Taxpayers may be surprised to learn that there could now be wiggle room in their taxes thanks to the help of the Tax Debt Relief Act. This Act is among the existing IRS tax relief programs everyone can utilize when struggling to pay their due taxes. If you’re in a difficult financial situation, continue reading to learn about tax relief solutions that may work for you.
6 Tax Debt Relief Act Must-know FAQ Answers
1. What is Tax Debt Relief?
Every citizen has their tax responsibilities. However, among these expected responsibilities, sometimes there are circumstances that make paying taxes more challenging. As a result, tax debts can accumulate, causing you stress and worry.
While your situation may feel dire, there’s likely more room for negotiation than you might otherwise think. In these moments, it’s important to look at the Internal Revenue Services as a lender who collects what taxes they can, when they can. That means if you can present a proper case of your situation, you and the IRS can often agree on a tax debt relief program.
Tax debt relief programs are incentives or agreements that reduce how much in taxes a person or business entity owes the IRS. Alternatively, these programs can lengthen the period of payment on due taxes. To reduce your payment even further, with the help of a professional, you can also work on finding allowable deductions you can apply on your tax debt.
2. What Tax Debt Relief Programs Are Available?
The IRS can be lenient in two ways:
1. Offer in Compromise (OIC)
The IRS can allow a taxpayer to pay less than the full amount of their actual tax due. In an Offer in Compromise agreement, the IRS allows the taxpayer to pay their due taxes in a lowered lump sum or an installment plan.
2. IRS Payment Plan
It is never a good idea to hide from your IRS responsibilities. Doing so will only result in graver offenses and fines. Instead of running, keep in mind that the IRS may actually be willing to work with you. The IRS payment plan is one example of this.
This plan is an arrangement allowing a taxpayer to settle their tax debt over a set period of time. Depending on what kind of tax debt you owe the IRS, and how much, you can be given up to five years to pay your tax liabilities.
3. What Are the Qualifications for an OIC?
Some of the usual qualifications for an OIC are:
- The IRS concludes a taxpayer’s actual due is uncollectable.
- A taxpayer presents a legitimate case of doubt as to liability.
- The payment of tax debt would cause a taxpayer’s family undue hardship.
4. What Are the Qualifications for an IRS Payment Plan?
— IRS (@IRSnews) December 13, 2017
Basically, any citizen who cannot pay their due taxes can ask for an IRS payment plan. You can apply for this kind of tax installment plan through the phone, online, or by filling out IRS forms. Additionally, you can negotiate and choose how much your monthly payment will be. However, keep in mind that the computation is based on dividing the taxes you owe by 72.
5. Is Hiring a Tax Relief Professional Necessary?
When applying for tax debt relief programs, it’s helpful to use the services of tax relief companies. These companies can provide you with a tax relief professional who can build your case and represent you before the IRS.
Through the help of these tax relief companies, you may seek the assistance of “enrolled agents” trained to deal with tax relief cases. Often times, these agents will work with taxpayers on a success basis. That means they only get paid when they are successful in helping a taxpayer.
6. What Can Happen If I Didn’t Pay My Tax Debt?
Learn more about tax debt relief and the Tax Debt Relief Act from this video below:
If you’re in a financial situation where it is almost impossible to pay your taxes, remember that you have options available to you. The law considers financial crises, and the IRS can be lenient in some cases. Remember, as you have read, there are methods you can resort to when you cannot pay your taxes in full right away.
Have any other questions about the Tax Debt Relief Act? Let us know in the comments below!