Are you worried about federal tax liens, wage garnishments and tax penalties? Paying back taxes owed to the Internal Revenue Service (IRS) can be difficult, especially if you don't have any enough money set aside to cover the full amount that you owe. The IRS offers tax debt solutions that are designed to assist based on a recognition that it is in the interests of both parties to reach an amicable resolution.
Tax Debt Solutions when the Debt is Not Currently Collectible
The need for paying back taxes could be alleviated if you lack the ability to pay your taxes. IRS Form 433-F, Collection Information Statement must be completed so that they can assess whether you have the ability to repay the debt. Once the debt is deemed to be uncollectible, the IRS will stop any wage garnishments and levies. The 10-year statute of limitations clock will continue to run.
File Chapter 7 or Chapter 13 Bankruptcy for IRS Tax Debt Relief
Filing for income tax bankruptcy is an effective tax debt solution, but you'll need to comply with the five different rules. Chapter 7 bankruptcy, also known as liquidation bankruptcy, discharges debt without any further payments. Chapter 13 bankruptcy eliminates debt, but uses a 3 or 5-year repayment plan to achieve that objective. The five rules below must be complied with:
- The back taxes owed must have a due date that is a minimum of three years before the date of filing for bankruptcy. Any tax return extensions are added to the due date.
- All taxes must relate to a return that was filed a minimum of two years before the date of filing.
- The debt must be assessed by the IRS as being at least 240 days old.
- Must not be fraudulent.
- Mustn't be any evidence of tax evasion.
Offer in Compromise (OIC) as a Tax Debt Solution
An Offer in Compromise is a way of paying back taxes owed for a vastly reduced sum of money. You must complete IRS Form 656, Offer in Compromise and Form 433-A, Collection Information Statement. The Internal Revenue Service is under no obligation to accept your offer so seek guidance from a professional tax advisor. Less than 25% of all OIC applications are accepted.
IRS Installment Agreements Offers a Tax Debt Resolution
If you're looking for a tax debt solution for paying back taxes owed at an affordable rate, an IRS payment plan could provide the answer. There are currently four different types of agreement based largely upon the amount of money owed. To be considered, you must complete Form 9465 and Form 433F and send them to the office specified in your IRS correspondence.
Tax Debt Help with a Partial Payment Installment Agreement
Just as an OIC allows you to pay the IRS less than they're actually owed, a partial payment installment agreement provides a variation of this tax debt resolution. It involves making a series of monthly payments to the IRS. Once a specific number of payments have been made, any remaining debt is forgiven. Complete Form 9465 and Form 433-A, send them off and the IRS will respond within a period of 30 days.
Sources
"Payment plans, installment agreements." Internal Revenue Service (IRS).
"What are my payment options?" Internal Revenue Service (IRS).
"What is an offer in compromise?" Internal Revenue Service (IRS).
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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