One thing in life is sure, taxes. You must pay them each year. Some businesses and entrepreneurs must do this throughout the year. 

If you owe back taxes, you must take care of them as soon as possible. The worst thing is to ignore the Internal Revenue Service; they will not simply go away. You must show them that you are not simply trying to evade taxes. 

You must demonstrate that you wish to handle your tax debt. Here we share the options for taking care of your IRS tax debt and some tips to do so.

Should I File My Taxes to Avoid Tax Levies by the Internal Revenue Service?

First things first – you must file your taxes. Even if you can’t send in a payment with the filing, the forms must be completed and submitted. Missing the filing deadline can add penalties on the amount you owe. If you must file an extension, make sure that you get the extension in by the April deadline and get your taxes in by the extension deadline.

Request a Payment Plan to Avoid Garnishments

There are options if you can’t have your taxes in by the extension date. Ask for an installment agreement. If you owe more than $25,000, you will have to pay via auto drafts through your bank. 

While payment plans will include penalties and interest, it’s best to pay something if you can. If it’s impossible to afford your basic living expenses and pay the taxes, ask for a temporary payment delay. Request a settlement, or Offer in Compromise to help you pay a lesser amount.

Get Help from a Professional for Tax Debt Settlement

A tax expert can help you navigate the IRS options and make sure you choose the best option for you.

Frequently Asked Questions

Does The IRS Offer Debt Forgiveness?

The IRS does offer debt forgiveness. Forgiveness means that you can reduce your tax debt. While this is rarely approved, it is possible. 

The Debt Relief Program provided by the IRS has a few options to help you figure out repayment. If you owe $50,000 or less, you could be eligible for the program. It also requires that your income be under $100,000 for an individual and $200,000 for married couples.

You apply for tax debt forgiveness and wait for your approval. The IRS will collect financial data to decide if you are qualified. Once approved, you must agree to the terms and follow-through.

Does the IRS Offer a Hardship Program?

The Internal Revenue Service has a Federal Tax Relied Hardship Program for those unable to pay tax debt. Apply for the IRS Currently Not Collectible Status. You will have to complete the Collection Information Statement that the IRS will use to determine if you qualify. 

You can be approved for this program if you don’t have the funds to pay your tax debt and cover your living expenses. Once approved, you cannot face property, bank account, or paycheck seizure. Once you’re in the program, you should then find out about getting in the Fresh Start Program to handle your taxes at some point. 

The program can protect you for up to ten years. The IRS has ten years to collect tax debt; they can remove them from your file. Every two years, the IRS will look over your financial situation and look for income increases that could make you ineligible for continuation in the program.

As your new tax debts come in, those will not be added to your program. So, pay your new taxes if you can. While under hardship, you can continue to make small payments to help you bring down your tax debt.

What is the IRS Fresh Start Program?

The IRS Fresh Start Program allows taxpayers to pay their taxes over six years. Your payment amount each month will be based on your income and assets. The Fresh Start Program stops interest, penalties, liens, seizures, and wage garnishments. If you owe less than $50,000, you may be eligible.

There are two payment options:

Extended Installment Agreement offers six years to pay off your tax debt. The IRS has also extended the short-term payment plan in light of the pandemic to 180 days. It was usually 120 days. 

If you are setting up a payment online, don’t just take the payment plan presented if you cannot afford it. Pick up the phone and call the IRS to see what you can do.  

Offer in Compromise allows you to pay less than what you owe. The IRS will consider your income, assets, and expenses when determining your eligibility. All tax returns must be submitted. If you are in the middle of an active bankruptcy, you will not qualify.

To qualify for the IRS Fresh Start Program, you must file all of your tax returns and continue to do so while in the program. You must complete IRS Form 9465 and provide any supporting documents as requested.

How do you qualify for IRS forgiveness?

Your eligibility for IRS forgiveness depends on your income and expenses. You can also qualify if your property or business has had losses due to a declared disaster. If you are divorced or legally separated and your spouse is responsible for the tax debt, you can have your liability waived. 

Important IRS Forms

Form 1040

The main tax form is 1040, and it includes all information from the W-2 you received from your employer. 

Form W-4

This is the form your employer will complete when you are first hired. It’s where your allowances are submitted. 

Form 656

To apply for an Offer in Compromise, you will use Form 656

Should I Get Tax Help?

If you are behind on your taxes, it’s time to take care of the situation. For expert assistance, contact IRS Tax Relief Network today. We can walk you through the steps and help you complete and file all the forms needed to help with your tax debt. The IRS Tax Relief Network can help you find out your balance, collect tax records, set up payment plans, and apply for an Offer in Compromise.