Seeking Tax Debt Relief Assistance Through The IRS
Monday, March 16th, 2009 Subscribe To Our Feed
Recent regulation enacted by IRS offers tax debt relief
The financial crisis that became most apparent in the last couple of years, has put many homeowners on the brink of foreclosure. In turn, the housing industry is experiencing a huge downturn in home sales, based in large part on the fact that mortgages are more and more difficult to obtain. Those who have been lucky enough to obtain a home mortgage in recent years are having problems making their monthly payments, due to job layoffs, or simply because they took out a mortgage on a home they really could not afford. The handwriting was on the wall, and the IRS realized homeowners needed help and in 2007 they passed the Mortgage Forgiveness Debt Relief Act. However, because it was passed so late in 2007, accountants had problems getting all the information and paperwork necessary to assist their clients with the new tax debt relief act.
A Real Break for Homeowners
The 2007 Mortgage Forgiveness Debt Relief Act was a real “lifesaver” for many homeowners needing help with mortgage payments. In years prior to 2007, any money saved through a home refinance procedure that resulted in a lower interest rate, placed the homeowner in a higher tax bracket and resulted in having to claim the savings as income on their tax return. This was tantamount to receiving money in one hand and having it taken away from the other hand. With the new Mortgage Forgiveness Debt Relief Act this procedure was changed. Even though the money still must be reported to the government, the new enactment requires From 982 to report the information and is not included as income. Unfortunately, due to the fact that the Debt Relief Act was not computerized until March of 2008, accountants did not have the electronic paperwork at their disposal to take advantage of the new Act. Therefore, some tax payers who were eligible for the Relief were prevented from receiving it.
There are exceptions to the tax debt relief act, however. Anyone who has refinanced a second home, or borrowed a larger amount than originally owed on a first mortgage, is required to report those amounts as income when filing their tax return. However, individuals who are able to prove a particular financial hardship or a destitute situation, will be allowed to take advantage of the Tax Debt Relief assistance plan. By all means, if you feel you qualify under this new Tax Debt Relief Act, the forms necessary to file should be electronically up to date for this new tax filing year. If you file you own taxes, check to be sure that the Form 982 is included in your software.
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