If you or your family are facing an IRS tax bill or debt that you can’t pay off, don’t despair. There are a number of options to consider to help you pay off your debt. Read on to learn about your options for IRS tax debt relief.
What Is Tax Debt Relief?
Tax debt relief refers to a variety of options designed to help taxpayers pay off their debts to the IRS. Tax relief usually takes the form of debt settlement or payment plans. The type of arrangement you make to pay off your IRS debt will depend on your overall financial situation, as well as the amount of debt that you owe.
Pay Off Your Debt Via Installment Agreements
Installment agreements are sort of like loan agreements that you make directly with the IRS, allowing you to pay off your debt in monthly installments over a pre-agreed amount of time up to six years. While you will pay additional interest as part of such an agreement, you can end the accrual of penalties with an installment agreement. Additionally, an agreement will help to stave off garnishments, liens, and other IRS debt collection activities.
If you owe less than $50,000 in taxes, interest, and penalties combined, you are eligible to apply for an installment agreement online at the IRS’s website.
Work With a Debt Settlement Company
A debt settlement company can work with you to reduce the amount you owe and set up a plan based on your personal finances. There are a number of different kinds of debt relief services, including for-profit companies and non-profit credit counselors. Before contracting to work with such a company, get a quote from at least three different companies and make sure that they are certified. Credit counseling services should be certified by either the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).
Negotiate Your Debt Through an Offer in Compromise
For those who are unable to pay back the full amount of their tax debt, the IRS offers a payment plan program called Offer in Compromise, or OIC. If you qualify for OIC due to your financial capacity, you can strike a deal with the IRS that results in a significantly reduced debt. However, it can be difficult to qualify for OIC. The IRS considers a number of factors, including your income, expenses, and ability to pay back the full debt.
First Time Penalty Abatement Policy
In rare situations, the IRS can offer delinquent taxpayers a penalty abatement if they demonstrate special hardship. The First Time Penalty Abatement policy allows the IRS to grant administrative relief for those who fail to deposit taxes, pay on time, and/or file a tax return under certain specific circumstances.
It can be overwhelming to find yourself in debt to the IRS. However, you can get help for your family using these or other programs to pay off your tax debt.