IRS is the most intimdating entity to be indebted to – short of a literal mob boss. See if your eligible for tax forgiveness, and check out some other options.
Being in debt is never an enjoyable experience. Owing money to any lending entity can be stressful, but there are few more nerve-wracking than the IRS. That’s right: the internal revenue service can leverage the full force of the government against you, making them the big bad of debt collectors.
If you’re drowning in tax debt to the IRS, it may feel like getting back on your own two feet might be impossible. But as it turns out, there may be some options available to those who are deep in financial trouble.
Depending on the specifics of your case, you may be eligible for tax forgiveness from the IRS. Read on and we’ll go over all the information that you should know, as well as other options for getting out of tax debt.
An Offer in Compromise
You owe more money than what you currently have in your possession. It’s a situation that no one wants to be in, but it happens to more people than we like to admit. How can you give what you don’t have?
The IRS understands this, and though it may be hard to believe, they might be sympathetic. Or, at the very least, they understand that it would be better to have some of your money instead of none of it.
If you only have the resources available to you to pay for a partial amount of your tax debt, you may be able to apply for a process known as an offer in compromise. This is when the IRS takes a look at your finances and determines what is realistic for you to pay given your current circumstances.
If successful, the IRS can offer a reduced rate and you can owe a lot less money than you were initially required to pay. This reduced amount can then be paid all at once or over the course of different monthly payments. This is the most popular and often sought after form of tax forgiveness.
Not everyone gets it, though: it can be hard to be approved by the IRS and there is a large investigation process. It’s not as simple as saying you don’t have the funds and can’t pay. Then everyone would do it!
The IRS will look closely at your income, bank statements, assets, and a number of other factors when determining if you are eligible for an OIC. If they determine there’s a way you can pay more than you say you can? Trust us when we say: you will.
Outside of that, failure to follow proper tax procedures when submitting your taxes may make you ineligible for the program.
The Fresh Start Initiative
Recently, the IRS has made it easier for taxpayers to apply for an Offer In Compromise. They have expanded an initiative they initially launched some years back called the fresh start initiative.
Under this initiative, those applying won’t have to provide as extensive financial background information in order to apply. For example, the organization now only looks one or two years into a person’s financial futures instead of five.
Under the initiative, many taxpayers can also sign up to pay their taxes in monthly installments as opposed to a full lump sum. This applies to federal, state, and local taxes that are overdue.
The IRS also expanded what is known as the Allowable Living Expense standard, which decrees what kind of payments are permitted to be considered allowances. In this new change, credit card payments and bank fees are now considered allowances. More people are qualified for installment agreements under the new fresh start initiative rules.
Other Ways to Deal With Tax Debt
Tax forgiveness through these initiatives is one of the best ways to get out of tax debt. But it’s not the only thing you can do.
Hire an Attorney
If you owe a large sum of money, you might want to consider hiring an attorney who specializes in taxes. This attorney can look at the facts of your case and help you to come to an agreement with the IRS. They will be much better suited than you to negotiate your case and get things down to size.
An experienced attorney will likely be able to get you better terms on a payment plan than you could yourself. You will need to thoroughly vet who you hire, however, because there are many out there who hope to take advantage of those with tax troubles.
Not Currently Collectible
If you have no current way to pay your taxes, you could attempt to file as not currently collectible with the IRS. This is where the organization voluntarily agrees not to collect tax debt from you for the given year.
This only can occur when you provide sufficient evidence that paying your debt is not possible. In this situation, you can provide evidence as to why the IRS should not seize your property. This debt will then be added, in most cases, to your next year’s total owed.
If anything, filing as NCC helps buy you a little more time to get yourself back on track.
Tax Forgiveness From the IRS
If you’re in over your head in tax debt, you’re probably curious about how the process of tax forgiveness works. Reading the above information can help you determine what path might work best for you when it comes to handling your existing tax debt.
Need more financial advice, tips, and tricks? Check out the rest of our blog for more information.