Need Help with Tax Debt? Check Out These Relief Options
Meta Description: The IRS provides relief options for tax debt, including installment plans, penalty relief, and offers in compromise, but beware of scams.
You might feel stressed and overwhelmed if you owe money to the IRS. How can you pay off your tax debt and avoid penalties and interest? You might also worry about losing your property or facing legal action.
But don’t panic. Fortunately, some relief options are available for taxpayers struggling with tax debt. These options can help you reduce your tax liability, set up a payment plan, or even settle your debt for less than you owe.
This blog post will explain some of the most common relief options and how they work.
Hire a Tax Relief Company for Assistance (But with Caution!)
This is the first thing you can do to save your back from IRS debts.
The process of applying for tax debt relief programs can often be overwhelming for those who don’t have a good understanding of accounting and tax-related terms.
Working with a reputable tax relief company like https://globalgatecpa.com/ will genuinely help you if you don’t understand the process or need assistance filling out forms.
However, you should carefully consider this decision, as scams and fraudulent tax relief companies are looking to take advantage of your vulnerability.
Here are some things to keep in mind:
- If the company loses or delays your application, you’re still responsible for your tax debt, interest, and penalties with the IRS.
- Some companies may charge an upfront fee, surpassing the potential savings on your tax bill.
- Be cautious of any company that demands payment before work is done, as this is a red flag for potential scams.
Also, don’t work with a company who are –
- guaranteeing debt reduction or elimination
- promising your tax debts will be forgiven
- not reviewing your financial situation thoroughly
The Federal Trade Commission advises taxpayers first to try to settle their tax debt directly with the IRS before seeking the assistance of a tax relief company.
If you have concerns or suspect you’ve fallen victim to fraud, file a complaint with the FTC.
A free tip: If you owe less than $10,000, you can tackle the matter yourself. If you owe over $10,000, hiring an expert to negotiate with IRS can help you get better terms.
What Are the Relief Options for Tax Debt?
The IRS offers several relief options for taxpayers with trouble paying their tax debt. Some of these options are:
1. Installment Agreement
You have the option of selecting from two different types of installment agreements (IAs), both of which provide you with additional time to settle your tax debt:
Short Term Plan
If you owe the IRS less than $100,000, you can apply for a payment plan with up to 120 days to pay off the balance. You can apply through different methods, such as online or by phone, without fees.
Once approved, you can pay through credit/debit card, money order, check, online, or by phone using the Electronic Federal Tax Payment System (EFTPS).
Long Term Plan
Consider a long-term payment plan if you owe the IRS less than $50,000 (including extra fees) and can’t pay it off in 120 days.
This plan lasts for 72 months, and you can either make payments directly every month or through automatic debit withdrawals. However, you must make automatic debit withdrawals if you owe more than $25,000.
The amount you need to pay to set up the payment plan depends on how you want to make payments.
- If you pay directly using a money order, Direct Pay portal, or EFTPS, the fee is $130 if you apply online or $225 if you apply by mail, in person, or by phone.
- If you’re a low-income taxpayer (earning an adjusted gross income at or below 250 percent of the federal poverty level), you may get a $43 reimbursement for the setup fee.
- If you choose automatic debit withdrawals, the fee is only $31 if you apply online or $107 if you apply by mail, phone, or in person. You might also qualify for a fee waiver if you’re a low-income taxpayer.
Note that both payment methods don’t stop the interest and late payment penalties from accumulating until the balance is fully paid.
2. Currently Not Collectible
Currently, not collectible (CNC) status is a temporary relief option that suspends the IRS’s collection activity if you cannot pay your tax debt. You can request “currently not collectible” status by calling the IRS.
The IRS will ask you to fill out a form called Collection Information Statement for Wage Earners and Self-Employed Individuals or Collection Information Statement to confirm your financial situation.
You will have to provide proof of your financial hardship and show that paying your tax debt would cause significant hardship for you or your family. The IRS will review your income, expenses, assets, and hardship circumstances to determine if you qualify for CNC status.
If the IRS grants you CNC status, it will stop sending you notices and taking enforcement actions against you. However, you will still owe your tax debt, and interest will continue to accrue, but the IRS will not levy your income or assets or file a tax lien against you.
Remember, this is just a temporary solution, not a permanent one!
3. Offer in Compromise
The Internal Revenue Service (IRS) is known to be stringent in forgiving tax debts, but taxpayers may apply for an “offer in compromise” to settle their liabilities for less than the full amount owed.
However, such arrangements are typically only granted to individuals genuinely experiencing financial hardship, such as those who have incurred substantial healthcare expenses or lost their jobs with limited prospects of generating income in the future.
Although exceptions do occur, these situations are relatively rare.
Taxpayers to be realistic about their circumstances. For example, those who possess assets and earn a significant income are unlikely to receive tax relief.
To apply for an OIC, you must fill out Form 656, Offer in Compromise, and Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals.
You can also apply for tax credits available to small businesses. Fill out Form 433-B (OIC), Collection Information Statement for Businesses to avail that.
You must also pay a $205 application fee and a 20% deposit of your offer amount. These are non-refundable even if your application is rejected!
Conclusion
Managing your tax debt is essential to maintain a healthy balance between your personal and work life. However, it can badly affect your financial well-being and peace of mind.
The three relief options discussed in this post can help you resolve your tax debt and get back on track with your taxes.
To choose the best option for your situation, you should review your tax records and financial information, compare the pros and cons of each option, and contact the IRS or a tax professional for guidance and assistance.
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Management Team And Promoter Background A cunning investor must go through some of the crucial factors while investing their money in the IPO of any company. Some of these core factors are as follows:- It is essential to know the strength of the management team that is running the company. Take a look at the managers and operators of the company who are associated with the company’s daily affairs. The average number of years top management have spent their time in the company. Work culture and the attrition rate of the company you must consider before making your investment. 5. Potential Of The Company In The Market You have to understand the potential of the company in the market before investing your money in it. Investors can quickly analyze the potential of the business in the market and its prospects. A company that performs well after raising the capital can be trusted by the investors. Investors will gain better returns from the investment if the business model is good and can sustain for a longer duration. So work out your plans well before making your investment. 6. Key Strategy And Strength Of The Company Investors can sort out the key strengths of the company by identifying the DHRP. The current position of the company can be traced to the industry where it operates. When you read more about the company, then you will have a clear idea about the positioning and the strategies of the business where its works on. Growth Of IPO And Market Size Trend Analysis Year On Year Basis Final Take Away Hence, these are the current IPO status in the world market as well as in India. You need to make the right investment strategies that can work well for your business. Work out the best plans that can help you to get better returns from your investments. Do not make your choices in the wrong direction while you plan the make the investments in the IPO of shares. Frequently Asked Questions(FAQ's) [su_accordion class=""] [su_spoiler title="1. Is Buying An IPO A Good Idea?" open="yes" style="default" icon="plus" anchor="" anchor_in_url="no" class=""]Depending on the market trend and market situations, you must start buying the IPO of a company.[/su_spoiler] [su_spoiler title="2. Is It Bad To Buy An IPO?" open="no" style="default" icon="plus" anchor="" anchor_in_url="no" class=""]Buying the IPO is not a bad idea but knowing the market status of the company and its share value projections is a bad idea to buy the IPO.[/su_spoiler] [su_spoiler title="3. What Are The Top 5 IPOs?" open="no" style="default" icon="plus" anchor="" anchor_in_url="no" class=""] The list of top 5 Ipo in the Upcoming months are as follows:- Bumble Instacart Nextdoor Petco Robinhood [/su_spoiler] [su_spoiler title="4. Does IPO Always Gives Profit?" open="no" style="default" icon="plus" anchor="" anchor_in_url="no" class=""]You can receive the dividends from the company when you sell the shares in the open market in an IPO. You need to track the market trend to earn a profit from IPO.[/su_spoiler] [/su_accordion] Read Also: Why Create A Powerful Business Continuity Plan? How To Start A Business In 2021 – Best Business Strategies Is Nykaa Going To Dominate The Market With Their Recent Launch?
Nov 15, 2021