The cost of tax debt relief depends on the solutions and services that are required for your specific situation. Introducing a payment plan can help you avoid wage garnishments, levies and other collection actions. While interest and penalties will accrue until the balance is paid, the penalty for non-payment will be reduced by half, from 0.5% per month to 0.25% per month. If your account is currently not collectible, the IRS generally won't impose any liens on your assets in an attempt to collect it from you.
While you're not paying your tax debt, interest and penalties are accruing anyway. In addition, any future tax returns will go toward your tax debt until it is canceled. Help options available through the IRS usually include a payment plan or negotiating a debt settlement, also known as a commitment offer. The best option for a tax debtor depends on their specific financial situation.
Tax settlement firms use a procedure accepted by the IRS, known as a compromise offer, to reduce their customers' tax bills. Tell the tax settlement company, which steps in and leaves the worried customer amazing messages that say that their tax liability is miraculously reduced by hundreds or thousands of dollars. You can choose to put your tax debt on a credit card and you can even avoid paying interest if you qualify for a card with an introductory APR period of 0%. If the IRS considers that your tax debt is “currently uncollectible,” the agency will temporarily suspend collection efforts, which may give you some respite.
If you're wondering, “What if I can't pay my taxes?” , you can go to the Internal Revenue Service (IRS) for help or to outside companies that specialize in reducing tax debt. Another form of federal tax debt relief is the commitment offer (OIC), which allows you to settle your tax debt for less than the full amount due. A case manager will review your current tax debt and other financial details and provide you with an estimate of your services. Tax debt relief is a generic term for programs that help you pay your tax debt, such as IRS debt repayment plans and the services of third-party tax relief companies.
Those seeking help with their unpaid tax balances generally prefer to have their tax or financial advisor refer them to a qualified tax lawyer with years of experience in this area. Couples who file joint returns are responsible for the taxes they owe, but the IRS can exempt one party from taxes, interest, or penalties if the other couple was at fault for not reporting the taxes due. Any reputable tax relief company will first obtain key financial data from its customers before offering them a realistic assessment of what they can do for a reasonable fixed fee. The IRS updates interest rates quarterly based on the state of the market, so a personal loan to pay off a tax debt may or may not be a good deal, depending on when you apply for it.
At the end of the day, tax debt relief companies often use the same IRS programs for people with financial difficulties that you can apply for yourself. If you're confused about the tax settlement industry and what it does, think about the debt settlement business. Tax debt relief is a form of assistance for people who can't afford their back taxes or taxes that weren't paid in full the year they were due. This is a special agreement that some taxpayers can make with the IRS to settle their tax debts for an amount less than they owe.