The annual filing of taxes is overwhelming for most taxpayers. It’s even more overwhelming if one gets behind on paying their taxes. In fact, for some people, getting into tax debt is debilitating.
If you find yourself with overdue taxes or back taxes, you’re probably curious about federal tax relief options. Fortunately, taxpayers who have unpaid tax debt, IRS levies, IRS liens, or an IRS audit, don’t have to handle things alone. There are multiple options available that help taxpayers resolve their tax situation.
Take a look at four top tax relief options:
IRS Payment Plan
One of the most common tax relief programs is the IRS payment plan. This program helps with debt settlement, providing a doable way for taxpayers to pay their taxes.
With a payment plan, taxpayers make an agreement with the internal revenue service. This agreement allows the taxpayer to pay their taxes over time by making regular monthly payments for a predetermined length of time.
When a payment plan is set up, it includes any and all penalties and interest that has accrued, along with the full amount of the tax debt. Taxpayers are then able to pay their taxes and fees until there has been total debt resolution.
IRS payment plans come in either short or long-term plans. Short-term plans last for less than 120 days and are available to those with a maximum of $100,000 in debt, penalties, and interest. Long-term plans are for 120 days or more and they are available to those with a maximum of $50,000 in debt, penalties, and interest.
Short-term payment plans do not require a fee to apply, while long-term plans cost anywhere from $31 to $225 to apply, depending on the application platform.
It’s important to keep in mind that being approved for a payment plan does not mean that there are no further repercussions for your debt. In fact, penalties and interest will continue to grow until the debt is paid in full.
IRS payment plan participants who owe more than $25,000 will need to make their payments online via automatic withdrawal. Those who owe less and opt to use a credit card for payments will be subject to processing fees.
Another popular tax relief program is the offer-in-compromise. Those who are approved for this program are able to obtain debt settlement for less than they owe. While the IRS does not accept everyone who applies for the program, it is a good option for those who cannot pay the full amount of their taxes without creating a financial hardship for themselves.
The IRS approves less than half of applicants for an offer in compromise. Before applying, you will want to explore other tax relief options to determine which is the best one for your tax issues.
When they are deciding who to approve for the program, the IRS will look at a number of factors, including the taxpayers’ income, expenses, ability to pay, and assets. If the information provided shows the IRS that paying the total amount of taxes will cause financial difficulties for the taxpayer, they may approve them for the offer in compromise.
If you are going to apply for an offer-in-compromise, you will need to check out IRS form 656-B. This form contains the essential information applicants need to apply, as well as any materials and forms that need to be filled out.
Here are some things you’ll want to know when you apply for the offer-in-compromise program:
- Applying costs a non-refundable $205, as well as a non-refundable first-time payment.
- Tax return filings must be current for approval.
- You can hire a tax relief company to help you apply and to support you through the process.
- After you have filed your application, the IRS will cease debt collection attempts.
- If you are approved for the program your federal liens will not be removed until you have paid the agreed upon amount to settle your tax debt.
- If your offer is rejected, you can appeal within 30 days.
Currently Not Collectible
Taxpayers who will have an extreme financial hardship from paying their taxes may be eligible for currently not collectible status. This program is for those who cannot take care of their living expenses and pay their taxes. Currently not collectible status is a temporary stay on taxes, giving taxpayers a reprieve from tax debt and collection actions until they have bettered their situation.
If you apply for currently not collectible, you will need to provide information that proves your financial hardship. If approved, your tax debt does not disappear, it is only paused temporarily. Your case will be revisited annually to see if there has been an improvement in your finances.
Hire a Tax Relief Company
Professional tax relief companies are able to help you with your tax situation. They include experienced tax attorneys, enrolled agents, and certified public accountants.
These experts understand tax issues and are able to represent clients in front of the IRS. They have custom training and licensing that enables them to help taxpayers find relief from their tax debt.
These tax professionals will help decide which tax relief program is right for you. They will file your forms and ensure that you are set for approval. If you have to meet with the IRS, they are able to take your place and meet up on your behalf.
The IRS Tax Relief Network has a team of experienced tax professionals ready to serve you. No matter what your tax situation, they will help you find relief. With affordable and transparent fees, a free consultation, and up-to-date tax knowledge, the IRS Tax Relief Network is there for you.