- May 27, 2021
- Posted by: blogtester
- Category: Tax Relief
Is there a tax bill from the IRS this year? There’s no need to panic if you find yourself in this unpleasant situation. The Internal Revenue Service (IRS) offers several IRS Debt Relief options that may benefit you.
You may break down your debt into manageable payments or reduce the amount of tax you owe the government. No, back tax relief will not eliminate your tax bill. In fact, it may end up making you pay more over a long period; but, paying to the federal government what you have owed will get a lot easier.
However, if you are in that boat, it is not the end of the world. You can take the necessary steps to lessen the impact of tax debt on your monetary well-bring, credit and life.
IRS Debt Relief Strategies
You have several options to strategize for back tax relief, the ones you can’t afford to pay in full when they’re due.
Here are five options you can think about.
Don’t ignore the issue:
The IRS, however, will not. Although if you can’t pay how much you owe, file your return on time. If that’s not possible, then file for an extension. The penalty for late filing is 5% of the tax owed for each month, up to a maximum of 25% of the balance.
Underpayment penalties range from 0.5 percent to 1% of the outstanding balance per month, with a maximum penalty of 25%. Your tax debt will rapidly increase if you do not file your return or make any payments on your obligation.
Be honest with yourself about your situation:
The IRS does not exempt anyone from tax debts. To settle your tax debt for a lower amount than you owe, you can fill the “offer in compromise” Form 656. These types of deals are only offered to people who are in dire financial conditions. You may be eligible if you or your family has had catastrophic healthcare costs or if you do not have a job any more and may not find any income generation in the future. The IRS debt relief “offer in compromise” isn’t something that happens regularly.
The IRS will consider the following factors when reviewing your offer in compromise application:
- Financial capability
Check out the IRS Offer in Compromise page to see if you meet the criteria for a lower tax bill. To confirm your eligibility and prepare your preliminary proposal, you can also use the Offer in Compromise Pre-Qualifier online.
The amount owed less than $10,000:
Do you have to pay less than $10,000 in debt? Take care of it on your own. What is the size of the balance? If the amount is less than $10,000, you may be able to handle the situation yourself rather than paying someone to assist you with the IRS. The IRS application for an installment payment schedule, Form 9465, can be completed online.
For any taxpayer owing less than $10,000, the service will necessarily agree to such a plan for debt relief taxes. Typically, the scheme allows you to pay off the amount owed, plus penalties and interest, for 36 months.
The amount owed is more than $10,000:
If you owe more than $10,000, try to talk to a tax attorney for negotiating with the IRS. Payment plans vary, and an experienced attorney can assist you in negotiating better terms. They can also help you in avoiding the imposition of a tax lien, which will harm your credit.
However, be cautious about who you are hiring. Consumers are regularly warned by state attorneys general about tax debt resolution frauds. If someone claims they can help you in IRS debt relief, or avoid IRS interest and penalties or resolve your tax debt for a fraction of what you owe, they are almost definitely lying and do not merit the fee they will charge.
If you have colossal government debt obligations, go for a streamlined installment agreement. Taxpayers with up to $100,000 in tax debt can now qualify for a Fresh Start agreement as part of the IRS’s Fresh Start program, which began in 2011. To qualify, you must file all previous tax returns and in the last five years must have not had another installment agreement. You won’t be eligible if you file for personal bankruptcy.
The advantages are substantial. Taxpayers have up to 84 months to pay the balance owed, as long as the term does not exceed the collection statute’s 10-year expiration date — the date of the assessment.
If you agree to sign a waiver, the payment period may be extended further. You won’t have to report your assets or income to the IRS either. The IRS will not place a tax lien on you if you agree to pay by direct debit or payroll deduction.
How can IRS Debt Relief Companies Help?
If the IRS is contacting you and demanding payment, it’s a good idea to seek professional assistance. Similarly, if you have an IRS payment plan with which you may be in default, work with experts. The Internal Revenue Service acknowledges that not everyone is able to pay their tax debt in full and on time. As a result, to get their money, the government organization is often prepared to accept various payment arrangements and one-time settlement offers.
If you hire a reputable back tax relief firm to represent you, they may contact the IRS to agree on an offer in compromise, an installment agreement, or penalty or interest abatement.
Platinum Tax Defenders will deal directly with the IRS on your behalf. Our experienced team of tax attorneys and consultants can assist you in resolving your tax debt once and for all. It is possible to negotiate with the IRS on your own, but this is not recommended. Allow us to assist you in reclaiming or keeping your hard-earned money before it’s too late.