Wondering how does Tax Debt Relief work? We got you!
Did you know that each year in the US, almost $450 is unpaid in tax, and if you think you can escape the clutches of tax, then you are wrong because IRS notes down everything, and sooner or later, your tax debt will catch up with you?
If you are reading this, then I am guessing that has already happened. Do not worry because there are ways to deal with this situation partially. So let’s get into it.
What Is Tax Debt Relief?
Tax Debt Relief refers to negotiating and setting up a payment plan with the IRS where you get to pay less than what you owe and no, it does not mean you will be able to get rid of your tax debt entirely.
Also, in cases of natural calamity or disaster such as an earthquake, wildfire, hurricanes, etc., the IRS offers special tax relief where the victims can claim for casualty losses or can ask for deadline extensions.
How Does Tax Debt Relief Work?
You can avail the benefits of tax debt relief in several ways. Let’s have a look at this one by one:
1. Offer In Compromise
If you know that you won’t be able to pay your tax debt in full because of your financial condition or any other reason, then you might request IRS1 to settle your debt for a less amount. If they agree to this, they might ask you to show them a proof of your:
- Assets and liabilities
2. IRS Repayment Plan
If you are struggling to pay your tax debt in full, then the IRS can allow you to pay your full balance in smaller payments.
If you owe $50,000 or less, then you will be eligible for a long-term plan that will give you a period of 120 days or more to clear your dues.
And if you owe $100,000 or less, then you will be eligible for a short-term plan that will give you a period of 120 days or less to clear your dues.
3. Penalty Relief
You might also get penalty relief if you meet certain criteria of the IRS.
This means that you would still have to pay the tax debt you owe, but you will be exempted from the penalties.
Some of the criteria that can get you a penalty relief include:
- You do not have any penalties for three tax years prior to the year for which you were charged for a penalty.
- You have paid your due tax before or have arranged to do so.
- You filed the necessary forms or filled extension for the delay, etc.
4. Statutory Relief
You may also get statutory relief if in case you received erroneous written advice from the IRS.
If this happens, do not ignore it and make sure to talk with your tax professional so that they can find a way to get your tax debt lowered.
5. Tax Relief Companies
If you want this matter to be taken care of by expert negotiators, then you might want to look for a tax relief company.
These companies use their experience and negotiation skills with the IRS to get your tax debt amount lowered in exchange for hefty fees with no guarantee.
However, trustworthy companies such as CuraDebt relief might be a good option for the same. You can check CuraDebt reviews if you want to learn more about it.
Remember running away from paying tax will only increase your penalty and interest charge.
So pay your dues on time and consider your options if you struggle to pay your tax debt.
Shefali Jain is a Content Writer & Editor at USWorkforce.org
After completing her graduation in hospitality, Shefali decided to follow her passion and started writing. Shefali has been writing for two years now and contributes to our website as a skilled editor and content writer with strong research skills. Writing product and service reviews, biographies, and book reviews are some of her key areas, among many others in which she specializes. In her time at the organization, she has written and edited content on a range of topics, including employment law, human resources, and business management.
The US Workforce has a policy of producing high-quality content that follows industry standards by using primary sources, such as white papers and government data, alongside original reporting from reputable publishers. We also follow an editorial style where appropriate information about the topic can be found with due credit given when applicable.