Low-income families., while low-interest loan programs and. For research on the importance of asset development and debt relief among low-income. There are federal benefit programs. What we're saying about debt Consumer. Find out what help you can get if you are on a low income. This could be help with living costs, rent. Debt Settlement Programs. Debt settlement programs typically. Dealing with Debt; Donating to Charity. Under the provisions of the Servicemembers Civil Relief Act. Chapter 13 allows people with a steady income to keep. Tax Relief Companies . Call for a free consultation. If you pay them an upfront fee, which can be thousands of dollars, these companies claim they can reduce or even eliminate your tax debts and stop back- tax collection by applying for legitimate IRS hardship programs. The truth is that most taxpayers don't qualify for the programs these fraudsters hawk, their companies don't settle the tax debt, and in many cases don't even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don't provide refunds, and leave people even further in debt. Some taxpayers who filed complaints with the Federal Trade Commission (FTC) reported that, after signing up with some of these companies and paying thousands of dollars in upfront fees, the companies took even more of their money by making unauthorized charges to their credit cards or withdrawals from their bank accounts. If you owe back taxes and don't know how you're going to pay the debt, the FTC, the nation's consumer protection agency, says don't panic, take a deep breath, and consider your options. If you are having trouble paying bills, it's often better to try to work out a payment plan with the creditor yourself than to pay someone else to negotiate a plan for you. The same is true when you owe money to the IRS or your state comptroller. IRS Help for Taxpayers. If you owe taxes, but can’t pay the IRS in full, consider submitting an Installment Agreement Request (Form 9. In certain situations, the IRS can’t deny a request for an installment agreement if you owe less than $1. That said, you should still pay as much as you can with the return. You will be charged interest and possibly a late payment penalty on any tax not paid by its due date, even if your request for an installment agreement is approved. You can avoid IRS collection notices and actions, like a Notice of Federal Tax Lien or an IRS levy, by establishing an installment agreement upfront and making your installment payments. If you owe back taxes, there are several IRS tax relief programs to help, including the agency’s Fresh Start initiative: An Installment Agreement is generally available to people who can't pay their tax debt in full at one time. The program allows people to make smaller monthly payments until the entire debt is satisfied. Under its Fresh Start initiative, the IRS raised the threshold for streamlined installment agreements from $2. Taxpayers who owe less than $5. IRS and don’t have to complete an IRS Collection Information Statement (Form 4. A, 4. 33- B or Form 4. F). An Offer in Compromise (OIC) lets taxpayers permanently settle their tax debt for less than the amount they owe. The OIC is an important tool to help people in limited circumstances; taxpayers are eligible only after other payment options have been exhausted. Under its Fresh Start initiative, the IRS expanded the OIC program to cover a larger group of struggling taxpayers. However, the IRS will not accept an offer if it believes the liability can be paid in full as a lump sum or through an installment agreement. The IRS offers guidance on choosing a tax professional for an OIC on its website. In very limited circumstances, the IRS may offer penalty abatement to people who haven't paid their taxes because of a special hardship. If the taxpayer meets very narrow criteria, the IRS may agree to forgive the penalties. Interest abatement is even more limited and rarely provided. While these programs may eliminate penalties or interest, you still owe the taxes. If a tax relief company promises it can eliminate interest and/or penalties for you, be wary: there is limited relief available, no matter who represents you before IRS Collections. Their services should include a face- to- face meeting with you where they explain your options and their fee structure. According to the IRS, you can apply for an Installment Agreement, OIC, or penalty or interest abatement without the help of a third party. If you prefer third- party assistance in negotiating with the IRS, only certain tax professionals — Enrolled Agents (federally- authorized tax practitioners who can represent taxpayers before all administrative levels of the IRS), Certified Public Accountants (CPAs), and attorneys — have the authority to represent you . Their services should involve a face to face meeting where they explain your options and their fee structure. If you are asked to make an upfront payment for representation in a tax collection matter, carefully review the refund policy before signing any agreement. Also check to see if a default billing rate — a flat rate applied to the work of all employees at a firm, not only the tax professionals — will apply if you cancel the company’s services. A high default billing rate may quickly use up a large portion of your upfront payment, even early in the representation. Contact the Taxpayer Advocate Service, an independent organization within the IRS, for free help if you are having tax problems that you haven’t been able to resolve yourself, if your problems are causing financial difficulties for you or your business, or you face an immediate threat of adverse collection action by the IRS. Call 1- 8. 77- 7. State Tax Relief Programs. The process for tax settlements with the states is very similar to the process with the IRS, although it varies from state to state. In some states, for instance, a taxpayer's penalties can be waived, but interest can't. In other states, interest can be waived, but penalties can't. And in some states, legitimate tax debt can't be reduced at all. For more information, contact your state comptroller. For a state- by- state listing, visit the National Association of State Auditors, Comptrollers and Treasurers (NASACT) at nasact. Problems with Tax Relief Companies and Representatives. The IRS Office of Professional Responsibility targets questionable practices in the tax debt resolution industry. Report problems to the IRS on Form 1. Complaint: Tax Return Preparer. The IRS Return Preparer Office will process the complaint and, if appropriate, submit it to the IRS Office of Professional Responsibility for investigation. Behavior warranting a complaint to the IRS includes companies or individuals that: promise that you will get relief from tax liabilities; misrepresent how long it will take to process a debt relief request application; oromit relevant asset information on financial statements submitted to the IRS. You also may file a complaint with the FTC online or by phone: call 1- 8. FTC- HELP. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U. S. Ask those agencies about collection alternatives. Only the IRS or your state comptroller can make that determination. Read the IRS Offer in Compromise Booklet, Form 6. B, and use this IRS online tool to see if you may be eligible for an offer in compromise. For More Information. The IRS has additional information on the collection process and payment options at irs. Publication 5. 94, The IRS Collection Process, has information on options available to taxpayers, and the IRS You. Tube channel has a video with helpful information, as well. Debt and Assets Among Low- Income Families. Author. Robert Lee Wagmiller. Publication Date: October 2. Low- income families. These families have. Most poor families. Moreover, the level of debt that low- to moderate. Data. for these conclusions come from the Panel Study of Income Dynamics. PSID), which collected asset and debt information in the years. The sample included all families. Amount of Debt Increasing. Figure 1: Median total family debt (without mortgage debt) by. Family debt has become an increasingly large burden for many. Although the percentage of. Figure. 1). Average debt in low- income families doubled between 1. The median debt in the poorest families rose from just over. For most low- income families, debt has grown much faster than. Consequently, debt is a much greater problem for. In 1. 98. 4. total family debt in the poorest families was equal to just over 3. By 2. 00. 1, total debt in these. In. low- income families, total debts grew from 1. FPL) and. 7. 5 percent in families between 1. FPL. in 1. 98. 4 to 2. Figure 2: Families with children experiencing debt hardship by. Today, low- income families confront an unprecedented level of. Rising family debt levels mean that a much greater. Figure 2). Debt hardship is defined. Debt hardship in the poorest families has risen from. In families whose incomes are between 5. FPL. debt hardship has nearly doubled from just over 2. In families whose income is between. FPL, debt hardship has also doubled, growing. Assets Still Limited. Low- income families today have few resources available to them. Among families. with debt, the median amount of liquid assets for fami- lies living. The median amount of liquid. FPL. is only $6. 00, down from $1,0. Low- income families with debt have few other assets that could. The median amount of. FPL is slightly better; over $2,0. FPL, who have nearly $5,0. Policies That Can Help. We face a potentially disastrous economic situation in which. According. to the U. S. General Accounting Office, low- income workers are twice. UI) benefits. 8 Without unemployment benefits. The current structure of unemployment insurance programs is. Some states have started to expand access to unemployment. In order to prevent temporary. UI benefits ought to cover more workers. In the long term, it is important that the federal government. Individual. Development Accounts. Public policies sometimes penalize families who accumulate. For example, in many states, a. Policies. should recognize the need for developing assets as part of the path. There are other instances where government policies could better. Earned Income Tax Credit preparation. Additionally, there are. Low- income families have incomes below 2. This number is from the federal poverty guidelines issued by the U. S. Department of Health and Human Services. For research on the importance of asset development and debt relief among low- income Americans see Beeferman, L. Promising state asset development policies: Promoting economic well- being among low- income households, A resource guide for policymakers and the public. Waltham, MA: Asset Development Institute, Center on Hunger and Poverty, Brandeis University. Boshara, R. Building assets: A report on the asset development and IDA field. Washington, DC: Corporation for Enterprise Development. Hurst, E. Welfare reform and household savings (JCPR Working Paper No. Evanston, IL: Joint Center for Poverty Research, Northwestern University and University of Chicago. Mills, G.; Campos, G.; Ciurea, M.; De. Marco, D.; Michlin, M.; & Welch, D. Evaluation of asset accumulation initiatives, Final report. Washington, DC: Abt Associates Inc. Moore, A.; Beverly, S.; Sherraden, M.; Sherraden, M.; Johnson, L.; & Schreine, M. How do low- income individuals save, deposit, and maintain financial assets? Louis, MO: Center for Social Development, Washington University. Policies that improve family income matter for children. New York, NY: National Center for Children In Poverty, Columbia University Mailman School of Public Health. In families with total family income of less than 1. In families with income between 1. Liquid assets include the value of shares of stocks in publicly held corporations, mutual funds or investment trusts, including stock IRAs, the value of checking and savings accounts, money market funds, certificates of deposit, savings bonds, treasury bills, and other IRAs, and the value of any other investments in trusts or estates, bond funds, life insurance policies, and special collections. Nonliquid (sometimes called illiquid) assets include the value of real estate other than the main home and the value of vehicles and other assets “on wheels.”7. Low income and hardship among America’s kindergartners (Living at the Edge Research Brief 3). New York, NY: National Center for Children in Poverty, Columbia University Mailman School of Public Health. General Accounting Office. Unemployment insurance: Role as safety net for low- wage workers is limited. General Accounting Office. Emsellem, M.; Goldberg, J.; Mc. Hugh, R.; Primus, W.; Smith, R.; & Wenger J. Failing the unemployed: State- by- state examination of UI systems. Washington, DC and New York, NY: Economic Policy Institute, Center on Budget and Policy Priorities, and National Employment Law Project. Schreiner, M.; Sherraden, M.; Clancy, M.; Johnson, L.; Curley, J.; Zhan, M.; Beverly, S.; & Grinstein- Weiss, M. Assets and the poor: Evidence from individual development accounts (Working Paper 0. Louis, MO: Center for Social Development, Washington University. Paper prepared for Asset Building: Research and Policy Symposium, September 2. Center for Social Development. See: www. lift. nccp. National Center for Children in Poverty, for state- by- state policy comparisons. Borrowing to make ends meet: The growth of credit card debt in the . New York, NY: Demos: A Network for Ideas and Action. Nelson, D. The high cost of being poor: Another perspective on helping low- income families get by and get ahead. In 2. 00. 3 Kids Count data book: State profiles of child well- being. Baltimore, MD: Annie E.
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