How Do I Reduce Back Tax Debt During Financial Hardship?

There’s never a good time to have tax debt. When back taxes start to accumulate, it can lead to financial hardship. Your back tax debt might be large enough that you can’t afford to pay it. Alternatively, if you are paying your back taxes, it might prevent you from paying other bills. Don’t let your back taxes send you into financial turmoil. Working with a tax resolution professional can be the help you need to get out of tax debt, for good. The team at Platinum Tax Defenders has years of experience helping their clients settle back taxes. Many of their clients come to Platinum because they’re in financial trouble and unable to pay. If you owe the IRS more than $10,000 in tax debt, there are options for you. The IRS has several back tax settlement options to help those in financial trouble.

Offer In Compromise

An Offer in Compromise deal is one way to settle back taxes for much less than you owe. A tax relief professional can help you apply for an OIC with the IRS. An Offer in Compromise is an agreement between the taxpayer and the IRS. The deal settles the taxpayer’s back taxes for much less than they owe. Platinum Tax Defenders can save their clients thousands of dollars in back tax debt through OIC deals. Most recently, Platinum effectively got one of their client’s liability down from over $140,000 to $100.

When Does The IRS Accept Offer In Compromise Deals?

The IRS may accept an Offer in Compromise deal under several conditions. However, when attempting to reach an Offer in Compromise settlement, it’s best to work with a tax resolution professional. A tax relief expert knows how to apply for an OIC with the IRS to get you the best outcome. If you want to pay less than you owe, call Platinum Tax Defenders today.

Doubt As to Liability

The IRS may accept an OIC if there’s a doubt as to liability. The IRS may approve an OIC if there’s a dispute regarding the existence or amount of the back tax debt. However, if you’re going to dispute a back tax debt against the IRS, don’t do it alone. Another benefit of working with a tax relief expert is they will negotiate with the IRS for you.

Doubt That Debt Is Fully Collectible

If the IRS doubts they can collect the full back taxes from you, they may approve an Offer in Compromise. Doubt as to collectability exists when the taxpayer’s assets and income equal less than the full amount of back tax debt. You also want to work with a tax attorney to settle your back taxes in this case. To present to the IRS that you are unable to pay your taxes, you will need proof and documentation. An experienced tax resolution professional can help you gather the necessary documents.

Effective Tax Administration

Lastly, the IRS may approve an OIC if there’s an Effective Tax Administration case. Effective Tax Administration cases are one area where tax relief experts put their negotiation skills to the test. This type of Offer in Compromise exists when a client doesn’t dispute the amount of taxes they owe. In this case, the client has the money to pay but has an important reason for not paying. To win your case, you’ll have to convince the IRS that accepting the offer is better than collecting the taxes. The IRS divides Effective Tax Administration offers into two categories—economic hardship and public policy or equity grounds.

Economic Hardship

Clients must prove that paying their back taxes in full would place them in severe financial hardship.

Public Policy or Equity Grounds

The IRS agrees that tax collection would “undermine public confidence” that the IRS is administering laws fairly. Effective tax administration deals reflect the situation laid out in the offer and cannot be $0.

Currently Not Collectible

The Currently not Collectible designation is another way to avoid taxes if you’re suffering from economic hardship. Currently Not Collectible is a status a delinquent taxpayer can have with the IRS. In this case, the IRS temporarily pauses any current collections against the taxpayer. Currently Not Collectible stop levies, threatening letters and collection enforcement until the taxpayer’s current financial situation improves.

Who is Eligible for Currently Not Collectible Status?

For a taxpayer to qualify or Currently not Collectible, they must demonstrate financial hardship. Financial hardship means that paying living expenses leaves little to no room to pay off back taxes. The taxpayer must show a severe economic disadvantage and not just a small inconvenience. Working with a tax attorney, in this case, can help. A tax resolution professional knows how to negotiate with the IRS to get you Currently not Collectible designation. Not everyone will get Currently not Collectible status when they apply. Currently Not Collectible status isn’t a permanent solution; it’s only temporary relief. When your tax relief professional gets you CNC status, you can work with them to determine permanent tax relief options.

Installment Agreement

An Installment Agreement is another way your tax relief professional can help you. If you can’t pay back your full tax debt in one lump sum, an Installment Agreement might be for you. With an Installment Agreement, a tax attorney can help you negotiate an affordable monthly payment. It’s best to work with a tax relief expert in this case so they can arrange the monthly payment you can afford.

Experiencing Economic Hardship? Get Help From A Tax Relief Professional

Hiring a tax relief specialist can get you a better deal when attempting to pay off back taxes. Working with a tax relief expert can be especially helpful when you’re experiencing economic hardship. A tax attorney can help you determine which repayment method is right for you. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. Owing back tax debt can leave you in bad financial shape. The IRS only wants to get what money you owe them in back taxes. Often, they are willing to help you settle back taxes, but you have to know how to try. That’s where a tax relief services company can come in handy. When you hire a tax resolution professional, there are other methods you can use to avoid expensive back tax debt. Call Platinum Tax Defenders for a free consultation today.