Tax Resolution Programs
Outside of tax season in April most people don’t like to think about taxes, especially any tax debt that they may have accrued. It can be daunting to try and figure out how to resolve tax debt issues, especially without the help of a professional. Many taxpayers don’t know their options or who to turn to for assistance. The IRS actually have resolution programs to assist taxpayers with their tax debt, here are some of them:
Offer in Compromise
An Offer in Compromise is a request to settle your tax liabilities for a portion of the debt. The proposal is based on your ability to pay through liquidating or borrowing from assets and income. It is a fantastic option for taxpayers with tax debts that far outweigh their ability to pay the debt. The IRS has guide lines and check lists to prequalify taxpayers for this program. To apply for an Offer in Compromise you must provide information such as: bank accounts, retirement accounts or savings funds, owned or leased vehicles, and homes under their name. You also need to list your monthly income and necessary living expenses and some of the expenses are capped by IRS National Standards.
Once submitted the IRS could take anywhere from 6-8 months, sometimes, up to a year or more to assigned an agent to work on the request and make the determination. If for some reason your request is denied, you will be given Appeal rights to appeal the denial.
Currently Non-Collectible Status
For taxpayers that are experiencing financial hardships, such as unemployment or living on fixed income, the IRS will stop collection actions and allow you time to get back on your feet. Depending on if your financial hardship is temporary or permanent the ‘noncollectable status’ could be granted for 2 years or permanent.
Installment Agreement
For taxpayers who are unable to full pay the debt but has the ability to make monthly payments. The payment amount depends on your disposable income after necessary living expenses are paid. With the Fresh Start Initiative program you might not need to disclose your financial information depending on your total tax debt and the time the IRS has to collect the debt.