When people fail to meet their tax obligations, they are penalized. Any taxpayer is always afraid of tax penalties. It is an additional burden to be penalized considering that one fails to pay his taxes due to financial problems. These people, however, can have a way of evading the penalties. The way to avoid the penalties is through tax reliefs.
Tax relief are ways of keeping off penalties in the case of delayed tax payments. Tax collecting authorities try as much as possible to keep these methods of tax relief from the public. But being away from the public knowledge does not imply that they are not accessible. Seven methods of tax relief known to work in avoiding tax penalties are bankruptcy, hardships, making of partial payments, streamline pay agreements, penalty abatement, offer in compromise and the amendment of own tax obligation. Three of the most effective methods of getting tax relief among the seven are cited below.
Tax relief can be awarded to a person that has been declared bankrupt. Part or the whole of a person’s tax debt may be lifted if a person or institution is declared bankrupt. The interpretation of this concept is that the person has no way of paying the debt he owes the tax collection authority. 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. Seek sufficient information from your attorney in this process.
Tax relief can also be gotten by people who 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. Circumstances that may qualify as hardships may include being hit by disasters like earthquakes and tsunamis, having a permanent medical condition that affects your income generation among many more in that line. Being in such a situation, one should file for a tax relief in order to be exempted from the pending penalties and other tax obligations.
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. The taxes you need to pay can then be paid in monthly installments. When tax payment takes a large amount of your income making you unable to meet your other needs or run your business, this is the method to use. Getting tax relief through these methods could be unknown but the methods are legitimate.