Written By Sergio Melendez, JD EA
Eliminate your IRS Tax Problems! These top 5 tax releif programs eliminate your tax debt so that you can carry on without the IRS headaches.
TLDR:
IRS Offer In Compromise Program: Settle your back taxes with the IRS OIC. Offer a payout amount to the IRS, the rest is forgiven.
IRS Non-Collectible Program: Financial Hardship Program, closes out collections and does not extend the 10-year Statute Date
IRS Hardship Payment Plan: An installment plan based on your finances, not the amount you owe.
IRS Innocent Spouse Relief: When your former spouse should be held liable for the taxes owed.
IRS SFR Tax Reconsideration: Appealing the IRS filing enforcement of your tax return, claiming all of your credits, expense & deductions.
Owing money to the IRS can be scary. The IRS is a very large and powerful collections agency on behalf of our government. However, there are tax laws & tax relief programs designed to help you fight back against the IRS! Which tax program will you be taking advantage of?
The very first program I want to discuss is called the IRS Offer In Compromise Program. It works that when you offer the IRS a certain amount, they forgive the rest. As an example, let's say you owe $100,000 in back taxes to the IRS. If the calculation serves right, that based upon your income and equity and assets, you are only able to pay them, let's say a $100. You would offer them $100. If the IRS accepts that offer, that means the rest is forgiven. That is the way the offering compromise works. It is one of the best programs because everything is eliminated; income taxes, penalties interests. You truly do have a fresh start.
The second program I want to discuss is known as Financial Hardship, or the IRS calls it Currently Non-Collectible, or also Status 53. If, for whatever reason you do not qualify for the offering compromise, the currently non-collectable is a fantastic program.
When you get placed in Status 53, or currently non-collectable status, it is a payment plan of $0 per month to the IRS. As long as you remain in non-collectable status, the IRS doesn't hold it against you, even though if you owe the money. So does non-collectable status also known as CNC, there's one other thing you should know about the IRS. It is an open secret.
The IRS 10 Year Collections Rule:
IRS only has 10 years to collect on the balances when you owe them. This is called the Collection Statute Expiration Date or “CSED”. After 10 years, the IRS time is up and they can no longer collect from you. If You get placed in the CNC Program, that does not extend the 10-year rule. So this is a good thing!
The third program I want to discuss to you today is known as a Financial Hardship Payment Plan, also known as a Partial Payment Installment Agreement. Let's pretend that you did owe $100,000 to the IRS, but you do not qualify for CNC and you do not qualify for offering compromise. However, based on your financials, you are able to pay the IRS, let's say $75 per month. So even if you owe $100,000, the IRS will accept a payment plan of $75 a month.
Now keep in mind, remember that 10 year open secret that the highers only has 10 years to collect up the balance, well, the same is true with this hardship payment plan. It does not extend a date, so this is fantastic news. If you get put in a payment plan that you are only able to pay whatever you are able to afford. Once again, this is known as a Hardship Payment Plan, also known as a Partial Payment Installment Plan.
The fourth way to resolve the matter is, if let's say you went through a divorce and you found out that your ex spouse did some tremendous things that were completely against the marriage, it broke community property law, and throughout the divorce, you found out that all of a sudden you have a tax debt. Now, based on the state you live in, the IRS does apply to state law. However, if the terms and the reason is so unreasonable to you, you could file what's known as an Innocent Spouse Relief.
Under the terms of the Innocent Spouse Relief, the IRS takes the way the income was handled, the way the taxes were filed, and your overall general living arrangements with your ex spouse. So, if they find this out that you had no fault of your own, that you acted in good faith, they go ahead and forgive all of the taxes and penalties and the only person they hold responsible is your ex spouse. This is also one fantastic program, in case any of the other programs don't work.
The fifth way you could go ahead and resolve your tax matter is, if let's say you never filed the income tax returns and the IRS did them on your behalf. The IRS calls this as an SFR, Substitute For Return. That means that they didn't apply no deductions, no exemptions. They basically said, "Here's your income. Here's your tax. Here's interest and penalties. Now you owe us."
You could go ahead and replace the tax returns. What you would want to do is get your records of wages and income transcript from the IRS, review your deductions, and refile the tax returns. If this reduces the balance, this is one fantastic way to go ahead and eliminate the debt.
I have discussed with you the five different ways to go ahead and resolve all your tax matters with the IRS. The one thing to hold in part is that you have to take action. What happens when you have balances old with the IRS, the IRS could come right after you. They could do bank levies. They could do wage garnishment. They could file federal tax needs. The moment you resolve all your tax balances, the IRS completely backs off. So, it's very important that you take action.
Which program do you qualify for? Have you reviewed the qualifications? If so, leave me comment.
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Sergio Melendez, JD EA
