Qualifying For Tax Debt Relief Programs

: Chris Lee Law Firm

  Filed under: Taxes

tax debtUnfortunately, tax debt is becoming a common source for the debt burden of many families. Unpaid taxes can easily result in penalty fees, wage garnishment and tax levies. For the family struggling to make their payments and keep food on the table, adding a large tax debt can be the final straw.

What is most challenging about tax debts is two-fold (1) the IRS is very serious about collecting their money and (2) tax debts may not be able to be resolved through bankruptcy. However, that doesn’t mean that there is no hope. In fact, the IRS offers programs to help taxpayers repay their tax liabilities without putting them into further financial strain.

Qualifications Of Tax Debt Assistance Programs

The IRS offers an installment plan for the average taxpayer that is having difficulty repaying their debts. The plan allows the taxpayer to repay the tax debts over a specified period of time, generally up to three years. To qualify for an installment plan, the taxpayer must:

  • Have filed a tax return for the year(s) that the debts are owed
  • Owe less than $25,000 in tax liabilities
  • Show documentation about monthly income and expenses

For those experiencing a more severe financial hardship, the IRS may be willing to settle for less than the actual amount of tax debt owed. An IRS offer in compromise is a proposal given by the taxpayer that offers an amount they  feel they can realistically pay on their owed debt. To qualify for an offer in compromise, the taxpayer must:

  • Have filed a tax return for the year(s) that the debts are owed
  • Be able to prove financial hardship
  • Offer equal to or more than the reasonable collection potential, or the amount that can reasonably repaid.

 


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