The Internal Revenue Service (IRS) understands that life happens. Therefore, the agency has forged a program that allows people not to pay their tax debts if they can’t afford them. Under certain circumstances, taxpayers can have their tax debt partially forgiven.
If the IRS considers forgiving your tax liability, they look at your present financial condition first. The agency can’t collect more than what a taxpayer can reasonably pay. If any collection action forces anyone into a financial crisis, the IRS can’t collect back taxes.
The IRS offers several relief options for taxpayers who owe unpaid taxes. However, the eligibility for each option depends on the circumstances regarding your outstanding debt. The forgiveness and relief options are installment agreements, innocent spouse relief, offer in compromise, and currently not collectible. But how can people maximize the IRS debt forgiveness program? Here’s how.
1. Keep Track of What You Owe
The key to maximizing the agency’s forgiveness program is by knowing how much you owe. It’s essential to have at least an idea of how much you owe or how much you would need to pay.
There are various ways to know how much you owe. People can check online through the IRS’s new portal, calling them on their hotline, mailing the IRS a form, or having a tax professional do all the work for you.
Before applying for IRS programs, find out how much in taxes you owe to the IRS. Knowing where you currently stand with your tax debt is vital for asking for IRS forgiveness. Regardless of the amount you owe, it’s essential to have at least an idea of it before seeking forgiveness.
2. Observe IRS Collection Actions
The IRS will continue to collect funds from you even if you can’t pay unless you file for the forgiveness or assistance program. In this case, it’s essential to observe and keep track of their collection actions. The actions during collection can range from loads of notices in the mail to more aggressive measures like a private debt collection agency involvement. There are instances where a taxpayer’s passport will also be at risk due to tax debt.
a. Tax Lien
A tax lien is the government’s claim against your property. It secures the government’s interest in your assets if you fail to pay a tax debt.
b. Tax Levy
A tax levy is the government’s legal seizure of your property to fulfill outstanding unpaid tax debt. Before levying, the taxpayer will receive a notice stating the IRS’ plan of assessing actions against you.
c. Wage Garnishment
Wage garnishment is a type of tax levy. The IRS takes a part of your income to settle an existing tax debt. The method is usually done through the person’s employer and will continue until the debt is paid.
6. Pay Less Than What You Owe
If you have the means to pay a partial amount of your IRS tax debt, there is still a way. People can apply for the IRS government payment plan called an Offer in Compromise (OIC) to resolve the remaining amount.
Depending on the person’s capacity, the IRS might reduce the total debt. The amount can be delivered in a lump sum or fixed monthly payments. However, it isn’t easy to qualify for the payment plan. The IRS considers the ability to pay, income, expenses, and asset equity to determine eligibility for OIC.
There are instances when taxes are challenging to resolve. However, as a taxpayer, you have the options to help you pay off any debt amount. All you have to do is know what they are, how they work, and how you can apply for them.
The Axiom Tax Resolution Group offers tax relief solutions for IRS tax problems. We understand that tax problems can be a costly mistake. Therefore, our goal is to help individuals and provide them with solutions that can help them resolve their tax issues. Request a consultation online for us to discuss our next step in handling your concerns.