Tax Debt Relief – Yes, you have to qualify for this. As strict and ruthless as the IRS seems, there is a way to get relief from taxes if your qualify. There are basically three options to look at, they are:
2. Installment Plans
3. Offer in Compromise (OIC)
After reading what each option has to offer, you will have a much better idea on what to expect in the event you need tax debt relief.
Extensions are pretty much that – you can ask the IRS to extend the time past the normal filing deadline. It’s commonplace for many people to ask for extensions beyond the April 15th, filing deadline.
What relief will this give you? If you owe money, you won’t be put on a collection notice. You won’t have to pay anything while being granted an extension (generally 6 months), but the meter on interest will be ticking for that period of time.
Secondary Extensions – The IRS has several other extensions it grants for specific situations. They can range from 30 to 90 days. The qualifications all depend on the individuals circumstances.
The key to successfully working with this form of debt relief is communication. The IRS tends to be helpful when you are proactive; they become much less friendly when they have to chase you down.
If you owe money but can’t pay it, then you have the next option – the installment plan.
The IRS has their own payment schedule table. The repayment terms are from three to five years. Interest rates are set by the government and are generally fair. The first discussion you’ll have with the IRS is pretty straight forward. The amount you owe will be entered into their computer and the scheduled payment, according to their tables, will appear. If you’re able to meet those payments then all is well, if not, then this is where the negotiations start.
At this point the IRS will start asking for documentation concerning your finances. Since you are asking for a custom payment option, the IRS wants to make sure you qualify for the lower payment. It’s not that they don’t trust you, but the don’t.
Fees: The set-up fees to start an installment plan are in the $150.00 range. This can change year-to-year, it’s up to the discretion of the IRS.
Offer in Compromise
This is the purest form of tax relief the IRS offers. You’ll have to prove that you are pretty much insolvent and can’t afford to pay your bill. If you prove this fact, then you will go into negotiations with the IRS.
Can You Do This Yourself? Yes you can, but it is suggested to hire a professional tax agent. There are a couple of reasons, one is emotions. For many people dealing with the IRS is a emotional, traumatic experience. Under this type of pressure you can make mistakes and execute a bad deal. The second is – knowledge. A professional knows how to manage the paperwork and they have the negotiating skills to maximize results.
A compromise is generally a large reduction in what’s owed in return for a lump sum payment. Some people have seen their tax bills reduced as much as 80 percent.
Don’t think the IRS will go away, they won’t. Knowing what your tax debt relief options are puts you in a much better position to solve the problem – this is the best way to go.