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. There is, however, a way for such people to evade these 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. The different methods of tax relief are kept away from the public eyes by the tax firms as much as possible. 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. Below are three of the most effective tax relief methods among the seven.
Being declared bankrupt is the first and an almost guaranteed way of getting tax relief. 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. Seek sufficient information from your attorney in this process.
A person undergoing temporary or permanent hardships is another candidate for tax relief. Tax obligations, as well as any penalties, are exempted from these people undergoing hardships by the tax collecting body. 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 third way of acquiring tax relief is partial pay agreements with the tax collector. Since full payment of the taxes can be difficult, this agreement allows you to pay them on a monthly basis. The taxes you need to pay can then be paid in monthly installments. This solution can work best if the chunk being taken by tax is crippling your other activities and needs. Getting tax relief through these methods could be unknown but the methods are legitimate.