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Failure to meet your tax obligations has an ultimate price to pay which is penalties. The biggest fear any taxpayer has is the fear of being penalized. Considering that you are unable to fulfill your tax obligations due to financial hardships, being penalized is adding an insult to an already wounded person. There is, however, a way for such people to evade these penalties. This solution comes in the name of tax reliefs.
To keep off from being penalized when you have delayed in paying your taxes, you need to a tax relief. The different methods of tax relief are kept away from the public eyes by the tax firms as much as possible. Though unknown to many people, tax relief methods are very 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. Among the seven listed methods, below are three of the most effective methods of tax relief.
Tax relief can be awarded to a person that has been declared bankrupt. If an individual or an institution is declared bankrupt, the whole tax or part of it is exempted from them. 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. 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. 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. 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 third way of acquiring tax relief is partial pay agreements with the tax collector. 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. 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. Getting tax relief through these methods could be unknown but the methods are legitimate.