IRS Debt Help - Repayment Schemes

If you need IRS debt help, a tax professional is almost always worth more than their fee, because the IRS will take advantage of someone who isn't entirely sure of the process.

There are three main categories that can be used to justify reducing an overdue tax account.

a) If there's doubt whether the tax is due

b) If there's doubt whether the full amount of tax will ever be paid

c) The tax assessment is correct, but due to certain circumstances (eg financial hardship) the taxpayer can't pay

If you go for the third option (financial hardship), your OIC application should be successful if you can show that the amount of tax owed is more than you could pay off in 5 years.

Once an application is made, the IRS looks at all the payment options open to the taxpayer in relation to the state of their personal finances and takes a decision; Would they rather have part of the tax debt or none of it? Their decision is largely based on their evaluation of whether the taxpayer will ever be in a position to pay the full amount.

The IRS then make an offer to the taxpayer - An amount that they think the taxpayer can reasonably be expected to pay in light of their financial situation.

IRS Debt Help 3) Payment Plan

In some cases, the IRS will give taxpayers time to pay their tax debt when they are convinced that they can't settle their liability in one payment.

If you are unable to pay your tax liability, your account can be flagged "not currently collectible". This means that the IRS will not pursue collection until you are in a position to accept a payment plan or an Offer in Compromise is made.

IRS Debt Help 4) Penalty Abatement

If you can't pay your outstanding tax debt due to certain circumstances that are out of your control, it's possible to challenge the interest and penalties that have been added to your account. This will help to reduce the size of your tax liability.

a) Statutory Exceptions - Tax code changes from minor to major

b) Hardship beyond the taxpayer's control - eg bad tax advice, fire, flood, natural disaster etc

c) IRS errors/mistakes

d) Reasonable cause - Death, serious illness, ignorance of the law etc

Again, due to the complexity of this scheme, it's advisable to appoint an experienced tax advisor. Applications for penalty abatement have to be extremely specific and comply with all the IRS rules and regulations.

Read to the first part of this article about IRS debt help

If you've got problems with tax debt, this Guide To Tax Debt will help you to improve your financial situation.

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