IRS Debt Resolution
Don't let your tax debt follow you.
Are you struggling with paying your tax bill? Or do you owe more money to the IRS then you can handle? We can put a stop to those scary IRS letters and help you settle things out. Depending on your financial situation, there are different options for tax relief typically involving negotiation for a lower settlement and/or a payment plan.
Tax Debt Resolution is a broad term referring to several actions you may be able to take when it comes to resolving your debt with the IRS. Depending on your current financial situation and the reason for seeking debt resolution, determines which options are best for your situation.
Installment agreements with the IRS are similar to loans: You agree to pay a set amount of money each month for a period of time, up to a total of no more than six years until your tax bill, including interest and penalties, is all paid off.
Like any loan, IRS installment agreements come with interest and fees, but they also have a number of benefits including:
Freezing new penalties.
Stave off liens, levies, garnishments, and other collections activities.
Make your debt payment more affordable by spreading the total cost over a period of time.
Offers in Compromise (OIC)
With an offer in compromise (OIC) you agree to settle your tax debt for less than the full amount owed, and you pay the IRS via lump sum or monthly installments.
Taxpayers who can prove that paying their full debt, whether now or over time isn’t possible, may qualify for an OIC.
The IRS will vary a host of factors before accepting an offer, including your income, expenses, and overall asset equity. Unfortunately the IRS only accepts these offers rarely, with the added effect you’ll have to pay a nonrefundable application fee to the IRS and pay 20% of your total offer amount upon application.
You’re most likely to be successful if the IRS believes you’ve offered the largest amount that the agency can expect to collect from you within a set period of time.
Currently Not Collectable (CNC)
In some circumstances, taxpayers who genuinely can’t afford to pay any money toward their debt, can get the bill deferred.
If the IRS deems your tax debt is “Currently Not Collectible,” the agency will cease collection efforts temporarily, which can give you some breathing room. However, there are downsides:
The debt accumulates interest and late penalties during deferment.
The IRS may file a lien against your property.
The IRS will apply your future tax refunds to your past-due tax bill.
Innocent Spouse Relief
Couples who file joint returns are both liable for the taxes they owe, but the IRS can relieve one partner of taxes, interest, or penalties if the other partner was at fault for underreporting the taxes owed.
To be eligible for Innocent Spouse Relief, you must meet the following criteria:
You filed a joint return with your spouse
Your taxes were understated due to unreported income or other errors on your return
You didn’t know about the errors
You live in a community property state
You request relief within two years of receiving an IRS notice of an audit, or taxes due, because of the error
It doesn’t happen often, but if you can demonstrate a special hardship the IRS may offer penalty abatement for your delinquent bill. In other words, the agency may remove certain penalties and stop adding new charges.
Under its First Time Penalty Abatement policy, the IRS may grant you relief for things like failing to file a tax return, pay on time, and/or deposit taxes.
The agency’s requirements include:
You filed the same return type, if required, for the past three tax years prior to the tax year in which you received a penalty.
You’ve filed all currently required returns or filed an “extension of time to file.”
You have paid, or arranged to pay, any tax due.
Interest abatement is more limited than penalty abatement and is rarely approved. The failure-to-pay penalty also continues to accrue until your taxes are paid in full. For that reason, you may want to wait until you fully pay the overdue bill before requesting relief under the First Time Penalty Abatement policy.