What is tax Relief?
Do you owe the Internal Revenue Service (IRS) taxes that you're having trouble paying? Whether you have unpaid taxes, tax liens, didn't file tax returns, or have a tax collection agency breathing down you neck, help is available. But to qualify for any tax debt relief programs, you'll need to meet certain qualifications. The type of help you receive will depend upon how much you owe, whether you must pay a tax penalty, and your financial situation.
Reasons for Tax Debt
You could end up owing more taxes than you can afford to pay if your income wasn't reported, reported incorrectly, or payments were not made on time. You also can be burdened by a tax lien on property you owe. There may also be a need for tax debt relief if you have a low income or have been the victim of a disaster such as a hurricane or tornado. Whatever your situation it's important to understand the different programs that are available to help people with their IRS debt.
Set Up an Installment Plan
If you're unable to pay your IRS debt in a lump sum, you may be able to work out a payment plan. That will allow you to pay the entire amount of your tax debt in smaller payments. While this can give you more manageable payments, it's always best to pay your taxes in full if you are able so penalties don't continue to accrue.
Tax Penalty Abatement
The IRS will automatically add penalties and late fees to your tax bill if it's not paid on time. Although you can file a request to have those fees overturned or refunded, you'd better have a really good reason. Circumstances such as a long unemployment, death in the family, or disaster could convince the IRS to approve a tax penalty abatement. You'll need to show that going forward you're willing to repay your tax debt.
Are Your Wages Garnished?
People with unpaid taxes sometimes have their wages garnished. Since up to 25% of a person's income can be taken from each paycheck, the amount of take home pay is reduced, making it more likely they will fall behind with other expenses. Find a tax advisor who can help end a wage garnishment. However, if you have unpaid taxes for which you haven't filed returns, your wages will continue to be garnished.
Offer in Compromise
As a last resort, the IRS may approve an offer in compromise to settle a tax debt. Under this scenario, you'd be allowed to set up a plan to reduce the amount owed and pay it off over five years. This often occurs if the IRS believes that a person will never be able to pay off their tax debt. If you file an offer in compromise you'll still need to file all delinquent tax returns.
Don't run and hide if you owe the IRS money. In the long run it's better to set up some kind of tax relief plan than to accrue penalties and interest that will continue to add up over time.Source