IRS Tax Debt Management & Reduction Opportunities

IRS Tax Forgiveness Program

While the IRS is committed to ensuring that tax debts are paid, they are also understanding that, for many taxpayers, it may be challenging to pay back debt in full. Unfortunately, complete tax forgiveness is not commonly granted by the IRS, but they do offer several programs for taxpayers that cannot pay a debt in full right away. Some programs allow people to pay off debts in installments or even pause payments for a period of time. Others reduce the amount of debt to be paid. Each option, however, has its own set of requirements that must be approved by the IRS in order to be initiated. Tax Resolution can help provide different solutions based on your situation.

Offer in Compromise

An Offer in Compromise, or OIC, is an options that needs to be evaluated to see if the taxpayer has any settlement opportunities. With an OIC, the IRS will evaluate the taxpayers financial abilities and may consider a reductions (settlement) in the amount of tax debt owed, in most situations there will be an options to pay in a lump sum. (usually a lesser settlement amount) or in monthly payments (typically a higher settlement amount).

While an Offer in Compromise is the ideal choice for many taxpayers, not everyone will qualify for the program. If the IRS determines that the taxpayer can pay off the tax debt in full, or through an installment payment plan, or if you are currently in bankruptcy proceedings, you will not be eligible for an OIC. In addition, anyone that has failed to file tax returns or make any estimated tax payments, or employers that have not submitted employee tax deposits, will not qualify.

Installment Agreement

An Installment Agreement, or IA, will not reduce your tax debt, but it will allow you to pay off the tax debt over a longer period of time. It’s important to note that interest and penalties will continue to accrue until the tax debt is fully paid.

Fresh Start Initiative

Because the requirements for Offer in Compromise and Installments Agreements may be challenging to meet, the ORS created the Fresh Start Initiative to expand the benefits to more tax payers. The calculations for the OIC cases were adjusted with the intent of making the Offer program a more available option to more taxpayers. The OIC case is still based on proving Hardship… and the IRS stull makes this challenging for the taxpayer. Also, the taxpayer will need to have all taxes filed and deposits paid to be considered for the Fresh Start Initiative.

Innocent Spouse Relief

A married taxpayer may qualify for Innocent Souse Relief, or Injured Spouse Relief. There is specific criteria that needs to be met for the taxpayer to successfully take this position. A jointly liable spouse may have some options to separate themselves from a troubled spouse with back tax problems.

Currently Not Collectible

Those taxpayers that can demonstrate extreme financial hardship may be eligible for a Currently Not Collectible status (CNC). For example, anyone that has no additional money after paying living expenses could be considered. Qualifying for Currently Not Collectible status will not forgive your tax debt, but it will pause the payment for a period of time without the risk of a wage garnishment or levied bank accounts. However, interest and late penalties will continue to accrue during this time/ Any future tax return refund may also be withheld until the debt is paid in full.

Getting Started With a Tax Forgiveness Debt Plan

First, you will need to determine which plan is right for you, based on criteria including the amount of debt owed and your current financial status. Then, you will need the proper casework and the appropriate forms to the IRS and obtain approval for the relief you are seeking. It’s important to note, however, that the IRS will require that all tax return, from both previous and current years, have been filed… the taxpayer needs to be current and compliant.

Let Tax Resolution Help

If you owe a tax debt that you are currently unable to pay, it can be frightening and overwhelming to seek relief from the IRS on your own. At Tax Resolution, we strive to find the best solutions for our clients. Many of our Enrolled Agents are former IRS agents who leverage their tax knowledge to find workable options to address the back tax debts. We’ll review your unique situation, determine the best option for you, and submit the casework to the ORS on your behalf.

Don’t face your mounting tax debt on your own. Contact us today for a free and confidential consultation.