Our licensed professionals are here to help you resolve your tax problems. Depending on your circumstances and how much money you owe to the IRS, you may be entitled to a reduced amount of money owed or be able to make payments overtime. Some people may not even have to pay taxes at all for the time being. In certain cases, you can have your tax obligations permanently forgiven.
If you can’t afford to pay your tax balance all at once, you may be able to make monthly payments to settle your tax obligations. In this case, the best option is to set up an installment agreement. The IRS may require you to fill out Form 9465: Installment Agreement Request and Form 433-F: Collection Information Statement sent to you by mail.
However, don’t disclose more information to the IRS than what they ask. You may want to think about contacting a professional before you submit your financials to the IRS. Also while thinking about payment agreements, don’t look for any tax refunds for they will be used to pay your past due balance.
Partial Payment Settlement Agreement
A partial payment settlement agreement that is a reduction of your original debt that is similar to an installment payment agreement. The payment plan allows you to pay off a portion of your tax balance in monthly payments until your tax liability. If you wish to negotiate a partial payment settlement agreement, you have to submit Form 9465 and Form 433-F and a letter telling the IRS why you want to be granted a reduction on your tax obligation.
If you want to apply for a partial payment settlement agreement, you have to prove financial burden and consult a tax professional prior to your agreement. If you still want to fill out this agreement and your requests get granted, you will make installment payments just as you would for a regular installment agreement.
There are three types of categories that are “Offer in Compromise”:
- Doubt as to Liability: The amount of tax that you were assessed with is incorrect.
- Doubt as to Collectibility: This is the most oftenly used strategy that tax companies use in Offer in Compromise. In this case, the taxpayer must demonstrate the fact that they might never be able to pay their full tax balance due to a financial hardship or other financial reason.
- Effective Tax Administration: When requests for tax relief are placed under this category do not try to get rid of the tax debt. Instead, you make a claim that collecting taxes would create an injustice.
Usually an Offer in Compromise there are long waiting periods from the IRS and lots of paperwork. To request an Offer in Compromise you file Form 656: Offer in Compromise and Form 656-A: Income Certification for Offer in Compromise Application Fee and Payment. Offer in Compromise has a low rate of being accepted so hiring a professional tax consultant has the best chance of success.
If you are now able to pay your tax balance in full, but you want to avoid the penalties that you have because you are late on paying your tax balance, the Tax Penalty Abatement program might be your best option for relief. However, you must have a good reason for requesting this penalty abatement such as death, unemployment, of loss due to disaster. You can request this penalty abatement by writing a letter to the IRS explaining your circumstances, requesting an interview with a tax consultant or by filing FOrm 843 Claim for Refund and Request for Abatement.
If you are unable to pay the tax balance that you owe to the IRS, you may want to request that your account should be placed into Currently Not Collectible or Financial Hardship status. You need to file From 433A. If your request is approved after the form is filed, you will still owe taxes to the IRS but collection efforts will be paused for the time being. You will be re-evaluated under certain conditions and your collection could be lifted.
Waiting Out the Statute of Limitations
Depending on your personal circumstances, you may be able to wait out your tax obligations and then have them be taken off your record. The statute of limitations for federal income taxes is generally ten years unless you are involved with fraud. However, calculating the statute of limitations can be hard. The ten year span of time does not begin until your taxes are assessed by the IRS and the clock will pause if you file bankruptcy or try to sue the IRS. If you are going to try to use the statute of limitations strategy, call one of our tax professionals today to gain the essential knowledge that you need.