If you owe the IRS and are going through a period of financial hardship, there are ways that you can get relief. Being buried under debt can be emotionally and physically exhausting, but knowing how to approach the situation can make it easier to handle. The IRS Fresh Start Initiative and other resolution tactics can make a significant difference in your debt burden. This is what you need to know about IRS tax debt resolution Program.
The IRS Fresh Start Initiatives
Beginning in 2011, the IRS Fresh Start Program Fresh Start Initiatives Was were designed to help struggling taxpayers and businesses meet their debt requirements without suffering undue penalty and interest. The changes made it possible for taxpayers to use three improved outlets to pay off tax debt:
Installment agreements – If you can’t pay off a debt all at once, you can put up to $50,000 of debt as an individual or up to $25,000 as a business into an installment agreement. While these agreements have always been available, the initiative made it easier for taxpayers to use the agreements to settle debt. Under the agreement, you would make monthly payments not to exceed 72 months. Taxpayers can easily apply for an agreement online.
Offers in compromise – Allowing taxpayers to settle debts for less than the full amount owed, offers in compromise have become more flexible and cover a larger portion of taxpayers. If you can prove that a settlement amount is the most you can possibly pay within a period of time, the IRS may accept that as a reasonable offer. You can pay off an offer in compromise in lump sum or through an installment agreement.
Tax liens – Under the fresh start tax program initiative, the IRS has raised the amount at which it will file a tax lien against a debtor. In most circumstances, the IRS will not file a lien against a taxpayer unless he or she owes $10,000 or more. A soon as a taxpayer has met the requirements (i.e., negotiated a payment plan or paid off the debt), he or she can file for the withdrawal of the lien.
The IRS is interested in collecting as much as it can from individuals and businesses who owe money. These programs help taxpayers make responsible decisions instead of shying away from obligations. If you owe the IRS, there are also other alternatives that may be helpful to reduce or pay back the debt owed.
Other Debt resolution Programs for Individuals
As an individual taxpayer, here are some other methods of tax relief you may want to look into:
Past returns – Reviewing, filing, and amending previous tax returns can reduce tax liability. If a mistake was made and/or if you were owed a refund in previously unfiled years, shoring up your tax returns can improve the outlook of your current tax liability. You can only claim a refund within 3 years of the tax return year, and any potential return may be applied toward other tax debts.
Innocent spouse relief – If you filed jointly with a spouse who filed a return incorrectly, you may qualify for innocent spouse relief. The IRS won’t hold you liable for the amount, if you can prove that you had no knowledge of the tax responsibility or error.
Financial hardship – Anyone who is going through demonstrable financial hardship may qualify for status as “currently non-collectible.” These temporary delays may be enacted to give you time to pay the debt without compromising your immediate well-being.
Other Debt Resolution Programs for Businesses
A business in crisis may not see the same level of assistance from the IRS. The agency may choose to close your company instead of helping you find better ways to pay the debt you owe and keep your business in operation. If you have neglected to pay payroll and other taxes, you may want to consider contacting a professional to evaluate your options. Every business is different and may have different resolution tactics available to minimize the impact of tax debt.
Contacting a Professional
Filing for bankruptcy should always be a last resort for individuals and businesses that owe the IRS. A tax resolution expert who is an enrolled agent will have the in-depth tax information needed to help you dissect your situation and develop a strategy for addressing your debt. Very rarely is debt completely forgiven, but there are several programs that can minimize its impact on your life.
Learning more about your situation is the first step to getting your relationship with the IRS back on track. Avoid tax liens and having your assets compromised by reaching out to Long Island Tax Resolution Services today.