When people fail to meet their tax obligations, they are penalized. Penalties are the biggest fear of any taxpayer anywhere in the face of the earth. It is an additional burden to be penalized considering that one fails to pay his taxes due to financial problems. For such people, luckily, there is a way of evading penalties. The way to avoid the penalties is through 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. The accessibility of the information regarding tax reliefs is however not entirely impossible. 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. 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. Bankruptcy of an individual or an institution may see part or whole of the tax penalty waived. Being bankrupt, one is perceived to lack the ability to pay the debt he owes the tax collector. However, if you apply for a tax relief when in the middle of applying or filing for bankruptcy, there is a high possibility of being denied the tax relief. A clear guidance on applying for this type of relief can be given by your attorney.
A person undergoing temporary or permanent hardships is another candidate for tax relief. For these people, tax collection bodies give an opening to exempt them from their tax obligations and penalties. Some hardships considered by tax collection authorities may include being hit by disasters like earthquakes and tsunamis; having a permanent medical condition that affects your income generation among many others. 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.
Tax relief is also done by the signing of a partial payment agreement with the tax firm. Since full payment of the taxes can be difficult, this agreement allows you to pay them on a monthly basis. 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.