IRS Tax Debt Relief Solutions Are Easier Than You Think

By on | Tax & Bankruptcy Law Information.

Numerous people face tax problems with the IRS. It is not the best situation to find oneself in, but if you are in need of tax debt relief, solutions do exist. In addition to typical debt consolidation, those seeking tax debt help can make use of “currently not collectible” status, installment arrangements, or the offers in compromise program.

“Currently Not Collectible” Status

Filing IRS Form 433-F, Collection Information Statement, will allow a taxpayer to be declared “currently not collectible” by the IRS. If you are facing serious financial hardship, you should consult a tax professional and discuss filing Form 433-F, which will provide the IRS with official evidence of your inability to pay tax debts. As a result, the IRS will cease all collection activities, including tax liens and wage garnishments. While a taxpayer is in “currently not collectible” status, the IRS will send an annual statement to the taxpayer stating the amount of debt still owed. This statement is not any kind of bill, but the IRS is required to send it every year. There is a ten-year statute of limitations on tax debt collection, which still applies when a taxpayer is “currently not collectible.” What this means is that if the IRS is unable to collect the debt during the ten-year period after a taxpayer declares “currently not collectible” status, then the tax debts will expire.

Installment Arrangements

Another potentially useful tax debt relief solution is a monthly payment plan. Setting up installment arrangements is generally the most convenient way to go about paying off any taxed owed to the IRS. In order to do this, you must either fill out a form and sent it through the mail or obtain the form from the IRS website. There will be a fee assessed to arrange a new installment plan, which can range from $45 to $105 depending on your individual situation. Payments will generally be automatically taken out of your bank account every month on the day of your choosing. This is typically a great way to get some tax debt relief, as the IRS would rather receive payments late or broken into monthly installments rather than not receive them at all.

Offers in Compromise

The Offers in Compromise program may be a smart option if you owe a large amount of money to the IRS that you will probably be unable to pay off. Filing an Offer in Compromise entails making an offer to the IRS to pay less than the full amount of the tax debt you owe. If you qualify for the Offers in Compromise program, you must agree to either pay a lump sum or spread your payments over a 24-month period. To apply for an offer in compromise, you will need to fill out IRS Form 656, Offer in Compromise, in addition to Form 433-A, Collection Information Statement.