If you’ve had a serious change in finances, from a loss of income or increased expenses, you might be in a position in which you need help paying your taxes. The IRS is not to be ignored, but it does have programs available to those under duress, and this guide will show which debt relief strategies could save you.
Learn About the Fresh Start Initiative
Because of the 2008 recession, the IRS launched the Fresh Start initiative, in which it offers a series of options available for those with financial hardships. Rather than settling for bankruptcy, you have options available to be in good standing with the IRS.
Discover the Right Debt Relief Program for You
If you have begun to receive notices of overdue payment to the IRS, but are now in a position to pay what you owe, you could choose to make a lump-sum payment. This would catch you up on your initial payment due, plus penalties and interest, allowing you to avoid wage garnishment or tax liens. Simply pay what you owe over the phone, by mail, or online.
Many taxpayers do not have the funds to catch up on everything with a lump-sum payment. However, the IRS does allow you to apply online to pay through either a short-term or long-term payment plan. With this form of repayment, you’ll have additional fees, interest, and penalties, but you’ll have an extended length of time to catch up without further legal troubles.
You might be at a point where you simply can’t pay back all of what you owe to the IRS. If this is the case, the last measure the IRS has available to those in the most hopeless circumstances is the ability to apply for an Offer in Compromise. This allows you to settle your tax debt for less than what you owe.
While not every application is accepted, this allows the IRS to consider the amount you can reasonably pay back based on income, expenses, and assets. You can call the IRS and have them talk you through the process. Before you make the call, make sure you have your tax ID information, your notice or bill, your tax return, and figures on your current income and expenses.
Find the Right Company to Assist You in the Process
Dealing with the IRS often means you will have to sort through mountains of files and paperwork. If this is more than you can handle on your own, there are numerous businesses available to help you. Depending on your level of need, you’ll likely want to hire a certified public accountant or go with a brand-name tax assistance company to help you through the process.
Unfortunately, there are a number of unscrupulous scammers trying to trick you into believing they can promise a successful application no matter your situation. Look out for businesses with poor online reviews or anyone asking you to pay your full cost upfront without detailing what they are going to provide as a service to you.
No one likes to be in a difficult financial situation, especially with the IRS knocking on your door, but remember that debt relief programs are available in times of need.