Los Angeles residents have one of the highest tax burdens in the country when you add up federal, state, and local taxes in Southern California. If you run into financial trouble in L.A. and can’t pay your back taxes, penalties and interest add up and your tax debt will keep growing.
Whether you live in L.A. County or Orange County, tax debt help is available for people who live and work in the Los Angeles area. When you have tax debt, it’s important to communicate with the IRS and respond to balance due notices and letters.
Here’s what you need to know about IRS tax debt in Los Angeles and tax relief programs in general.
What Tax Debt Relief Can I Get in Los Angeles?
From DTLA to Hollywood, Beverly Hills to Santa Monica, East LA to the valleys, Los Angeles residents can get federal tax debt help from the IRS Fresh Start Program and other federal tax relief programs.
Los Angeles Residents Can Apply for the IRS Fresh Start Program
The IRS Fresh Start Program is a collection of IRS tax relief programs, each created to address a specific tax debt problem. Under the Fresh Start Program, you can set up a monthly Installment Agreement, submit an Offer in Compromise, apply for Currently Not Collectible status, ask for Innocent Spouse Relief, or see if you qualify for tax Penalty Relief.
Set Up an IRS Installment Agreement
An IRS Installment Agreement lets you pay off your tax debt in smaller monthly payments. The IRS looks at your household income in Los Angeles and your expenses to determine a fair monthly payment amount.
The benefit of an Installment Agreement is that in many cases, it’s easy to qualify for. Often, you don’t have to prove you have a financial hardship.
Submit an Offer in Compromise
An Offer in Compromise (OIC) lets you pay off your full tax debt for less than you actually owe. Your exact offer amount depends on your ability to pay based on your income and expenses living in Los Angeles. Like with an Installment Agreement, the IRS allows you to pay your OIC amount over a number of months. You can choose to pay the accepted offer amount over five months (and sometimes over 24 months).
The IRS often approves an Offer in Compromise when it believes you have a legitimate financial hardship that is likely to last a long time.
Request Currently Not Collectible Status
The IRS offers Currently Not Collectible status to delinquent taxpayers with temporary financial hardships. This status doesn’t forgive your federal tax debt, but it delays collection efforts by the IRS until your financial situation improves.
Ask for Innocent Spouse Relief
If you live in the L.A. area, filed a joint return, and now owe back taxes because of something your spouse did that you were unaware of, you can file for Innocent Spouse Relief. If the IRS approves, you will be relieved of your spouse’s tax debt.
Reduce IRS Penalties
The IRS also offers Penalty Relief through its First Time Penalty Abatement and Reasonable Cause programs. If you made a good-faith effort to pay your taxes on time but couldn’t because of circumstances beyond your control in Los Angeles — financial difficulties or lack of awareness of a particular tax debt, for instance — you can ask the IRS to remove or reduce your penalties.
I live in Los Angeles. What if Need More Tax Relief Help?
At Wiztax, while we have clients in almost every state, we are based in Los Angeles! Call us at 866-568-4593 or get started for free so we can tell you exactly how we can help with these options. We never charge for ‘investigations’ or consultations so call or schedule a call today.
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