Individual tax relief refers to several programs and initiatives that aim to assist taxpayers in settling or reducing their tax bills. However, these resolutions depend on how much you owe the IRS, along with other factors surrounding your tax return. Here are the different types of tax resolution that you may qualify for:
Full Pay Installment Agreement
The full payment installment agreement may be the ideal choice if you are a low to moderate-income earner. You pay the outstanding taxes in full by paying a specific amount to the IRS every month. The best thing about this resolution is that it tailors your repayments according to your income, allowing you to pay IRS in installments that are more likely to work within your budget.
Partial Payment Installment Agreement
A partial payment installment agreement might be the right option if you can’t settle your tax debt in full. The IRS accepts partial debt payments, and your income determines your monthly installment. For this payment plan, there are strict requirements you must meet in order to qualify. Once your installment period ends, you will stop the payments even when you have an outstanding tax debt.
Innocent Spouse Relief
Generally, married couples file their taxes jointly, but in case of a divorce, the spouses must repay any tax debt owed. The IRS might relieve your tax debt back taxes if your former spouse failed to pay their portion of the joint tax balance. Should you qualify for this option, the IRS will not pursue any collection action. They will also not issue any liens or levies.
Currently Not Collectible
The Currently Not Collectible (CNC) program allows you to declare your account uncollectible, and the IRS will still consider you in compliance with any tax agreements without any enforcement. The CNC will enable you to recover from excessive, unaffordable debt threatening your financial standing. However, the Currently Not Collectible status is meant to be temporary, and the IRS expects you to continue with the monthly payments once you stabilize financially. Should your balance expire while you are still under CNC status, you will not be expected to pay back the IRS.
Streamlined Installment Agreement
A streamlined installment agreement is a simple payment plan if your tax debt is not more than $50,000, and you must pay it off within six years. Getting into this payment plan does not require disclosing financial information; you only need to pay all your bills on time to avoid levies. This agreement usually has a high monthly payment, but the IRS will not file new liens once you start the payment plan. However, all previous liens remain until you pay off your tax debt.
Offer in Compromise
An Offer in Compromise is another option that allows you to resolve your tax debt for less than you owe. With this resolution, a tax consultant can negotiate a fair settlement that won’t put an undue strain on your finances. The Offer in Compromise documents will provide the IRS with information regarding your financial status, expenses, income, and home equity. It is worth noting that this resolution is hard to qualify for.
IRS tax resolution is a much easier process than you may think. These tax resolutions differ in many ways and have varying requirements to qualify for. It’s recommended that you work with a trusted tax expert who can advise you of your options, depending on your financial situation, and help you get the relief you need.