4 Options for IRS Tax Debt Relief

4 Options for IRS Tax Debt Relief

Are you being hounded by the IRS over a tax debt?

They will call or write you asking you to make payments on what you owe. If you ignore them, they will take harsher actions to pay your tax debt, including confiscating your property or putting a lien on your assets.

This can be scary, but there is help if you find yourself with a tax debt the IRS is trying to collect. You can get the assistance you need to find IRS tax debt relief.

Check out these options for IRS tax debt relief.

IRS Tax Debt Relief

1. Installment Agreement

The IRS offers several options to taxpayers struggling with unpaid taxes, including an installment agreement. With an installment agreement, the taxpayer can figure out how much they can afford to pay each month to eventually settle the debt with the IRS.

Signing an agreement means that the IRS will not take any collection actions against the taxpayer, like filing a lien. The new agreement will allow the taxpayer to repay the debt in monthly payments of an agreed-upon amount over an extended period of time set by the IRS.

2. Offer in Compromise (OIC)

An OIC is a settlement between the taxpayer and the government that is mutually agreeable, resolving the taxpayer’s tax liability. To qualify, the taxpayer must demonstrate that they can not pay the full amount of their debt. A viable OIC requires extensive documentation, including:

  • Financial statements
  • Proof of income
  • Analysis of a taxpayer’s assets

Acceptance of some OICs can result in reduced tax liability, saving the taxpayer thousands of dollars. The program is governed by strict eligibility requirements and application fees. However, many taxpayers have found success with this tax relief program. Hiring an OIC lawyer will determine the best legal steps for reducing your IRS tax debt.

3. Currently Not Collectible (CNC) Status

CNC status is a type of Short-term or Long-term Relief that can be used to halt collection activities such as wage garnishment and bank levies. There are a few criteria that must be met in order to qualify as CNC, such as, the client must not be able to pay the taxes, the collection should not be cost-effective, and repayment should not be expected within the next 12 months.

This may give the taxpayer some financial relief by suspending collection activities. However, depending on the taxpayer’s financial situation, liabilities may continue to accumulate.

4. Penalty Abatement

Penalty abatement is a popular option for an IRS tax payment. Penalty abatement can reduce or eliminate the amount of penalty debt an individual owes. This type of tax debt relief involves filing a request for penalty abatement with the IRS, which is based on reasonable cause.

Individual taxpayers may be eligible if they did not previously have any penalty due and owing and did not owe any interest. Taxpayers must provide evidence of reasonable cause which may pertain to involuntary events such as:

  • Natural disasters
  • Deaths
  • Accidents
  • Illnesses

If the taxpayer is eligible for penalty abatement, the taxpayer’s penalty debt may be forgiven or reduced.

Exploring Options for IRS Tax Debt Relief

Tax debt can be stressful, but there are multiple options available to IRS taxpayers to help ease the burden. With programs such as offers in compromise, installment agreements, and non-collectible status, you do have hope. Don’t wait; take charge of your debt today and contact a qualified tax consultant to discuss options for IRS tax debt relief.

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