Tax settlements are an important part of business and personal tax preparation. They can help you cut through the confusion and save you time and money. As well as provide you with the assurance that your hard work is being acknowledged by the tax authorities. But, they’re also a great way to get everything off your chest and have a face-to-face meeting with the taxman if necessary. Unfortunately, tax settlements can also come at a high cost. Should you accept a lower offer from the government or risk going to jail? What if you violate your settlement terms? How much are you supposed to pay the government in fines? What if the government audits your tax return anyway? In order to protect yourself against these risks, it’s worth getting yourself some form of taxation audit insurance. This will cover both short and long-term scenarios so that even low offers from the government won’t affect your future tax planning.
What is a taxation audit insurance policy?
A taxation audit insurance policy is a contract you sign with a third party to protect yourself from potentially costly tax liabilities. The policy might cover you if the Internal Revenue Service (IRS) goes after your records for tax issues and debts. It might also protect you if an audit trail goes missing or you can’t account for the income from certain sources.
Taxation audit insurance: What’s included?
Most policies cover you for both federal and state income taxes as well as any interest, penalties, or additions to the tax burden that may arise from late or incorrect payments. The policies might also cover you for gift and estate taxes, as well as any taxes that may be due on future inheritances or business profits.
How to Apply for Taxation Audit Insurance
Like most financial products, the best way to get tax audit insurance is to apply online. You can find nearby agents through the National Association of Tax Advisers’ website. The site also lists nearby offices of the three major tax-preparation services: H&R Block, Taxslayer, and Taxation By Experts. The first step is to find out if you’re a high-risk taxpayer. High-risk taxpayers are those who have had a tax problem in the past and have either been issued a notice or been convicted of a federal tax crime. To apply for tax audit insurance, visit one of the sites and enter your information. Next, choose the appropriate option from the drop-down menu and follow the instructions. Once you’ve applied, you’ll have the opportunity to choose which coverage option you want.
How to Protect Your Settlement
Once you’ve chosen which coverage option you want, make sure you understand the settlement implications. Many insurance companies only cover “clean” settlements, meaning you leave the company with nothing to prove you’ve been wronged. If you choose this coverage option, the full value of your settlement may still go toward the IRS’s collection efforts.
A taxation audit insurance policy helps protect you against potentially costly tax liabilities. The policy might cover you if the Internal Revenue Service (IRS) goes after your records for tax issues and debts. It may also protect you if an audit trail goes missing or you can’t account for the income from certain sources. Whether you choose a short-term or long-term policy, the policy will help protect you from the uncertainty and risk of a tax audit.
