If you are facing financial hardship and struggling to pay your tax debt to the IRS, you may qualify for a delayed payment period – the experts at Optima Tax Relief highlight how these types of programs works.
Being in debt to anyone is never a pleasant experience – especially when that debt is owed to the IRS. Millions of individual taxpayers, as well as business owners, find themselves owing the IRS every tax season. While the majority of American taxpayers end up getting a refund each year, others aren’t so lucky. If you fall into the latter category, the IRS does offer a number of options to help ease the burden – including the potential delaying or deferring of payment. The experts at Optima Tax relief walk through what some of these options are, and how they work.
Requesting for an IRS Tax Relief
One of the most important factors to understand as you review your options is that like many other types of debts, your tax liability is subject to interest and penalties as determined by the IRS. This interest compounds daily, so taking an aggressive and proactive approach to eliminating your tax debt will allow you to avoid incurring additional debt.
If you are unable to reduce your balance owed to the IRS over the short term, you can request to be put on an installment plan. You may also qualify for breaks on the fees associated with those plans if you set up an automatic payment or meet other financial qualifications.
The IRS also has the ability to settle your debt for less than the total amount owed – known as an offer in compromise – and can even delay or defer payments in the case of financial hardship. In order to assess if you qualify for these programs, the IRS will require you to complete a Collection Information Statement and provide proof of financial status – which requires additional documentation and disclosures relative to your assets, monthly income and expenses.
Settle your Tax Debt – Now
While leveraging these programs may provide temporary relief to qualifying taxpayers struggling to make payments, it is important to understand that the debt still exists and must be settled once the qualifying financial hardship has ceased. The delayed debt will continue to be subject to interest and penalties, and the IRS may place a lien to further guarantee the outstanding debt.