IRS Tax Debt Relief Programs: Definition, Eligibility, and Type

IRS Tax Debt Relief Programs: Definition, Eligibility, and Type

IRS Tax Debt Relief Programs is a great initiative by the government to help taxpayers when they cannot afford to pay their tax debt under certain situations. When the IRS considers forgiving your tax liability, first of all closely check your present financial conditions. It means the IRS does not collect or can collect more than you can actually pay.

In general, tax-debt relief is a very broad concept, it covers numerous options, each designed to make the best possible peace between taxpayers who have filled in behind and the IRS. Relief is generally provided in terms of a payment plan or a debt settlement. Which one is suitable for the tax-debtors' hinges on their overall financial condition?

Who might need Tax-debt Relief?

Here are some situations when taxpayers need the help of the relief program:

Those taxpayers who have fallen behind and do not have any sources to pay their debt via personal loans, home equity loans, investments, credit cards, etc.

Those who could not file tax returns for some years, but who have managed to operate beneath the radar of the IRS.

Those taxpayers in arrears have come to the attention of private debt collectors of the IRS.

Those whose debt is so seriously delinquent, and the IRS has told the State Department to revoke, deny, or confiscate their passports.

The major focus of the IRS Tax Debt Relief Programs is to support delinquent taxpayers, who are striving hard to get themselves square. The best part is, any of these initiatives can be started by the taxpayer. Besides, for those reluctant to pass this journey along, a tax-settlement industry has grown to guide them on how they can navigate the agency’s rules.

What you should know before applying for the IRS Tax Debt Relief Program?

Before applying for the programs, know how much in taxes you owe to the IRS. When you are aware of your current standing with your tax debt, you can actually be prepared to ask for IRS forgiveness.

There are different mediums to know how much you own like, you can check online through the new portal of IRS, you can also call the IRS or send mail to the IRS a form and the best one is to contact a tax professional who does the research for you.

It does not matter how you figure out how you owe in back taxes, you must be aware of it before seeking forgiveness.

The Eligibility Criteria

As said, the IRS offers some relief options for taxpayers who own unpaid taxes. The eligibility criteria for each option vary as per the circumstances regarding the unpaid debt. Here is a rundown of the forgiveness and relief options:

· Installments Agreement (IA): IA allows you to pay down your tax debt in chunks if you are not able to pay the amount in full. The typical repayment period is about 72 months. This option is for those who owe less than $50,000 in combined tax, interest, and penalties.

· Innocent Spouse Relief: This program allows qualified applicants to avoid penalties from tax inaccuracies or fraud they are not aware of.

· Currently Not Collectible (CNC): CNC generally works as a clean slate program; this is mainly for those who can prove they cannot pay back tax debt.

· Offer in Compromise (OIC): OIC is basically a settlement option that qualifies some taxpayers to pay far less than what they actually owe to the IRS.

There are two main factors, you need to know. First, IRS tax debt relief does not work automatically. Means, just because you meet all the requirements for any of the forgiveness options, you will come under the program automatically. You will need to fill out the proper IRS debt relief program form and make sure you comply with all applicable needs.

The second thing is the IRS will not consider you for any tax relief support unless you have filed all of your tax returns from current and previous years. The IRS will not hold that you have filed a return late against you when assessing your eligibility. So, in case you have unfiled tax returns, getting current is the initial step to get the benefits of IRS Tax Debt Relief Programs.

The Bottom Line

Understanding your tax debt and dealing with the IRS is no piece of cake. You will have to go through various issues and obstacles. Fortunately, there are many professionals who can actually guide you to navigate your options. Do proper research and find the right professional who can help you throughout the process.