IRS Tax Debt Relief Programs: Eligibility, Benefits, and Application Procedure

Are you looking for assistance in IRS tax debt relief programs and willing to apply for it? Then reading this article would help you get clarity about the IRS tax debt relief programs.

Internal Revenue Service (IRS) is an authority that enforces and administers federal tax laws. IRS is also responsible for collecting federal taxes for the United States federal government. IRS is an agency of the Department of Treasury. The IRS made tax debt relief programs to help taxpayers who are unable to pay taxes and penalties because of financial difficulties. Several programs are offered by the IRS that can help you in case you are facing difficulty in remitting tax debts due to a shortage of funds or time. You have to choose to apply among the IRS tax debt relief programs according to your eligibility.

Different IRS Debt Relief Programs and Their Benefits

Before we start discussing eligibility and the process of applying for relief programs, we must know the types of IRS tax relief programs and the benefits of the same.

Installment Agreement

If the taxpayer is unable to pay the tax due to a proven fund crisis and also IRS finds it genuine, then they may suggest an installment payment plan. Tax debts up to $100000 will be considered under this program for short-term (less than 180 days) and long-term (more than 180 days)  installment plans. You must follow the plan and remit all your debts according to the payment plan suggested by the IRS. This installment payment plan will provide an extension for you and reduce your burden.

Offer in Compromise

Offer in Compromise (OIC) is one of the most availed IRS tax debt relief programs. If the taxpayer is unable to remit the whole tax due, then according to this program a settlement contract will be made between the IRS and the taxpayer. This helps to reduce the tax debt amount and you do not need to pay the full tax debt.

Currently Not Collectible

If a taxpayer is unable to pay taxes for a certain time due to some financial hardship or any other proven circumstances then they can apply for the Currently Not Collectible program. If accepted by the IRS then any tax collecting activity will be stopped for the time permitted according to the IRS tax debt relief program. This program helps with time extension.

Penalty Abatement

You can apply for waived full or partial penalty by applying for Penalty Abatement under the IRS tax debt relief program. This allows partial or total waiving of some of the penalties.

Innocent Spouse Relief

This relief program is not for all. This comes in use when the return has not been filed or tax has not been paid due to proven unawareness or negligence of one of the spouses. This is a special case and its eligibility is also exclusive.

Tax Payer Advocate Service

Tax Payer Advocate Service is an organization that assists taxpayers in settling their tax debts who are facing financial difficulties.

Eligibility

As we can see there are several programs but please remember that the programs have some eligibility criteria for applying that may differ from each other. Your eligibility is the key factor for choosing a relief program to apply for. It is advisable to take the help of a qualified tax professional if you are naive to tax law. Here we have listed some basic and common eligibility criteria for applying.

Outstanding Taxes

Before you apply for any of the tax debt relief programs you must clear all other taxes and previous dues other than the debt you are applying for relief.

Timely Return Filing

Even if you cannot pay the tax in full, you must file all your returns on time. Your timely filing of returns will show your sincerity towards tax laws.

Financial Hardship Proof

The most important eligibility to apply for the IRS tax debt relief programs is the proof of your financial crisis and the significant reasons for not paying taxes.

Ability To Pay

How much you can pay or when you will be able to pay should be your deciding factor for availing of the relief program. According to your ability to pay the debt you can choose to apply for an installment contract or offer in compromise or any other.

Procedure Of Application

The procedures of different IRS tax relief programs may differ a little. We have stated the general procedure of application for relief here. You may need to consult or take the help of any advocate or qualified tax professional to apply for the right relief program.

Check Your Eligibility

Check eligibility for the relief program that you are aiming to apply for. Clearing previous dues, timely return files, or any other requirements can be part of the eligibility.

Choose The Suitable Relief Program

You must choose to apply for the relief program according to your eligibility and the ability to pay. This is the most important step of the process.

Gather All Required Documents

You must gather all documents that can prove your financial inability to pay tax debt before you apply for the relief.

Include The Explanation

Apart from the documents you should include a logical explanation of the delay in payment or non-payment and significant reasons for getting the relief.

Submit The Application

Submit the specific forms issued by the IRS for the specific program with the proper documents required to back your application for the IRS tax debt relief program.

Review and Track

After applying you must keep tracking and reviewing the application after the period given by the IRS and wait for the decision.

Conclusion

Settling your IRS tax debts is necessary for you and your business to continue receiving legal sanctions and benefits. Do not miss filing your return on time even if you are not able to pay the tax immediately. Paying the tax debt partly also may help you avoid a huge penalty. However, we all know financial crises can occur anytime. This is why the IRS tax debt relief programs have been introduced. You should avail the benefits of the program and settle your tax debt in case you come across such an unavoidable crisis.