Tax Effective Ways to Approach an IRS Tax Debt Settlement
A lot of individuals actually face tax problems especially when it comes to the Internal Revenue System (IRS). Many individuals owe back taxes or have trouble paying their taxes to the IRS but you can get income tax debt relief by first understanding their tax debt strategies. You may like to use any of the five relief plans to get out of the trouble with paying income tax debt to the IRS:
1. Tax debt settlement: You may like to ‘Offer in Compromise’ (OIC) where you may settle your tax debts for less than the actual amount. However, for this, you will have to convince the IRS that you are in no position to pay the debt. It is also important to note here that not everyone qualifies for the Compromise offer and only about 15% of the applicants may succeed in OIC. You may like to take the help of a tax professional who can help you determine whether or not you are eligible for the compromise. The OIC is a time consuming affair and may take you anywhere between 12 months to 24 months.
2. Offer an installment agreement: You may also be able to solve your tax problems with the IRS of you can convince the IRS for a monthly payment plan where you will pay off the tax debts to the IRS. This is an option considered by many tax payers who may not have qualified for an OIC or are not able to include their tax debt in a bankruptcy relief and yet look forward to resolving their IRS tax problems. According to this plan, an individual seeking tax debt settlement can opt for five primary types of payment plans. These include:
• Guaranteed Installment Agreements
• Streamlined Installment Agreements
• In Business Trust Fund Agreements
• Long-Term Installment Agreements
• Installment Agreements on Specified Balance Due Accounts
3. Partial payment installment agreement: This is a somewhat new program for the individuals with tax problems. This involves a long-term payment plan to pay off your debts. However, in this plan, the total of all your monthly payments never pay the whole deb tand the unpaid debt expires as the statutory expiration date is reached on the collections.
4. No currently collectible: This option may be open to the tax payers who do not usually qualify for an ‘Offer in Compromise’ or the Installment Agreement. The Currently Not Collectible (CNC) may be opted by such individuals to get an income tax debt settlement. So, if you have a CNC status, you will be protected by the Statutes of Limitations and the IRS would agree to temporarily forgo any actions related to collecting taxes. With the improvement of your financial status the IRS can then remove the file from the CNC status and pursue active tax collection status once again. In fact, the IRS can also compel you to liquidate few of your assets before it grants the CNC status to you.
If you have an income that is below the allowable expenses and you have no way to improve your finances in the near future, you may qualify for the CNC status.
About Author:
Jacob Smith is a contributing writer for New Life Tax Relief on income tax debt and a senior debt analyst. He writes mostly on finance, tax problems, tax debt settlement.
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