5 Helpful Tax Debt Relief & Settlement Tips

Tax debt relief is a term that refers to measures that can be taken in order to get rid of debt that results from unpaid taxes. Settling those debts is complicated process, especially since you have to keep paying taxes every year. There is no way you can erase your debt completely, but there are several things you can do to make the repayment process easier and manageable. As long as you follow all the rules and pay everything on time, you should eventually be able to get rid of your debt.

Getting the Paperwork in Order

Before you set out to repay your taxes, you need to get a sense of what you will be facing. Find all your tax forms and organize everything. Once that's finished, there are several things you can do in order to get tax debt relief.

Installment agreement

This is a payment plan that allows you to pay off your debt on in monthly portions (the installments). When you agree to monthly installments, you agree to pay a certain amount every month. That amount is equal to the total value of your debt divided by thirty. You must be able to pay off the total debt over a thirty-six month period that starts when you sign the installment agreement. In order to qualify for the installment agreement, you must meet several requirements. They include:

  • No other obligations - all of your taxes must be filed and you can't have another installment agreement.
  • Generally good record - if you filed your tax forms late and paid your taxes late any time during the five years prior to the most recent tax year, you would not qualified for an installment agreement.

Offer in Compromise

This is a program where you agree to repay a portion of your debt. The rest will be forgiven. In order to qualify, you must prove to the IRS that you either don't have the money to pay off all of the debt.

Not currently collectible

Under this program, the IRS agrees not to collect on your tax debt for a year due to your financial hardship. You can apply for it by filing Form 433-F. This won't reduce your debt, but if does give you time to find some way to repay it.

Hiring a Tax Professional

If you owe IRS over $125,000, you should consider hiring an experienced tax professional. A tax professional will use his or her expertise to help you through any and all of tax relief programs listed above. A tax professional must be a licensed as either a Certified Public Accountant or an Enrolled Agent or tax attorney.

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