GET TAX HELP (800) 536-0734

Someone Filed a Fraudulent Tax Return in My Name. Now What? 

Someone Filed a Fraudulent Tax Return in My Name. Now What? 

Tax season can already be stressful without the added burden of discovering that someone has filed a fraudulent tax return using your identity. Unfortunately, tax-related identity theft is a real concern in today’s digital world. If you suspect or discover that someone has filed a fraudulent tax return in your name, take immediate action. Here are the steps you should take to protect yourself and mitigate any potential damage. 

Contact the Authorities 

When you suspect tax-related identity theft, your first point of contact should be the IRS. The Identity Protection Specialized Unit is equipped to handle cases of identity theft. Further, they can guide you through the necessary steps to resolve the issue. They may ask you to provide information and documentation to support your claim. Hence, be prepared to provide details about the fraudulent activity. You can contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245.  

File an IRS Identity Theft Affidavit 

IRS Form 14039, the Identity Theft Affidavit, is a crucial document for victims of tax-related identity theft. By submitting this form to the IRS, you officially notify them of the identity theft and provide details about the fraudulent activity. Include any supporting documentation, such as a copy of the fraudulent tax return or notices from the IRS. 

File a Police Report 

Filing a police report creates an official record of the identity theft. This can be crucial when dealing with financial institutions and government agencies. Provide as much information as possible to the police, including any documentation or evidence you have regarding the fraudulent tax return. 

Place a Fraud Alert on Your Credit Reports 

If your identity was stolen to submit a phony tax return, don’t assume the scammer will stop there. Contact one of the major credit bureaus, like Equifax, Experian, or TransUnion, and request a fraud alert be placed on your credit reports. This alert notifies creditors to take extra precautions when processing credit applications in your name. The fraud alert is free and lasts for one year, but you can extend it if necessary. 

Monitor Your Financial Accounts 

Regularly monitor all your financial accounts for any unauthorized activity. This includes bank accounts, credit cards, and investment accounts. Look for unfamiliar transactions, withdrawals, or changes to your account information. Reporting suspicious activity promptly can help minimize the damage caused by identity theft. In addition, placing a temporary freeze on your accounts can help mitigate risk while you sort this issue out. 

Report the Fraud to the Federal Trade Commission (FTC) 

The FTC serves as a central hub for reporting identity theft and provides resources to help victims navigate the recovery process. By filing a report with the FTC, you contribute to the agency’s efforts to track and combat identity theft on a larger scale. You can file a report online at or by calling the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261. 

Continue Filing Your Taxes 

Despite the fraudulent return filed in your name, you are still required to file your tax return. Use Form 14039, the Identity Theft Affidavit, to attach a paper return and explain the situation to the IRS. Include any additional documentation or information requested by the IRS to support your claim. 

Request an Identity Protection PIN (IP PIN) 

An Identity Protection PIN is a six-digit number issued by the IRS to eligible taxpayers to prevent identity thieves from filing fraudulent tax returns. You can request an IP PIN online through the IRS website or by submitting Form 14039. Once enrolled, you must include the IP PIN on your tax return each year. This added layer of protection can help prevent fraudulent tax returns in your name in the future. 

Stay Vigilant 

Identity theft can have long-term consequences, so it’s essential to remain vigilant even after taking initial steps to resolve the issue. Regularly review your credit reports, monitor your financial accounts, and report any suspicious activity immediately. Consider subscribing to credit monitoring services for added protection. Many banks offer this service for free. Check with yours to see what they can do to help. 

Tax Help for Victims of Tax Fraud 

If you’re overwhelmed or uncertain about how to proceed, don’t hesitate to seek assistance from a tax professional or identity theft specialist. They can provide personalized guidance based on your specific situation and help you navigate the complex process of resolving identity theft issues. Professional assistance can streamline the recovery process and increase the likelihood of a successful resolution. Optima Tax Relief is the nation’s leading tax resolution firm with over $3 billion in resolved tax liabilities. 

If You Need Tax Help, Contact Us Today for a Free Consultation 

What If I Can’t Pay My Taxes?

What If I Can’t Pay My Taxes?

Every year, millions of individuals and businesses face the intimidating task of paying their taxes. However, there are instances where meeting this financial obligation becomes challenging or even impossible. There are times when you might’ve asked yourself, “What if I can’t pay my taxes?” Whether due to unexpected expenses, changes in income, or other unforeseen circumstances, finding yourself unable to pay your tax bill can be stressful. But fret not; there are steps you can take to address this situation and navigate through it effectively.  

Stay Calm and Assess Your Situation 

The first step is to stay calm and assess your financial situation realistically. Panicking or ignoring the problem won’t make it go away. Take a deep breath and gather all relevant financial documents, including tax returns, income statements, and bills. Understanding the full scope of your financial position will help you devise a plan of action. 

Contact the IRS or Tax Authority 

It’s crucial to communicate with the IRS or your state’s tax authority as soon as you realize you cannot pay your tax bill. Ignoring the issue will only worsen it, potentially leading to penalties and interest charges. The IRS may be willing to work with you to find a solution. You can reach out to them by phone, mail, or even online through their official website. 

Consider Payment Options 

The IRS offers various payment options for taxpayers who cannot pay their tax bill in full. These options include installment agreements, where you can pay your tax debt overtime in monthly installments. Be sure to know your agreement terms and confirm you can adhere to them. Failing to make a payment will result in the IRS voiding the agreement and placing you in default. 

Explore Financial Hardship Options 

If you are experiencing significant financial hardship, you may qualify for special programs or relief options. The IRS offers programs such as Currently Not Collectible (CNC) status, which temporarily suspends collection activities due to financial hardship. To qualify for CNC status, you must demonstrate that paying your tax debt would cause significant economic hardship. Additionally, you may qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed if you meet certain criteria. 

Prevent Future Tax Issues 

Once you’ve resolved your current tax dilemma, take steps to prevent similar problems in the future. This may include adjusting your tax withholding, setting aside money in a dedicated savings account for taxes, or working with a financial advisor to better manage your finances. 

Seek Professional Help 

If you’re unsure about how to proceed or need assistance negotiating with the IRS, consider seeking help from a qualified tax professional. Keep in mind that only certain tax professionals are qualified to work with the IRS on your behalf. Tax attorneys, enrolled agents, or certified public accountants (CPAs) can provide expert guidance tailored to your specific situation. They can help you explore all available options and represent you in dealings with the IRS. Also, having help throughout the year can potentially reduce the risk of new tax issues arising. Optima Tax Relief has a team of dedicated and experienced tax professionals with proven track records of success.    

If You Need Tax Help, Contact Us Today for a Free Consultation 

What is Injured Spouse Relief?

What is Injured Spouse Relief?

When couples file joint tax returns, they often expect to share both the benefits and the burdens of taxation equally. However, situations can arise where one spouse’s debts or obligations lead to the entire tax refund being withheld to cover them. We’ve covered innocent spouse relief before. However, there is another type of tax relief offered to spouses: injured spouse relief. This provision can be a lifeline for those facing financial strain due to their partner’s financial liabilities. Here’s a breakdown of injured spouse relief, including what it is, who is eligible, and how it works.  

What is Injured Spouse Relief? 

Injured spouse relief is a provision established by the IRS to address situations where a jointly filed tax refund is subject to offset to satisfy the debts of one spouse. This relief aims to protect the portion of the refund belonging to the innocent spouse. It helps ensure equitable treatment within joint tax filings when you are not responsible for your spouse’s back taxes. Examples of these types of cases include past-due child support, federal debt, or state income tax debt. 

Eligibility Criteria 

To qualify for Injured Spouse Relief, specific conditions must be met: 

  1. Joint Filing Status: The couple must have filed a joint tax return. 
  1. Refund Overpayment: The refund should result from overpaid taxes or eligibility for refundable tax credits. 
  1. Separation of Obligations: The debt leading to the refund offset must be solely the responsibility of one spouse. 
  1. Innocent Spouse Status: The requesting spouse should not be legally liable for the debt in question. 
  1. Substantiation of Claim: The innocent spouse must demonstrate their rightful share of the joint refund through accurate documentation. 

How to Request Injured Spouse Relief 

To seek injured spouse relief, the innocent spouse must file Form 8379, Injured Spouse Allocation. This form allows the innocent spouse to allocate their share of the joint refund and shield it from offset to satisfy the other spouse’s debt. It’s crucial to provide accurate information and documentation to support the claim. This can include details of income, withholdings, and credits for each spouse. 

Navigating Community Property States 

In community property states, such as California, Texas, and Arizona, spousal income and assets acquired during the marriage are typically considered jointly owned. This communal property framework can complicate the allocation of refunds in cases of injured spouse relief. While federal tax law governs the allocation of refunds for federal tax purposes, community property laws may influence the determination of each spouse’s share in community property states. It’s essential for couples residing in community property states to understand the interaction between federal and state laws when seeking injured spouse relief. 

Common Mistakes to Avoid 

When applying for injured spouse relief, it’s essential to avoid common mistakes that could delay or jeopardize the claim: 

  • Incomplete Information: Failing to provide accurate and complete information on Form 8379 can lead to processing delays or denial of relief. 
  • Missing Deadlines: It’s crucial to file Form 8379 within the statute of limitations, typically three years from the due date of the original return or two years from the date of payment. 
  • Ignoring State Obligations: While injured spouse relief applies to federal tax debts, couples should also address any state tax liabilities separately. 

Tax Help for Injured Spouses 

Injured Spouse Relief serves as a vital safeguard for innocent spouses facing financial hardship due to their partner’s obligations. By understanding the eligibility criteria, filing requirements, and potential impact of this relief, couples can protect their financial interests and maintain stability in their relationship. If you believe you qualify for injured spouse relief, consult with a tax professional. You can also seek guidance from the IRS to navigate the process effectively. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.   

Contact Us Today for a No-Obligation Free Consultation 

What is an Offer in Compromise (OIC)?

What is an Offer in Compromise (OIC)?

Tax debts can be a significant burden, causing stress and financial strain for individuals and businesses alike. Fortunately, the IRS offers various options to help taxpayers settle their debts, one of which is known as an Offer in Compromise (OIC). An Offer in Compromise is a valuable tool that allows eligible taxpayers to settle their tax liabilities for less than the full amount owed. This article aims to provide a comprehensive overview of Offers in Compromise, including how they work, eligibility requirements, the application process, and their potential benefits. 

Offer in Compromise Eligibility Criteria 

Not everyone qualifies for an OIC. In fact, many taxpayers don’t. Only about a third of OICS were accepted in 2022. The IRS evaluates each case based on specific criteria. The IRS offers an online questionnaire to determine eligibility. Generally, taxpayers must meet the following conditions to be eligible for consideration: 

  • Inability to Pay in Full: You must demonstrate that you are unable to pay the full amount of taxes owed. This could be due to financial hardship, limited income, or substantial expenses.  
  • Doubt as to Collectability: There must be a genuine doubt regarding their ability to collect the tax owed, whether it be now or in the future. 
  • Doubt as to Liability: There must be a genuine dispute regarding the amount of tax owed. For example, if the taxpayer believes that the IRS has incorrectly assessed their tax liability, they may qualify for an Offer in Compromise based on doubt as to liability. 

In addition to the above, you must be current on your tax filings and estimated payments. You must not be in an open bankruptcy proceeding. You must have a valid extension for the current year’s tax return (if applying for the current year). Finally, if you’re an employer, you must be up to date on all your tax deposits for the past 2 quarters. 

The Application Process 

Applying for an Offer in Compromise involves several steps, and it’s essential to follow the process carefully to maximize the chances of acceptance. The key steps typically include the following. 

Reviewing Eligibility 

Taxpayers should carefully review the eligibility criteria and ensure that they meet the necessary requirements before applying.  

Gathering Documentation 

The IRS requires extensive documentation to support the offer, including details of income, expenses, assets, and liabilities. Taxpayers must gather and submit all relevant financial information as part of their application. This part of the process is extremely time-consuming and exhausting. It’s not uncommon for the IRS to receive several boxes of documentation to support OICs.  

Completing the Forms 

The IRS provides specific forms for submitting an Offer in Compromise, such as Form 656, Offer in Compromise. In addition, you’ll need to submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses. Taxpayers must complete these forms accurately and honestly, providing all requested information. Any bit of misinformation can result in rejection.  

Submitting the Offer 

Once the forms and supporting documentation are complete, taxpayers can submit their Offer in Compromise to the IRS along with the required $205 application fee and initial payment. The initial payment will depend on the payment option you choose, as well as your actual offer. When you select the Lump Sum Cash option, you’ll need to submit 20% of the total offer amount with your application. If your offer is accepted, you’ll need to pay the remaining balance within 5 payments or less.  

If you select the Period Payment option, you’ll need to submit an initial payment. You’ll need to make monthly installment payments while the IRS reviews your OIC. If the IRS accepts your offer, you will need to continue making these monthly payments until the balance is paid in full. 

Waiting for Review 

After receiving the offer, the IRS will review the application to determine its validity and whether the proposed settlement amount is acceptable. This process can take several months, during which the IRS may request additional information or clarification. 

Acceptance or Appeal 

If the IRS finds the offer acceptable, they will issue a formal acceptance, and the taxpayer must fulfill the terms of the agreement to settle their tax debt. If they reject the offer, you may appeal within 30 days using Form 13711, Request for Appeal of Offer in Compromise.  

Understanding Offers in Compromise 

An Offer in Compromise is essentially a settlement agreement between a taxpayer and the IRS. It enables taxpayers to resolve their tax debt by paying an amount that is less than the total amount owed. The IRS considers an OIC as a legitimate option for taxpayers who are unable to pay their full tax liability or if doing so would cause significant financial hardship. However, taxpayers should be aware of the OIC process. 

  • Any payments you submit with your application are non-refundable, even if the IRS rejects your offer. These payments are applied to your tax liability.  
  • During the review process, the IRS will suspend collection activities. However, they can still file a Notice of Federal Tax Lien. 
  • Submitting an OIC will extend your Collection Statute Expiration Date (CSED). This date is used to determine how long the IRS can legally collect from you. 
  • If you submit an OIC while you have an open installment agreement with the IRS, you may stop making payments on your installment agreement while your OIC is under review.  
  • Your OIC is accepted if the IRS does not decide within two years of receiving the application. This does not include appeal periods. 

Need Help with an OIC? Call Optima Tax Relief 

Offers in Compromise represent a valuable option for taxpayers struggling with unpaid tax liabilities. By allowing eligible individuals and businesses to settle their debts for less than the full amount owed, Offers in Compromise can provide a lifeline to those facing financial hardship or significant disputes regarding their tax liabilities. However, navigating the application process can be complex, and it’s essential for taxpayers to understand the eligibility criteria, gather necessary documentation, and follow the process carefully. For taxpayers burdened by tax debt, an Offer in Compromise may provide the opportunity for a fresh start and a brighter financial future. Optima Tax Relief has a team of dedicated and experienced tax professionals with proven track records of success.   

If You Need Tax Help, Contact Us Today for a Free Consultation 

How Tax Relief Works

how tax relief works

Owing the IRS can be one of the most stressful situations a taxpayer can face. Recent data shows that American taxpayers owed over $316 billion in back taxes, penalties, and interest as of the end of 2022. Much of this debt can be attributed to late filing, mathematical errors, and underreported income. Whatever the reason for owing taxes, many taxpayers may find themselves considering tax relief when their tax bills get too large to pay. Here’s an overview of what tax relief is and how it works.  

What Is Tax Relief? 

The phrase “tax relief” can mean many things. When speaking of tax debt, tax relief is when your tax debt is managed, settled through negotiations, or paid down with payment plans. Tax relief programs were created for taxpayers who cannot afford to pay their tax bills, as well as those who have overwhelming and overdue tax bills.  

How Does Tax Relief Work? 

Tax relief is not a “one-size-fits-all” program. Every tax relief program works differently, and the process will also differ depending on the individual taxpayer’s situation. Here we will review the most common tax relief policies and programs.  

Offer in Compromise (OIC) 

An OIC is the most popular form of tax relief as well as the least likely option for taxpayers since most OICs are denied by the IRS. An OIC allows you to settle your tax debt for less than what you owe. When selecting OIC candidates, the IRS will examine your ability to pay your tax bill, your income and expenses, and the value of your assets. 

Applying for an Offer in Compromise involves a detailed process, beginning with completing IRS Form 656, “Offer in Compromise.” Alongside this form, taxpayers must submit a comprehensive financial statement detailing income, expenses, assets, and liabilities. There are some basic requirements for an offer in compromise including:  

  • Must pay a $205 nonrefundable application fee  
  • Must make a nonrefundable initial payment  
  • Must be current on all tax returns  
  • Must not be in an open bankruptcy proceeding  

If the IRS deems that you cannot afford to pay your tax debt, or that paying your tax debt will result in financial hardship, then it may accept your offer in compromise. If this happens, they will cease collections.  

Currently-Not-Collectible (CNC) Status  

In some cases, you cannot afford both your tax bill and your expenses. If this happens, you can request a Currently Not Collectible status on your account, which delays collections. The IRS will request information regarding your income and expenses to determine your eligibility. If approved, the CNC status will temporarily cease collections on your account. However, they will continue to assess interest and penalties to your account. They will continue to review your income each year to determine if you are still eligible for CNC status. They can also still file a tax lien against you during this time and keep your tax refunds to apply them to your tax bill.  

IRS Installment Agreement 

An IRS installment agreement lets you pay your tax bill, plus accrued interest and penalties, over a set period. There are two types of IRS installment agreements: short-term and long-term. A short-term payment plan must be paid in 180 days or less. To qualify for a short-term installment agreement, you cannot owe more than $100,000 in combined tax, penalties and interest. A long-term payment plan can be paid over 180+ days. To qualify for a long-term installment agreement, you must not owe more than $50,000 in combined tax, penalties and interest. While an IRS installment agreement does not reduce your tax bill, or exclude you from penalties and interest, it might be your next best option to pay off your tax debt.   

Penalty Abatement 

Sometimes life gets in the way of responsibility. Maybe you didn’t file your taxes for one year, or you forgot to pay your tax bill. If you have an otherwise clean record with the IRS, you can request a first-time penalty abatement, which waives a tax penalty or refunds you for one already paid for. Typically, if you meet three requirements, you should qualify for this tax relief option. 

  1. You are current on your tax return filing. Tax extensions are fine.  
  2. You are current on your tax bill or have a payment plan in place. 
  3. You have a clean record with the IRS. This means no penalties during the three tax years before the year you received a penalty.  

If interest accrued from a failure-to-pay or a failure-to-file penalty, and you receive penalty abatement, then the interest associated with the penalty abatement will also be forgiven.   

How Do I Proceed with Tax Relief? 

If one of these tax relief options sounds like they can be of help to your tax situation, you should consider pursuing it. Most of these options require nothing to lose, financially speaking. Dealing with the IRS on your own can be intimidating, time-consuming, and stressful. Working with a tax professional offers several advantages over handling IRS matters independently. For one, tax professionals have expertise that goes beyond basic tax knowledge. This can help you minimize errors, save time and money, and optimize your tax planning. Perhaps the greatest benefit is knowing that a professional is handling the IRS on your behalf. Optima Tax Relief has a team of dedicated and experienced tax professionals with proven track records of success.  

If You Need Tax Help, Contact Us Today for a Free Consultation 

What is a Tax Settlement?

What is a Tax Settlement?

Tax settlements are a crucial aspect of managing one’s financial responsibilities. They provide a mechanism for individuals and businesses to resolve outstanding tax issues with the IRS. This article aims to shed light on the tax settlement process, including its various options, implications, and considerations. 

Understanding Tax Settlements 

Tax settlements, also known as tax resolutions, refer to the process of reaching an agreement with the IRS to resolve outstanding tax liabilities. This can involve negotiating the total amount owed, the payment timeline, or even the reduction of penalties and interest. There are several types of tax settlements. 

Offer in Compromise (OIC) 

An Offer in Compromise (OIC) is a program provided by the IRS. It allows taxpayers to settle their tax liability for less than the full amount owed. It’s like making a deal with the government to pay a reduced sum to satisfy your tax liability. It’s quite rare for a taxpayer to receive an OIC because of the strict eligibility requirements. 

You must show that paying the full amount of your tax liability would cause you significant financial hardship. This could be because of job loss, medical expenses, or other challenging circumstances. To obtain an OIC, you’d apply to the IRS explaining your financial situation and why you think you should pay less. It’s a bit like making your case. In your application, you propose an amount that you can realistically pay. This is the reduced sum you’re offering to settle your tax liability. If your offer is accepted, you agree with the IRS to pay the reduced amount. Once you fulfill the terms of the agreement, your tax debt is considered settled. 

Installment Agreements 

Installment Agreements are arrangements that allow taxpayers to pay their tax balance over time through a series of scheduled payments. It’s like setting up a monthly payment plan with the tax authorities, such as the IRS.  

First, you figure out how much you owe in taxes, including any penalties and interest. If you can’t pay the full amount upfront, you can request an Installment Agreement. This is like asking the IRS if you can pay in smaller, more manageable amounts over time. The IRS reviews your request and may negotiate the terms of the agreement. This includes determining the amount of each monthly payment and the duration of the agreement. Once the terms are agreed upon, you make regular monthly payments until the total tax balance is paid off. 

Currently Not Collectible (CNC) 

Currently Not Collectible (CNC) is a status that the IRS grants to taxpayers who are facing significant financial hardship and are unable to pay their tax liability at the current time. In simpler terms, it’s a temporary pause on the collection of tax payments. To qualify for CNC status, you need to demonstrate that paying your tax debt would cause you substantial financial hardship. This could be due to factors like unemployment, serious illness, or other challenging circumstances. 

You apply to the IRS, providing detailed information about your financial situation. This includes income, expenses, assets, and liabilities. The IRS reviews your application and assesses whether your financial situation qualifies for Currently Not Collectible status. They may consider factors such as your income, necessary living expenses, and the value of your assets. If approved, the IRS temporarily halts its collection efforts. This means they won’t take certain actions, such as levying your bank account or garnishing your wages, for a specified period. However, the IRS may periodically reassess your financial situation. If your circumstances improve, they may lift the CNC status and resume collection efforts. 

Penalty Abatement 

IRS penalty abatement allows taxpayers to request the removal or reduction of certain penalties imposed by the IRS for failing to meet tax obligations. In simpler terms, it’s like asking the IRS for forgiveness on specific penalties associated with your tax liability. The IRS usually forgives first-time offenders. If you’re requesting another abatement, you need to provide valid reasons for not meeting your tax obligations on time. These can include circumstances beyond your control, such as illness, natural disasters, or other factors that prevented you from fulfilling your tax responsibilities.  

In your request, you explain the reasons for your failure to comply with tax deadlines and provide supporting documentation. The IRS reviews your application and assesses whether your reasons for requesting penalty abatement are valid. They consider factors like the nature of your circumstances, the impact on your ability to meet tax obligations, and the documentation you provide. If the IRS approves your request, they may either remove the penalties entirely or reduce the amount owed. This can result in a significant reduction in the overall tax balance. 

Benefits of a Tax Settlement 

A tax settlement can offer several benefits for taxpayers facing financial difficulties. One of the primary benefits is the potential to settle your tax liability for less than the full amount owed. By successfully negotiating a tax settlement, you may avoid more severe collection actions by the IRS, such as levies, seizures, or wage garnishments. This can help protect your assets and income. A successful IRS tax settlement can be a fresh start for taxpayers who have struggled with tax liability. It provides an opportunity to resolve past issues and move forward with a clean slate. 

Tax Help for Those Seeking a Tax Settlement 

Navigating tax settlements requires a strategic approach, open communication, and a clear understanding of available options. Whether opting for an Offer in Compromise, Installment Agreement, or another settlement option, seeking professional advice and adhering to the established process is key to successfully resolving tax liabilities. Professionals can provide guidance, negotiate on your behalf, and ensure compliance with tax laws. Optima Tax Relief is the nation’s leading tax resolution firm with over $1 billion in resolved tax liabilities.  

If You Need Tax Help, Contact Us Today for a Free Consultation