Navigating tax filing is stressful. It is even more nerve-wracking when you fall behind and owe back taxes. Luckily, there are tax relief help options available to assist you in eliminating back taxes and getting you back on track.
Getting Started To Find Your Tax Resolution Services
Let’s start with the basics. If you have fallen behind on your tax filings you will need to complete a few simple information-gathering tasks. This will help you find out exactly where you are at so you can determine the tax relief help options for your situation.
What to Do If You Owe the IRS Back Taxes
Locate and organize all of the needed documents for each year of back taxes owed. You will need your W-2 and/or 1099 form to show how much income you earned for each year and how much if any tax was deducted from your earnings. It is a good idea to separate each set of documents according to the year to help you stay organized.
If you are having trouble locating the needed documents, there is no need to panic. The IRS will have a record of the data contained on the forms. Simply contact the IRS and request a tax transcript for each year that you are lacking. This transcript will provide all of the data you need.
What Form Do I Fill Out If I Owe The IRS?
Tax rules and tax return forms can and do change significantly from one year to the next. You will need to make certain that you are filing each year of back taxes using the correct filing forms for that specific year. The official IRS website offers complete tax rules and the corresponding tax forms for each year.
You will need to print out and prepare form 9465 to schedule a monthly installment plan if you’re unable to pay the debt owed.
Many tax software packages offer the option to file tax returns for previous years as well.
Now that you have assembled all of your needed paperwork we are ready to take a look at the options that are available to help get YouTube tax relief help you need.
Option 1: Request An IRS Payment Plan
As a rule, the IRS is generally more than willing to allow you to pay your back tax debt over time using a series of pre-arranged installment payments. This is an easy and reliable way to manage your outstanding tax debt while remaining on the good side of the IRS. However, you will pay fees and accrued interest on any unpaid tax debt until the debt has been fully repaid.
Should you decide to go this route, you will have two basic tax relief options to choose from. The IRS offers both short-term and long-term tax relief help. Each option has its own requirements and costs which we have broken down for you below.
Short-Term Payment Plan
The IRS short-term payment plan is available for taxpayers who owe less than $100,000 in past due back tax debt. The short-term payment plan allows 120 days (4 months) for repayment of the outstanding tax debt. An extended short-term payment plan of up to 180 days may be available to qualified taxpayers upon request.
Short-Term Payment Plan Details:
- Combined back tax debt, fees, and interest must total less than $100,000
- The tax debt must be repaid within 120 days or 4 months
- 180 day extended repayment plan possible for qualified taxpayers
- No application fee
- Apply online, by phone, by mail, or in-person
- Installment payments may be made by electronic transfer from a checking or savings account or by check, money order, or credit/debit card.
Long-Term Payment Plan
The IRS long-term payment plan is available to taxpayers who owe less than $50,000 in outstanding tax debt. The long-term payment plan allows for a repayment period greater than 120 days. However, the long-term payment plan does incur higher fees.
Long-Term Payment Plan Details:
- Combined back tax debt, fees, and interest must total less than $50,000
- Intended for use by taxpayers requiring longer than 120 days to repay the outstanding tax debt
- $31 application fee if applying online and making electronic funds transfer/automatic withdrawal payments
- $107 application fee if applying by mail, by phone, or in-person and making electronic funds transfer/automatic withdrawal payments
- $149 application fee if applying online and making payments by check, money order, or credit/debit card
- $225 application fee if applying by mail, by phone or in-person and making payments by check, money order, or credit/debit card
- Set-up fees may be waived for low-income applicants making payments by electronic funds transfer/automatic withdrawal
- Set-up fees may be reduced to $43 for low-income applicants making payments by check, money order, or credit/debit card
Option 2: Offer In Compromise
In select cases, the IRS may agree to forgive a portion of outstanding back tax debt in exchange for a guarantee of the payment of the remaining debt. The IRS refers to this arrangement as an “Offer in Compromise”. The IRS will generally only consider granting an offer in compromise agreement in circumstances when extreme financial hardship makes it unlikely that the taxpayer will be able to fully repay the back due to tax debt.
The chances of obtaining an offer in a compromise agreement from the IRS are far lower than the chances of approval for a repayment plan. The Offer In Compromise page, located on the official IRS website, provides a tool to help taxpayers determine their eligibility for an offer in a compromise agreement.
The IRS will look at your overall ability to pay your back tax debt when considering your eligibility for an offer in compromise. Your ability to pay is determined by examining your income, your average living expenses, and the value of the assets that you hold.
How To Apply For An Offer In Compromise
The step-by-step instructions needed to apply for an offer in compromise are contained in IRS Form 656-B. While it is not required, enlisting professional tax relief help to assist you with an offer in compromise application is strongly recommended.
If your offer is accepted by the IRS you must be prepared to make a payment totaling at least 20% of the agreed-upon settlement amount or your first monthly installment payment depending on the length of the installment plan. In the event that your application is rejected by the IRS, you are allowed a 30-day window to appeal the decision. All tax debt collection efforts will cease during the application process.
Offer In Compromise Details:
- $205 non-refundable application fee
- Initial non-refundable payment required must total at least 20% of settlement amount if paying the total debt in five installments or less
- Initial non-refundable payment of first installment payment required if paying the total debt in six installments or more
- All tax return filings must be up to date
- Any existing IRS tax liens may remain in place until the debt has been fully repaid
- Taxpayers with open bankruptcy cases are ineligible
- Data contained in offers in compromise agreements is available to the public including the taxpayer’s name, location, tax debt liability, and repayment terms
Option 3: ‘Currently Not Collectible Status
In the event of temporary financial hardship, you may request that the IRS place your account into ‘Currently Not Collectable’ status. You will be required to submit information describing the nature of your financial hardship. If your request is accepted by the IRS, collection attempts will cease though your tax debt will remain. This delay in the collection is contingent on your inability to repay. The IRS will review your account periodically and require payment when and if your financial situation improves. The IRS may still institute a tax lien against the value of any assets you own while your account is in ‘Currently Not Collectable’ status.
Option 4: Professional Tax Relief Help
While you can absolutely attempt to negotiate repayment of your outstanding back tax debt on your own, a tax professional may be able to help you if your back tax debt situation is particularly complicated or you are finding the process confusing or difficult. That being said, it is important to note that not all tax relief companies are created equal. Many tax relief services charge high fees and offer more than they can deliver.
The best way to protect yourself from disreputable tax relief services is to do your homework upfront. Find out exactly where you stand with the IRS and research the options at your disposal carefully using the tools and the information provided on the official IRS website. If, and when, you decide that you need tax relief help, enlist the services of a reputable tax relief service. The experts at IRS Tax Relief Network offer a free consultation.
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