Federal tax debt is one of the most fearful financial woes a business or individual may face. Government tax authorities such as the IRS wield so much power; they can confiscate your properties and even invade your bank account if you fail to meet your tax obligations. Many taxpayers receive their funds during tax seasons. However, it’s common for people to come up short. Recently, about 20% of taxpayers file their tax returns with a balance due of roughly $3,000.
The good news is that there are several ways to seek tax debt help when you are in a dire financial crisis. Tax-enforcement agencies usually try to collect money if they know the money genuinely exists. In challenging situations, you can obtain tax debt relief and reduce your debt.
What Is Tax-Debt Relief?
This broad term covers different options designed to foster peace between defaulting taxpayers and the Internal Revenue Service (IRS). Tax relief can take the form of a debt settlement or a payment plan. The terms and conditions for the tax debtor may vary according to their unique financial situation.
Who Qualifies For Tax-Debt Relief?
- Taxpayers who struggle financially to settle their debts through personal loans, credit cards, equity loans, etc
- Tax debtors in arrears who the IRS knows of
- Taxpayers with seriously delinquent debts of $50,000+ who face threats of having their passports revoked or confiscated
- People who have failed to file their tax returns for several years while operating under the radar
3 Easy Ways To Get Tax Debt Help
Work With A Tax Professional
Tax laws can be very complex, so it is ideal for working with a licensed tax professional. When you hire a professional tax attorney, they can find ways for you to get tax debt relief. Having a tax expert in your team is also worth it if your dispute with the IRS is complicated and your penalties are severe. If your overall debt is lower than $10,000, you could try to work things out with the IRS by yourself. However, consider seeking tax debt help from tax professionals if you owe more than $25,000.
Installment Plans
These work like real estate mortgages, but rather than paying your lender monthly, you settle the IRS every month. To reach a tax installment payment agreement with the IRS, you may have to meet the following conditions:
- You file your tax returns in time.
- You mostly pay your state income and late fees
- You can meet the minimum monthly payment required by the IRS.
Offer In Compromise
The IRS may allow you to pay a reduced amount of your debt in back taxes (offer in compromise). For this to happen, you should be able to show the IRS that you cannot afford to pay your total debt, but you are capable of paying the reduced amount in a lump sum or by short-term installments.
Finally, for innocent spouse programs, the IRS may offer relief for a couple if it emerges that one partner has hidden a tax liability from the other.
