How Do Tax Relief Programs Work To Resolve IRS Debt?

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How do you feel when you receive a tax refund? Well, these might be some of the few times you get elated about hearing back from the government at a pocket level. Nevertheless, such moments might not be overwhelming if you mainly owe the IRS money, and worse could be if you are incapable of settling your tax bill.

If you have difficulty paying the IRS the amount you owe this tax quarter, you should look into tax debt relief programs. Despite the existence of programs accessible, you must exercise caution to avoid fraud.

What Exactly Is Tax Debt Relief?

Tax debt relief is a service the government provides if you cannot meet your tax payment. This can take the shape of a payment schedule or a consent decree in which the IRS promises to resolve your tax liability for much less than the entire sum you owe. Vast companies specialize in this quest and offer some of the best programs that help with tax debt.

Again, give Cesar that which is for Cesar. If you owe money to the federal government and cannot pay the invoice, you should consider your choices and establish a plan just before Tax Day, which is usually April 15.

Tax Relief Programs and Choices

There are a number of these programs to help you make your choices right. Moreover, these programs are specifically for citizens- (taxpayers) who owe IRS unpaid taxes.

1) Innocent Spouse Relief

If you were the victim of tax fraud or blunders that you were unaware of, innocent spouse relief might be of aid to you.

You could petition for Innocent Spouse Relief by submitting the IRS Form 8857, Claim for Innocent Spouse Relief, and any supportive papers. The request must be made within two years of the IRS’s primary collection campaign.

Remember, these processes are never instantaneous, and you must develop a certain level of patience. The IRS takes up to a maximum of 6 months to consider your request. Therefore, until then, you will have to wait.

2) Currently Not Collectible-(CNC)

If you are convinced and can prove that paying your tax debt will cripple your ability to meet day-to-day living expenses, then CNC is the savior of your situation. It grants you an extended timeframe to figure out how to meet tax debts without the IRS having to collect.

CNC compliance can be obtained by reaching the IRS immediately at the number listed on your tax notification or bill. You might also be required to provide a Collection Information Statement (Form 433-A, Form 433-B, or Form 433-F) and paperwork to verify your allegations to the IRS.

Unfortunately, a CNC status does not reduce your tax liability. Instead, it gives you an extended timeline to gather yourself and pay your tax dues. In the meantime, your outstanding balance will grow as the interests and penalties are continually assessed.

3) Offer In Compromise- (OIC)

An Offer in Compromise (OIC) permits you to settle your tax problem by paying less than what you owe. You must demonstrate that you:

  • You have inadequate assets and income to reimburse throughout the required term.
  • You are incapable of paying or would be inequitable, unfair, or create financial stress if they did so due to an aggravating situation.
  • You do not owe what is being imposed because a tax inspector misinterpreted the tax code.

Moreover, to qualify for (OIC), you must be up to date with all your tax fillings and have paid all the mandatory anticipated payments for the current tax duration-(quarter.) Unfortunately, you cannot qualify for (OIC) if you are immersed in bankruptcy.

Keep in mind that the rejection rate for OICs is comparatively higher, so you may wish to seek expert assistance before proceeding with the application procedure. Alternatively, you can utilize the OIC pre-qualifier tool to see if you are qualified for compensation.

The application process for an offer in compromise is tedious and involves a series of paperwork. You must complete and submit some documents to the IRS.

Besides the application forms and protocols, you must include $205 as an application fee and your primary payment with the package, or you could send your application through EFTPS.

It is stressful to owe taxes you will not be able to settle. The real kicker is that the IRS has a number of tax debt reduction options to assist you. If you do not believe you are a suitable candidate for tax debt relief, you do have other options. It may be prudent to visit a tax specialist for advice on your situation’s best strategy.

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