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Tags: finance, tax relief, applying for tax amnesty
 With the way the economy has been going, it would not really be surprising if a lot of people hard hit by the downturn to either not file a return for one or even multiple years or to pad their expenses or deductions in order to lower their liabilities or increase their refunds if they are getting any.
If you’re one of these people then you should know that options are available for you in the form of Tax Amnesty and Voluntary Disclosure programs. If you are thinking of applying for tax amnesty or avail of voluntary disclosure programs then there are things you should understand about them.
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Both the tax amnesty and voluntary disclosure programs were designed to encourage you to file and pay for your back taxes. If you do this, the Internal Revenue Service may often reduce the penalties or waive them altogether. However, for you to avail of the waiver you would need to pay all your levy liabilities plus whatever interest has accrued by the program’s deadline.
At the same time you may need to put in writing a promise to pay your taxes properly and on time in the future. A Tax Amnesty program is a comprehensive tax relief program that typically has a short window of opportunity. The IRS basically wants to collect as much back taxes as possible in the shortest time possible that's why they offer tax amnesty to people.
And like I said earlier, they will usually waive the penalties if you file and pay your taxes during the tax amnesty period. But if you don’t avail of the amnesty you will be charged a larger penalty. On the other hand, a Voluntary Disclosure program encourages people to file and to pay their back taxes voluntarily.
If the state already sent you a letter asking you to file a return, or telling you that you owe more taxes, then you can’t be part of the Voluntary Disclosure program. You can do the program as long as you haven’t received any communication from the government—basically you don’t really know when your deadline to avail of the program will be so you need to do it as soon as possible if you want to use it.
What these two programs say is that the best answer is for you to file your returns, even if you haven’t done so in a long while. Just have copies of the last return you ever filed. Also have copies of all necessary forms and documents for the years that you did not file—W-2s and such.
You can either file the returns yourself or use a professional tax relief specialist. A good reason to use a specialist is that they can not only help you deal with the IRS and be your advocate if you need tax amnesty but they can also give you advise on preparing your returns with incomplete documentation.
At the same time they can also assist you in paying off your liabilities to the IRS as well as plan for the future. And if you are filing back taxes then you can only submit a paper filing—electronic filings are not allowed. I suggest you mail each return separately via certified post so you get proof the IRS received your documents.
If necessary, deliver the returns to the nearest IRS office and hand it in personally. It is a good idea to contact the IRS before they get a chance to contact you. If you do this you might get more leverage in dealing with them and you may be offered more leniency when you do file.
The government wants the money that’s due them that’s why they are open to working with you if that will help them attain that goal. The tax amnesty and voluntary disclosure programs are proof of that. Take advantage of that.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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