and how to file for relief for bankruptcy, you may need to consult your attorney.
The other way of getting tax relief is when you are undergoing temporary or permanent hardships. The tax regulation body has a rare opening for people undergoing hardships to be exempted from their tax obligations or pending penalties. When one is hit by disasters like earthquakes and tsunamis, having a permanent medical condition that affects your income generation among others, they may be considered for a hardships tax relief. The taxpayer in these situations is supposed to file an application for tax relief and quote hardships as the point of reference on the application form.
The partial pay agreement with the tax collection firm is the third method of obtaining a tax relief. Through the agreement, a taxpayer is allowed to make monthly payment of the taxes he has in debt rather than having to make a payment of the tax arrears in full. Once accepted, you will then be able to make little agreed minimum payment of your owed taxes. If your tax payment is reducing your ability to meet your basic needs, this is the best method to get a tax relief. Though very little is known about this and the other methods of obtaining tax reliefs, all of them are genuine ways of getting tax reliefs.