Understanding IRS Tax Debt Relief Programs: An In-Depth Guide

For individuals going through hard times financially or who are unable to pay their full tax liability, dealing with tax debt can be a scary experience. The Internal Revenue Service (IRS) offers a number of tax relief programs to help taxpayers in this kind of situation pay their debts. The Offer in Compromise (OIC) program is one of the most popular choices. It lets taxpayers settle their tax debt for less than the full amount due. This article tells you everything you need to know about the IRS tax debt relief programs. It focuses on the eligibility requirements, the application process, and the most important things taxpayers need to know.

What you need to know about the Offer in Compromise program?

The Offer in Commitment program is meant to help you get the most out of your tax return. The IRS looks at each case based on certain factors, such as the taxpayer’s ability to pay, their income, their costs, and the value of their assets. The main goal is to make a fair compromise that lets the IRS collect as much money as possible in a reasonable amount of time.

How to Know if You Can Get an Offer in Compromise?

Taxpayers must meet certain requirements in order to be eligible for the Offer in Compromise program, including:

  • Filed all required tax returns and made all required projected payments.
  • Not in the middle of a bankruptcy case right now.
  • If you are applying for the current year, you must have a valid extension for a return for the current year.
  • Before applying, employers must pay taxes for the current quarter and the two quarters before it.

Putting together and sending in the application for an offer in compromise

Forms 433-A (OIC) for individuals and Form 433-B (OIC) for businesses must be filled out by eligible tax payers in order to apply for an Offer in Compromise. Taxpayers must submit Form 656(s), which lists individual and business tax debt separately, along with the necessary paperwork. A non-refundable application fee of $205 and a non-refundable starting payment must also be sent with each Form 656.

Choosing the Method of Payment

There are two ways for taxpayers to pay for their Offer in Compromise:

  • Lump Sum Cash: Include an initial payment of 20% of the total offer amount with the application. If the offer is taken, the rest of the balance can be paid off in five payments or less.
  • Periodic Payment: Include an initial payment with the application and pay the rest of the balance in monthly amounts while the IRS looks over the offer. If the offer is taken, the monthly payments will have to keep going until the debt is paid off in full.

Low Income Certification Guidelines

During the offer review time, taxpayers who meet the Low Income Certification Guidelines do not have to send the application fee, initial payment, or monthly payments.

How the Offer in Compromise process works with the IRS

During the evaluation process, the IRS applies non-refundable payments and fees to the tax liability, stops other collection activities, and extends the legal assessment and collection time. Taxpayers must make all payments needed by the offer, but they don’t have to pay on an existing installment agreement. If the IRS doesn’t make a decision within two years of the date the offer was sent, the offer is automatically accepted.

Meeting the terms and conditions of the offer

Once the IRS accepts the Offer in Compromise, tax payers must meet all the requirements listed in Section 7 of Form 656. This includes filing all necessary tax returns and making all payments. Federal tax liens stay in place until the terms of the offer are met, and the public may be able to look at details about the offer.

A Brief Look at the IRS Tax Forgiveness Program

The IRS Tax Forgiveness Program, also known as the Offer in Compromise, offers taxpayers the opportunity to settle their tax debt for a lower price. It aims to give individuals who owe back taxes to the IRS a way to find financial relief.

How to get into the IRS’s Tax Forgiveness Program?

The program isn’t guaranteed for all taxpayers, and it’s up to the IRS to decide who gets to use it. Individuals must meet certain requirements to be eligible for the IRS Tax Forgiveness Program, such as: owe at least $10,000 in back taxes to the IRS.

showing that you can’t pay the full amount in a decent amount of time.

How to apply, and what we can do to help?

Taxpayers can use a three-step process to apply for the IRS Tax Forgiveness Program. The first step is a free meeting to find out who is eligible and what to expect. If the taxpayer is eligible, the next step is the investigation part, during which the IRS looks at the taxpayer’s finances. The last step is tax resolution, which is when the IRS and the individual talk about a good way to settle the problem.

  • Individuals can find out if they are eligible for our tax resolution services, and we can help with the application process.
  • In order to determine whether applying for the IRS Tax Forgiveness Program is a good idea, we offer expertise in assessing individual situations.
  • Even though there is no promise of acceptance, we can help you get through the process in the best way possible.
Conclusion

The IRS has a program that will help you get your taxes back on track. This program lets taxpayers settle their debts for less than the total amount they owe, as long as they meet certain requirements. Also, the IRS Tax Forgiveness Program offers tax payers the opportunity to settle their back taxes.

We know how complicated the IRS tax debt relief programs are and can help individuals who are looking for relief in a big way. We offer a variety of services that are tailored to the needs of each client. This gives them the best chance of getting a good outcome with the IRS. If you’re dealing with tax debt, contact us today for a free consultation to find out what your options are and take the first step toward financial relief.

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