Tax Debt Relief- Five things to Consider
Many people today face IRS tax debt because the economy has really hurt their finances If you suffer from tax debt, you are looking for ways to get out of debt and have some relief from your tax debt problems. If you need tax relief, here are five things that you need to consider.
1. Get Professional Help
You need to find a reliable company that you trust to help you get some tax relief. There will be a fee, so you need to make sure you choose a company that you can afford. Dealing with the IRS can be scary and intimidating; therefore, you should not do it alone. A professional can help you find a way out of your IRS debt.
2. Payment Plans are an Option
The Internal Revenue Service will allow you to set up payment plans as a type of IRS relief. If you are unable to pay your taxes, then you can set up a payment schedule. Payments can be in the form of personal loans or an installment agreement. In most cases, you will be required to pay interest on these loans.
3. You can have your Taxes Reassessed
If you have been charged penalties for not meeting the requirements of the tax law, there are certain instances in which the IRS can eliminate those penalties. If you have reasonable cause or have been given incorrect advice, the penalties can be reduced or waived. If you are going to face economic hardship because of penalties, you can offer a compromise to reduce the amount of penalties due.
This option should only be used as a last resort. Some of your IRS debts could be waived if you file Chapter 7 bankruptcy. In order for the tax debt to be discharged, the debt must be owed for three years, the tax filing must be filed for two years and the tax assessment must be set for a minimum of 240 days. If you think that bankruptcy might be right for you, contact a bankruptcy attorney, so he can discuss your options with you.
5. Currently not Collectible
If you do not qualify for other types of tax debt relief, you might apply for Currently not Collectible status. You can apply for this form of relief if your income is lower than your allowable expenses and is not likely to get better any time soon of if your income is below your allowable expenses and the statute of limitations will soon run out. The IRS temporarily stops collection efforts but reevaluates your financial situation periodically. The bad thing with this is that the IRS will file a tax lien against you.