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. Normally, a person is unable to pay his taxes due to financial problems and being penalized is a burden on top of another burden. For such people, luckily, there is a way of evading 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. 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. 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. If an individual or an institution is declared bankrupt, the whole tax or part of it is exempted from them. This is because there is no way of meeting these tax obligations. 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.
The other way of getting tax relief is when you are undergoing temporary or permanent hardships. 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. When such happens, you only need to file for tax relief quoting the hardship as the reason for exemption.
The third way of acquiring tax relief is partial pay agreements with the tax collector. As a taxpayer, you may enter into an agreement with the tax collection firm to allow you to make your payments in agreed monthly remittances and not necessarily in full. Once accepted, you will then be able to make little agreed minimum payment of your owed taxes. 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.