Paying taxes is an exchange for the many benefits and liberties you get to enjoy each day, so it is safe to say that each person has some level of responsibility. However, there are plenty of errors and other mishaps that can significantly increase your tax liability and lead a person on a path to near financial ruin. For people that fall into this category, tax relief may be an option.
Offer in Compromise
The Internal Revenue Service (IRS) would prefer that each taxpayer pay their unpaid taxes right away. However, when a taxpayer is unable to pay, particularly for an extended time, the IRS may adopt somewhat of a something is better than nothing mantra.
For an unpaid tax balance, some taxpayers can find relief through an offer in compromise approach. With this method, you can offer the IRS a reasonable amount that is lower than the actual balance due. For instance, a person might offer an immediate $5,000 payment for a $7,500 debt.
How much lower the IRS is willing to take is dependent upon your payment history, age of the debt, and value of the debt. It is best to have a tax relief professional examine your file to see which type of offer is most likely to be accepted by the IRS.
A total forgiveness program is another option for relief. With this option, the taxpayer can virtually wipe their entire debt with the IRS clean. However, there is a strict criterion. First, the age of the debt must meet specific criteria. Typically, the tax debt must be at least ten years old.
Second, the taxpayer must also be able to prove that they do not have the financial wherewithal to pay the debt upfront, or even to enter into a payment plan to clear the balance. Since this relief program does offer a significant benefit, it is important to keep in mind that you will have to open up your finances for review by the government.
Any discrepancies in the financial data you provide or a lack of sufficient evidence to prove your claim that you are unable to pay will lead to a denial. A relief professional can work with you to prepare an application for forgiveness.
If you are drowning in tax debt and you do not know what to do, remember that you do have options. To learn where you stand and, to determine which path is the best way forward, speak with a tax relief consultant to learn more.