
Most people dread tax filing and payment deadlines, and many are unable to file or pay their dues despite their best efforts. To ease the burden on taxpayers, the IRS offers several tax debt relief options. If you owe a significant amount to the IRS and are unsure how to handle the situation, help is available. The IRS tax attorneys at the Law Offices of Nick Nemeth are experienced in resolving a wide range of IRS tax issues and provide comprehensive tax relief services and tax resolution strategies to guide you toward the best possible outcome. In this blog post, we discuss seven IRS tax debt relief provisions you should know about to help avoid penalties, interest, and levies.
1. Installment Agreements
An Installment Agreement allows taxpayers to pay off their IRS tax debt in manageable monthly payments instead of a lump sum. This option is ideal for individuals who cannot pay their full balance immediately but can afford to make regular payments over time. The IRS offers several types of installment agreements, including short-term and long-term plans, depending on the amount owed and the taxpayer’s financial situation. Before applying, it’s important to assess eligibility, as approval is not automatic and certain conditions must be met. Consulting our experienced tax professionals can help you understand your options and ensure proper filing.
2. Offer in Compromise (OIC)
An Offer in Compromise is a tax relief option that allows eligible taxpayers to settle their tax debt for less than the full amount owed. This program is typically considered when paying the full balance would cause financial hardship. The IRS reviews the taxpayer’s income, expenses, asset equity, and overall ability to pay before deciding whether to approve the offer. If accepted, the taxpayer may pay a lump sum or follow a short-term payment plan to satisfy the reduced amount. Because the application process is complex and approval is not guaranteed, understanding the eligibility criteria and submitting accurate documentation is crucial. This tax debt relief program is one of the most effective ways to settle your tax debt and can lead to IRS tax debt forgiveness in qualifying cases, providing significant financial relief.
3. Currently Not Collectible (CNC) Status
Currently Not Collectible (CNC) status is a form of temporary IRS tax debt relief granted when a taxpayer is unable to pay their outstanding tax balance without causing financial hardship. When the IRS places an account in CNC status, it suspends active collection efforts, including wage garnishments and bank levies. To qualify, taxpayers must submit detailed financial documentation proving they cannot pay their tax debt after covering necessary living expenses. While interest and penalties may continue to accrue, CNC status offers valuable breathing room until the taxpayer’s financial situation improves, or further resolution options become available.
4. Penalty Abatement
Penalty abatement is an IRS tax relief program that allows eligible taxpayers to request the reduction or removal of certain penalties, typically those imposed for late filing, late payment, or failure to deposit taxes. The IRS may grant this relief if you can demonstrate reasonable cause, such as a serious illness, natural disaster, or other uncontrollable event, or if you qualify for First-Time Penalty Abatement. Supporting documentation is crucial when submitting a request, as the IRS evaluates each case on its specific facts. While abatement does not eliminate the tax owed, it can significantly reduce the overall burden on the taxpayer.
5. Discharging Tax Debt Through Chapter 7 Bankruptcy
Chapter 7 bankruptcy may help eliminate certain IRS tax debts, provided specific conditions are met. Generally, the tax debt must be income tax, and the return must have been due at least three years ago, filed at least two years ago, and assessed by the IRS at least 240 days prior to the bankruptcy filing. These timelines are known collectively as the “3-2-240 rule.” Additionally, the debt must not be linked to fraudulent activity or tax evasion. While Chapter 7 can discharge your personal liability for qualifying tax debts, any existing federal tax liens may still remain enforceable against your property.
6. Innocent Spouse Relief
If you filed a joint tax return and your spouse or former spouse made errors or omitted income without your knowledge, you may qualify for innocent spouse tax relief. This IRS provision protects you from being unfairly held responsible for additional tax, interest, or penalties related to your spouse’s inaccurate reporting. It is especially useful in cases of divorce or separation, where spouse tax relief ensures you are not liable for the other party’s tax mistakes. To qualify, you must show that you were unaware of the issue at the time of filing and that holding you accountable would be unjust under the circumstances. Consulting our IRS tax relief attorney in Dallas can help you understand your eligibility and guide you through the application process.
7. Release of Wage Garnishment
The IRS has the authority to levy your wages, salary, and certain federal payments to collect outstanding tax debts. This wage garnishment continues until the tax debt is fully paid or the levy is released. However, if the garnishment causes significant financial hardship, meaning you do not have enough money left to cover your basic living expenses, you may be eligible to request a release or modification of the wage garnishment. To qualify, you will need to provide the IRS with concrete evidence of your financial situation, including income, expenses, and essential living costs. This relief option is crucial for taxpayers who want to avoid severe financial strain while resolving their tax debts.
Get Professional IRS Tax Debt Help
Navigating IRS tax debt relief options can be confusing and stressful without expert guidance. Our tax relief attorneys have extensive experience handling complex IRS cases and can provide help with IRS tax debt, guiding you toward the most appropriate relief provisions—from installment agreements to offers in compromise and more. With deep knowledge of IRS procedures and strong negotiation skills, they work to minimize your tax burden and protect your financial future. Working with our experienced tax attorney in Dallas can increase your chances of achieving a favorable resolution while ensuring all deadlines and documentation requirements are met. To explore personalized tax resolution services with our experienced tax attorney in Dallas, schedule a no-obligation, free consultation by calling (972) 426-2533. You can also fill out our contact form.