Paying off the IRS tax debt can be stressful, especially when you are going through financial hardship. Though there is no easy escape from paying off the outstanding amount owed to the government, there are certain debt relief provisions that enable liable taxpayers to pay off their taxes easily and in a lesser amount. If you are concerned about your outstanding tax debt, this post outlines five common IRS debt relief provisions. Read on.
1. Offer in Compromise (OIC)
An offer in compromise is an agreement between taxpayers and the IRS that allows eligible taxpayers settle their tax debt for an amount less than the amount owed and start afresh. Before applying for OIC, use the Pre-Qualifier to confirm your eligibility for the claim. A taxpayer involved in an open bankruptcy proceeding is not eligible for OIC.
2. IRS Tax Installment Agreement
IRS Tax Installment Agreement is another IRS debt relief tool that enables financially-distressed taxpayers to pay off the outstanding tax debt through monthly installments over a defined period of time. Taxpayers are eligible for such debt relief if they meet the minimum requirements and have a valid reason to justify relief. Obtaining an IRS Tax installment Agreement eliminates the probability of wage garnishments, levies and other enforced collection provisions by the IRS. Nonetheless, the minimum monthly payment for each taxpayer depends on the amount they owe.
3. Innocent Spouse Tax Relief
Married couples who file a joint tax share both benefits and liabilities associated with tax. However, if one spouse is unaware of the underpayment of taxes, he or she can request for Innocent Spouse Tax Relief. A spouse is eligible for Innocent Spouse Tax Relief if they prove that they were unaware of tax liabilities of the other spouse. Those who are not eligible for this type of tax debt relief can go for Separation of Liability or Equitable relief.
4. Abatement of Penalties and interest
Taxpayers who fail to deposit required tax amount are often faced with various tax penalties and interests. The tax penalty is a way to push taxpayers to pay outstanding amount on time. IRS Penalty abatement is another IRS debt relief tool that helps taxpayers remove certain penalties assessed by the IRS. Two common penalties that can be Abated are Failure-to-File and Failure-to-Pay.
5. Currently Non-collectible Status (CNC)
Taxpayers who are unable to pay their tax debt due to lack of money can apply for Non-Collectible Tax Status. For gaining the CNC status, the taxpayer should be able to prove that paying off the owed amount would lead to economic hardship. It is the duty of the taxpayer to present their case to the IRS under CNC.
Every year, many people in the US face the repercussions of not paying their tax on time. Though there is no escape route to paying the debts, there are certain provisions made by the IRS to enable cash-strapped taxpayers to pay off their debts in comparatively lesser amount. If you are looking for help with your tax debts, look no further than Nick Nemeth. The Law Office of Nick Nemeth has years of experience in helping taxpayers with IRS debt problems and other IRS associated problems. To schedule a free, no-obligation consultation with one of our experts, simply call (972) 426-2553.