Irs Debt Help 5 Options To Getting Rid Of Tax Debt
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IRS Debt Help: 5 Strategies for Resolving Tax Debt
Overview
Struggling with IRS debt can be overwhelming, but you're not alone. Many Americans face this challenge, but understanding your options can lead to a resolution. Here's a guide to five strategies that can help you manage or eliminate your IRS tax debt.
1. Offer in Compromise
An Offer in Compromise (OIC) allows you to settle your tax debt for less than the full amount owed. Although only about 15% of applicants are successful, those who qualify might find it to be an effective solution. Due to its complexity, many people hire tax professionals to navigate the process. These experts can determine eligibility and assist with negotiations.
The OIC process can take 12 to 24 months to complete, and the goal is to pay only what the IRS deems a "reasonable collection potential," which can be as low as 10% of what you owe.
2. Installment Agreement
If an Offer in Compromise isn't suitable, a monthly Installment Agreement might be a viable option. The IRS provides five types of payment plans, including:
- Guaranteed Installment Agreements
- Streamlined Installment Agreements
- In-Business Trust Fund Agreements
- Long-Term Installment Agreements
- Installment Agreements on Specified Balance Due Accounts
These plans allow you to manage your debt over time, making payments more manageable.
3. Partial Payment Installment Agreement
This relatively new program offers a long-term payment plan at a reduced amount. It's a good option if you're unable to pay the full amount but still want to make consistent payments.
4. Currently Not Collectible Status
If you cannot afford payments through an Offer in Compromise or Installment Agreement, you might qualify for Currently Not Collectible (CNC) status. In this case, the IRS agrees to halt collection efforts temporarily, though interest and penalties may still accrue.
Reasons for CNC Status:
- Income falls below allowable expenses with no expected improvement.
- High equity prevents OIC qualification, and expenses surpass income.
- The statute of limitations is nearing expiration.
5. Bankruptcy
Filing for bankruptcy may discharge your tax debts under the strict guidelines of Chapter 7 or 13. It's a significant step and requires careful consideration, often with the help of a tax professional.
Understanding the IRS Collection Statute
The IRS has a 10-year window to collect on tax liabilities, starting from when the debt is finalized. If they do not collect within this period, the remaining balance is erased.
Seeking Professional Help
Due to the intricacies of these strategies, hiring a tax professional is often wise. These experts, such as Tax Attorneys, Enrolled Agents (EA), or Certified Public Accountants (CPA), can guide you through IRS negotiations. Costs can range from $1,500 to $6,000 or more, depending on the complexity of your case.
It's crucial to choose a professional with experience in IRS issues, especially those familiar with revenue officers and the Automated Collection Systems division.
Conclusion
Tax debt won't disappear on its own, and proactive steps are essential to avoid escalated collection efforts or additional penalties. By exploring these strategies and possibly enlisting professional help, you can find a path towards resolving your IRS debt.
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