Paying your taxes is one of the most imperative parts of being a responsible citizen. However, taxes can often also become a significant financial burden for several individuals and businesses, especially during times of economic hardship. 

Fortunately enough, the IRS offers a variety of tax relief programs in order to help several taxpayers pay their tax bills when struggling financially. These programs offer an array of options for people and businesses who are currently facing tides of financial hardship, including Offers in Compromise, Installment Agreements, Currently not Collectible status, Hardship Relief, penalty Abatement, and many more. So, in case you’re struggling with the IRS tax debt, you can negotiate the IRS tax debt settlement via these options.

Every program in the list has its own set of eligibility criteria and application procedures, and it’s important to note that not all taxpayers qualify for each program that is listed. Some might be disqualified under several circumstances. However, these programs can stand to be a major lifeline for people struggling to make ends meet. It is for people who are in need of breathing room to gradually get their financial status back on track.

In case you are under the strain of financial hardship and it is the reason why you are having hardship paying taxes, then it’s best to explore all your options at hand by working with a tax professional. With the right assistance, you can find relief from all the piled taxes, moving forward with better financial stability. If you are under stress with the IRS Tax Relief programs, get help from our IRS tax resolution services.

What is Tax Relief?

Tax relief is the measure or provision in the tax code which helps to reduce the amount of taxes owed by the taxpayer. It is a government program or policy designed to provide financial support to those who are undergoing a financial crisis. Tax relief can be in several forms, including credits, deductions, and exemptions that can be applied to income tax, sales tax, and property tax, among many more.

A tax deduction is considered one of the most common forms of tax relief, which enables taxpayers to subtract a definite amount from the total sum of taxable money. For instance, in case an individual earns around $45,000 a year and is eligible for a deduction of $5,000, then the concerned person will have to pay taxes of $40,000. Tax relief is usually provided in order to incentivise a type of action or behavior. It can also be used in order to support low-income wage earners, or support small businesses to grow and create other opportunities.

IRS Tax Relief Programs

Tax relief, in summary, tax relief is any tax-related measure which helps lessen the financial burden of a taxpayer. There are several tax relief programs that the Internal Revenue Service (IRS) offers. Some are listed below. 

Offer in Compromise

An Offer in Compromise enables you to settle your tax debt for less than the total sum you owe. However, it is essential to note that not everyone is going to qualify for the program since there is a very strict application procedure. 

An Offer in Compromise (OIC) allows taxpayers to have a fresh start, helping them avoid the financial hardship that can result from back taxes. In case the IRS accepts the Offer in Compromise, the taxpayer will have to make a lump-sum payment or installments over a given period of time.

Installment Agreements

An installment agreement enables taxpayers to pay the amount they owe in the form of monthly installments over a given period of time. An installment agreement, also often called by the name of Payment Plan, is simply an agreement between the IRS and the taxpayer which enables the taxpayer to pay their debt amount on a monthly basis, over a given period of time. 

This is one of the many options given to taxpayers which help them pay their tax bill in full but in short amounts each month. There can be a variety of installment agreements on the basis of the amount of tax an individual owes and their current financial status. One of the most commonly availed installment agreements is the streamlined installment agreement, which enables taxpayers to pay off the debt in 72 months.

However, it is equally important to note that enrolling on an Installment Agreement with the Internal Revenue Service (IRS) will not diminish any penalty or interest that has come with the tax debt. Moreover, the people who fail to pay the debt on time may be subject to paying extra penalties and interest.

Currently not Collectible (CNC)

Currently not Collectible, also often known by the name Hardship Status, is a program designed by the IRS that helps taxpayers who are undergoing a financial crisis and are not able to pay off their tax debts. In order to be eligible for a CNC status, an individual should be able to provide evidence that they are unable to pay taxes. The evidence can range anywhere from critical medical issues to loss of income, which have contributed to their extenuating circumstances and stopped them from paying their debt.

After the IRS grants the CNC status, it suspends every collection activity on a temporary basis, including levies, liens and garnishments. While the taxpayer is currently in a CNC status, it is essential to know that the penalties and interest continue to accrue on the already outstanding debt. However, also note that the government isn’t going to take any form of enforcement action as long as the taxpayer is enrolled in the program.

Penalty Relief

The Penalty Relief program by the IRS enables taxpayers to request a reduction or waiver of the penalties which have been assessed on their tax account. Penalties can make paying the debt off harder since it rapidly grows in number. Penalty Relief can offer relief to taxpayers who have been assessed with piling penalties.

The several forms of penalties which qualify for relief include,

  • Failure to File Penalty
  • Failure to Pay Penalty
  • Accuracy-Related Penalty
  • Civil Fraud Penalty

The IRS compromise and settlement program, which is also often known by the name “Offer in Compromise” program, can stand as a viable option for taxpayers who are unable to pay their tax debt in full. With proper guidance from IRS tax resolution services, the stress about your debt might potentially lower down. 

How to File Back Taxes?

In case you have fallen behind on filing your taxes, you still can and the best idea is to file it sooner than later. Here are a couple of things to keep in mind,

  • Gather all essential information: Gather every document that is relevant to the years you need to file, including the W-2 forms, 1099s, and receipts for deductions.
  • Download all necessary forms: You should download the necessary tax forms for each year you are filing from the IRS website. Make sure you use the correct forms for the year(s) you are filing.
  • Fill out the forms: Fill out the forms with the necessary information. Also, ensure to add and double-check every piece of information that has been filled in.
  • Calculate owed taxes: In case you owe taxes for any of the years you are filing, then evaluate the same, including any penalties and interest and ensure to mention it.

After the forms have been completed, make sure to mail them to the correct address for the time period you are filing. 

Conclusion

In conclusion, the IRS tax relief programs are considered one of the essential resources for taxpayers who are struggling with an insurmountable tax debt. These programs typically offer several options which help individuals reduce or completely cut off their tax liabilities, and avoid penalties and interest, besides getting their finances back on track.

Whether it is an Offer in Compromise, or a Currently not Collectible status, there is likely a program which can help individuals resolve their tax issues. However, it is important to note that navigating the IRS tax relief program can be sophisticated which is why seeking help from a qualified tax professional is highly recommended. So, if you need help, avail our IRS tax resolution services today!

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Author

Mr. Michael D. Sullivan

Michael D. Sullivan is the founder of MD Sullivan Tax Group. He had a distinguished career with the Internal Revenue Service for 10 years. As a veteran IRS Revenue Officer / Agent, he served as an Offer in Compromise Tax Specialist and Large Dollar Case Specialist.

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