A Guide to IRS Debt Relief

You should be aware of several important criteria if you owe money to the IRS.

Most important of all is to know that the IRS is like any other lender and is keen to a mass or collect any dues owed – that means they will take what they can when they can. An ‘Offer in Compromise’ is something they are always open to and if you are in debt to the IRS, it may be something you can utilize.

The second most important thing to remember, when in debt to the IRS, is that you should ensure you are properly represented. Make sure the representative you choose can state your case in a proper, experienced manner while dealing with the IRS. Many renowned firms are out there with experienced employees who know how to present your position to the IRS in the best way.  

Regardless of the amount, big or small, remember that paying the IRS whatever amount you can manage to pay, is a very important step. If you neglect the debt on your tax, the IRS will be compelled to implement stringent measures against you. They can implement a tax lien or levy against your property or your assets until your debt is cleared.

Paying your debt on time is always the best path to follow, though, sadly a lot of people simply cannot afford to take this route. If you find yourself in this unfortunate situation, you should go to a tax relief firm that’s equipped in negotiating with the government and dealing with the IRS. A good company can help convince the IRS to award you additional time to clear your taxes and even reduce the amount of tax you owe. 

An Offer in Compromise

An agreement between the IRS and a taxpayer that permits the taxpayer to pay less than the amount they owe is called an Offer in Compromise (OIC). The taxpayer can choose from the options of a) paying the tax in a lump sum or b) setting up an installment plan under this agreement. Many taxpayers have settled their IRS tax debt through the Offer in Compromise program although it might not be the best choice for everyone.

Depending on your situation, and your specific tax case, the IRS will sometimes accommodate you with an Offer in Compromise.

  • Assuming that the IRS determines that original sum due is contrarily uncollectable, a taxpayer can be accepted for this program.
  • In the event that you have a reasonable suspicion about your tax debt, which is known as “doubt as to liability,” you may be eligible for an Offer in Compromise.
  • Depending on the severity of the situation, the IRS will accept a lesser amount of payment than what is owed if it would cause unjust adversity to the taxpayer or their family. In a real life scenario, this would be if a family has debt with the IRS but needs the money to pay for their sick child’s medical care and clearing the tax debt would compromise that care or the child’s health.

Setting up an IRS Payment Plan

In the event that you cannot pay your tax debt, it is strongly recommended not to hide from the IRS as they might be inclined to work with you more than you’d assume. Requesting an installment agreement might be the best option if you are not able to fully able to clear your tax liability.

Also known as an IRS Payment Plan, this arrangement allows you to pay your tax debt over a period of time (up to five years in some cases), depending on the type of tax debt and how much you owe. If you’ve received a notice from the IRS, your first step should be to respond by following the instructions included with the notice. Usually, the IRS will instruct you to contact them by phone or mail. You will then receive further instructions and have the opportunity to request an installment agreement.

Leaning on the kind of tax debt and the amount you owe, there is an arrangement called an IRS Payment Plan that gives you a period of time to clear your debt – this can be anywhere up to five years in some cases. Following instructions given by the IRS is the first thing to do if you’ve received a notice from them. In the majority of cases, the IRS will advise you to reach out to them over the phone or through mail. Upon doing so, you will be given more instructions and have the chance to request an installment agreement.

The Bottom Line

Always keep in mind that you have different options you can choose from on owing the IRS money. The IRS presents many different ways for taxpayers to clear their debts as it’s in the money making business. Choosing to do nothing about it will only escalate your problem, hence you have to face the situation head on as it’s always possible overcome your tax debt issues permanently.

You can ask for help from an “enrolled agent” trained to represent taxpayers in front of the IRS if required. These tax professionals won’t charge you unless they help you succeed, and they are very much experience in setting up Offers in Compromise and IRS Payment Plans. For people who are not able to fully pay off their tax debt, there are different pathways of solving the problem.

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