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Understanding your tax relief options

On Behalf of | Aug 7, 2023 | Tax Law

Knowing the various tax laws can be daunting, especially when facing financial hardship. Many people don’t know that there are tax relief options available.

Whether you are dealing with unpaid back taxes, unfiled tax returns or other tax-related issues, help is available.

Installment plans

The IRS offers different types of payment plans for taxpayers who are unable to pay their taxes in full. One of those is an installment agreement that allows you to pay the taxes you owe over an extended timeframe. In some cases, only a portion of the tax is repaid through installments. This is called a partial pay installment agreement. 

There is a short-term payment plan that gives you an additional 180 days to pay in full. If you have an assessed tax liability less than $50,000, you can make monthly payments for up to 72 months as long as the payment is made via direct debit or payroll deduction, and the debt is paid in full before the statute of limitations expires.

Offer in Compromise

Another option, if you can’t pay your tax debt in full or are facing financial hardship, is an Offer in Compromise (OIC). This program will allow you to settle your tax debt for less than the total amount owed.

Temporary delay

The IRS has a program that can temporarily delay collection processes if it determines you cannot pay your taxes due to financial hardship. this is called uncollectible status, or currently not collectible. The delay will continue until your financial condition improves. However, penalties and interest continue to accrue until you pay the full amount.

Even if you can’t pay your taxes, you still need to file a tax return. If you don’t, the IRS will impose a failure-to-file penalty. Furthermore, you will be unable to have the opportunity to prove financial hardship, establish a payment plan or apply for an Offer in Compromise.

While tax relief programs can provide much-needed help, they often require an understanding of complex tax laws and procedures. You will want to reach out to someone who can help you better understand your options and obligations.