Tax Debt Relief Services

There are different options to solve TAx debt

If you who owe taxes, whether to the IRS or your home state, generally there are several options available to you. If you owe and can pay in full, you should pay the taxes despite the pain.  However, if you cannot pay in full, there are tax debt relief options available to you to resolve your tax burden.  IRS tax collectors have more power than just about anyone in the federal government. They operate under very few rules. They can make your life unpleasant or miserable. Most success in dealing with tax collectors comes from your communicating with them in a prompt manner to reach a tax payment solution.

Your financial situation is different from someone else. The tax debt relief service that works for someone may not be the best choice for someone else.
You should take the time to understand all the tax debt relief options available to you to find the best solution for your needs and goals.

Tax Debt Relief Options

hh
INstallment agreement (iA)

If you are unable to fully pay your tax burden, the Internal Revenue Service (IRS) allows taxpayers to pay off tax debt through an Installment Agreement (IA). However, because interest and penalties will apply, the IRS encourages taxpayers to pay taxes immediately. Interest and penalties can equal 8% to 10% per year.


cc
offer in compromise

If you owe the IRS money and have tried everything to pay it off, you can consider making the IRS an “offer in compromise” (OIC) to settle your tax bill. An OIC allows taxpayers to settle their tax debt by paying the IRS less than what they owe in back taxes.  An IRS OIC is a tax debt settlement plan.


ss
innocent spouse relief

The IRS provide a special form of debt relief status called innocent spouse relief. It is intended for those that are widowed, divorced or separated and are experiencing tax problems that arose out of the actions of a former spouse.


qq
currently not collectable (CNC)

Currently Not Collectible (CNC) is a status assigned to taxpayers whom the IRS has deemed unable to pay their outstanding tax debt. When a taxpayer’s account is designated CNC, the IRS temporarily pauses it’s tax collection process.



Tax Debt Relief - Installment Agreement (IA)


If you are unable to fully pay your tax burden, the Internal Revenue Service (IRS) allows taxpayers to pay off tax debt through an Installment Agreement (IA). The IA is a tax debt relief program with stringent payment requirements. However, because interest and penalties will apply, the IRS encourages taxpayers to pay taxes immediately. Interest and penalties can equal 8% to 10% per year.

The IRS has four different types of Installment Agreements: guaranteed, streamlined, partial payment, and non-streamlined. Both guaranteed and streamlined IAs are full repayment plans, under $50,000 in tax debt, do not require detailed information of your income and assets, and the IRS does NOT file a federal tax lien against you. Payments are fixed monthly installments through Direct Debit.

Guaranteed Installment Agreement – Taxpayer Conditions:

  • Owes less than $10,000 (not including interest and penalties);
  • 5 years of filed tax returns, paid taxes owed, and has not entered into an installment agreement;
  • Unable to pay the tax debt when due or within 120 days;
  • Tax debt will be paid off within three years;
  • Must pay at least the minimum monthly payment (tax liability, interest, and penalties divided by 30).

Streamlined Installment Agreement – Taxpayer Conditions:

  • Owes less than $50,000 (including interest and penalties);
  • 5 years of filed tax returns, paid taxes owed, and has not entered into an installment agreement;
  • Tax debt will be paid off with six years;
  • Must pay at least the minimum monthly payment (tax liability, interest, and penalties divided by 50).

Tax Debt Relief - Offer In Compromise


If you owe the IRS money and have tried everything to pay it off, you can consider making the IRS an “Offer In Compromise” (OIC) to settle your tax bill. An OIC allows taxpayers to settle their tax debt by paying the IRS less than what they owe in back taxes. An IRS OIC is a tax debt settlement plan.

The IRS is generally reluctant to agree to offers in compromise. The IRS will do so when the Offer In Compromise represents the IRS’ best opportunity at getting the largest amount of debt possible from a taxpayer, within a reasonable amount of time. Since the IRS always seeks to collect as much of your tax debt as possible, only a small number of OICs are accepted each year.

The IRS Offer in Compromise review process is a detailed one. You are required to provide the IRS detailed information regarding your finances. Therefore, it is best to ensure you are a good candidate for the program before you apply. An unsuccessful OIC will only prolong the collections process (added interest and penalties) on your tax debt. Also, it provides the IRS additional financial information to enforce collections against you.

The IRS will look at four factors in evaluating a taxpayers OIC application:

  • Taxpayer’s ability to pay;
  • Taxpayer’s income;
  • Expenses and obligations;
  • Value of the taxpayer’s assets

Prior to applying for an IRS Offer In Compromise, the taxpayer must be current with their tax filing and payment requirements, and cannot be in an open bankruptcy proceeding.

Income tax returns are the most imaginative fiction being written today.

Tax Debt Relief - Innocent Spouse Relief


The IRS provide a special form of tax debt relief status called Innocent Spouse Relief. It is intended for those that are widowed, divorced or separated and are experiencing tax problems that arose out of the actions of a former spouse. This debt relief status could result in the IRS writing off your entire tax bill against you.

When both spouses are married and filing jointly, both taxpayers are legally responsible for the entire liability for the tax, and any additions to tax, interest, or penalties that arise from the joint return. This applies even if one spouse earned all the income or claimed improper deductions or credits. This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns.

Innocent Spouse Relief – You Must Meet ALL Conditions For Qualifying:

  • You filed a joint return that has an understatement of tax that is solely attributable to your spouse’s erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return, and incorrectly reported deductions, credits, and property.
  • You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax.
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.

You have the burden of proof to show to the IRS that your spouse (or ex-spouse) acted without your knowledge or consent. The IRS will inform your spouse/ex-spouse of your relief status claim. If you have a happy marriage, ponder your decision.


Tax Debt Relief - Currently Not Collectable (CNC)


Currently Not Collectible (CNC) is a status assigned to taxpayers whom the IRS has deemed unable to pay their outstanding tax debt. When a taxpayer’s account is designated CNC, the IRS temporarily pauses it’s tax collection process. This means, lifted liens and levies, no wage garnishment, suspending collection efforts, cessation of calls and letters, no further credit reporting and deferred debt payments.

For a taxpayer to qualify for IRS CNC, you must demonstrate a financial hardship which, after paying for the cost of living expenses, leaves little to no room to pay off an outstanding tax debt. You must demonstrate a severe economic disadvantage and not just a mild inconvenience.

To determine your financial hardship, the IRS will evaluate your “total positive income” versus your living expenses. Total positive income includes any positive value shown in the income section on a tax return. The IRS will tally up your income and compare it against both national and local standard living expenses, which are broken up into four categories:

  • Food, Clothing, and Miscellaneous (National)
  • Out-of-Pocket Healthcare Expenses (National)
  • Housing and Utilities (Local)
  • Transportation (Local)

The IRS will combine your standard expenses and deduct them from your total positive income to determine your net disposable income.  This disposable income would theoretically be spent on tax payments.  If paying off a tax debt after your basic cost of living would create an unfair economic advantage, the IRS might consider your account as non-collectible.

Once your account acquires this tax debt relief status, your debt is not simply wiped away.  You will still be expected to pay off your tax debt once your situation improves. The IRS will later reevaluate your standing and capability to pay your tax liabilities.

Debt Relief Articles

This Internet site provides information and reference material to consumers. It is intended to help connect them with providers of products and services that may assist them in their financial needs.