Nobody looks forward to tax season, particularly those individuals who know they will have a hefty tax bill to pay. Help may be available for these individuals if they know where to look. What is tax relief, and what should every taxpayer know about this process?
What is Tax Relief?
Certain individuals or businesses may owe a significant amount to the Internal Revenue Service or local and state tax agencies. Anyone who is in need of tax relief should investigate available programs to see if they can reduce their liability.
Some programs are used when the person is filing, while others are designed for those who have tax debt beyond what they are able to pay. Knowing what is offered is the first step in obtaining this relief.
Types of Tax Relief
Tax relief may come in the form of deductions, credits, and exclusions. However, many people find they need an IRS tax debt relief program. How do these strategies work, and when should the taxpayer turn to a professional for help in resolving their tax matter?
Most people are aware of measures they can take when filing their taxes to reduce the amount owed. This guide focuses on those individuals who have taken advantage of these measures and still owe more than they can afford to pay.
Fresh Start Initiative
The Fresh Start Initiative is a program offered through the IRS. The IRS may either allow the taxpayer to make payments on the debt rather than attempting to pay it in full. Many taxpayers find they can set up this arrangement on their own. If problems arise, a tax debt specialist can help with the process.
An Offer in Compromise
Many people find an offer in compromise is the solution to their tax debt problems. The taxpayer pays less than the original amount owed on the debt. However, before they do so, they must show they cannot pay the full balance, they owe less than what the IRS says, or paying the full amount would lead to financial hardship.
There are three ways the taxpayer may pay the offer in compromise. Some taxpayers pay the full amount in five installments. Certain individuals, however, choose short-term periodic payments.
If this option is selected, the entire amount must be paid in full within 24 months. A third option is deferred periodic payments. The IRS and taxpayer come to an agreement regarding the statutory period for this arrangement.
Tax Lien Withdrawal
For those taxpayers who have a federal tax lien, a third option is offered. A tax lien withdrawal is used to stop the government from seizing assets. A taxpayer may file to have this lien removed, but they must meet certain requirements to qualify. However, the Fresh Start Initiative raised the amount the taxpayer must owe before the IRS can serve them with a tax lien.
If this step is to be taken, it’s best that the taxpayer work with a tax debt professional. The professional can walk them through the process of requesting this relief. The taxpayer will have someone there to support them as they deal with the IRS.
No person wants to have tax debt hanging over their head. With the help of a tax professional, they can get the matter resolved in the shortest time possible. The IRS frightens many people and it shouldn’t. If they have the right person in their corner, they can deal with this agency in a professional manner and resolve their financial difficulties.