Are you one of the 18.6 million Americans who owe back taxes to the IRS? Do you spend every free moment wondering how to get out of tax debt? Have you had problems reaching the IRS by phone, ending every call in frustration and without a solution?
The cost of everything, including food and gas, has increased dramatically in the past few years. If you are just getting by, and have no funds left to pay your tax debt, you may think you have no solution.
Will you face wage garnishment? Jail time? Have your personal property seized? All of these are possibilities, as the IRS does not fool around.
However, you do have time to resolve the issue. As long as you take action, and don’t ignore your tax debt, you may find the IRS willing to work with you to resolve your unpaid taxes.
At Alleviate Tax, we’ve resolved more than $27.9 million in unpaid tax debt since 2018 for our clients. Whether you seek the help of a tax expert or not, the first step is recognizing that you can find a solution.
The IRS offers multiple tax relief programs and may even waive interest and penalties.
Current News You Should Know
Right now, the IRS is waiving the failure-to-pay penalty for taxpayers who have unpaid tax debt from 2020 and 2021. If you already paid this penalty, you’ll receive a refund. If you still owe back taxes, the IRS will credit the refund to your outstanding tax debt.
The new initiative applies to more than 4.7 million taxpayers, the Detroit Free Press recently reported, and could deliver up to $1 billion in relief. You can learn more about IRS penalty relief programs on the IRS website or reach out to the professionals at Alleviate Tax to see how we can help you.
7 Ways to Find Tax Debt Relief
In addition to seeking penalty waivers to reduce your total tax bill, you have multiple options when it comes to paying your past-due taxes. While you can manage some of these tactics to resolve your unpaid tax debt yourself, you may increase your odds of a satisfactory resolution by enlisting the help of a tax relief company like Alleviate Tax.
Offer in Compromise (Fresh Start Program)
Previously called the IRS Fresh Start Program (a name now adopted for student loan forgiveness), an offer-in-compromise can reduce your tax debt by up to 98%. However, it’s not easy to qualify. Less than 25% of Americans who file for an OIC have their application accepted, according to data from TAS Research, an arm of the Taxpayer Advocate Service.
If the IRS believes it can collect the debt in full, either with a payment plan or lump-sum payment, it will continue to pursue payments as interest and penalties accrue. Your situation may feel more hopeless than ever.
An offer-in-compromise may be feasible for a taxpayer who can show paying their debt would create financial hardship, whether due to job loss, pay cuts, insufficient earnings, or other factors.
However, the paperwork to prove your inability to pay can be tedious. Alleviate Tax can help increase your odds of a successful resolution, slashing your tax bill into a small lump sum or manageable monthly payments for up to two years.
Currently Not Collectable Status
If you have unpaid tax debt and very few assets, you might qualify for “currently not collectible” (CNC) status with the IRS. This is not a long-term solution to your tax debt, however. Interest and penalties will continue to accrue as long as you maintain your not collectable status.
However, if you still cannot pay any of your tax debt after 10 years, the statute of limitations may apply and you will be tax debt free. It’s best to enlist the help of tax professionals to help you file and understand the ramifications of this decision.
Innocent Spouse Relief
Married couples, filing jointly, can realize significant tax savings and benefits. But if one partner under-reports income or makes errors filing the joint tax return, it can lead to financial trouble for both taxpayers. However, if you had no knowledge of your spouse’s errors on your joint return, you may be able to apply for innocent spouse relief.
Innocent spouse relief may be granted if you are divorced or separated, a victim of domestic violence, or can show that you didn’t know the under-reported taxes or your spouse’s errors on the tax return. Proving your lack of knowledge or understanding to the IRS may be challenging. Alleviate Tax can help you achieve the tax relief you deserve.
Installment Agreement
Sometimes, people can pay their tax debt, but not all in one lump sum. After all, many Americans live paycheck to paycheck, with just enough money to cover housing, transportation, food, and other necessities. You may also have other high-interest debt to pay.
An installment agreement allows you to break up your overwhelming tax debt into manageable monthly payments. If you review your budget, you may find ways you can free up a few hundred dollars per month to assuage the IRS, stop collections action, and gradually pay off your tax debt.
You may have to pay some set-up fees for a long-term payment plan. You may be able to take as long as 72 months to pay off tax debt of up to $50,000, and up to 84 months for a larger tax bill.
Partial Pay Installment Agreement
If you evaluate your budget and find there’s no way you can pay down your tax debt in the allotted time, you may qualify for a Partial Pay Installment Agreement. A PPIA can help you avoid wage garnishment, liens and levies. Ideally, you’ll still have enough money to maintain your current lifestyle, even if you have to cut a few corners. A installment agreement should not leave you in poverty, but should provide manageable monthly payments.
If you cannot pay the entire amount within 10 years, the balance will not be pursued by the IRS. You can only apply for a Partial Pay Installment Agreement online or by phone. It takes time and knowledge to set up a payment plan with the IRS, so you may want to enlist the help of Alleviate Tax. We may even be able to have interest and penalties waived as part of the negotiation process.
Use 0% Credit Cards
Going into additional debt to pay off your tax debt may not be ideal. But if you can pay off your back taxes in one lump sum, it’s certainly easier. If your credit is in good standing, apart from past due tax debt, you might qualify for a 0% credit card. If you do, you can pay off as much of your tax debt as possible.
Keep in mind, charging your tax debt has additional financial drawbacks you should understand:
- Your credit score may go down, since you will have a high credit utilization ratio. It may be harder to secure low interest rates on future loans or credit cards.
- The IRS charges fees of nearly 2% when you pay by credit card. If you have a large tax bill, this adds up.
- You’ll need to make at least your minimum monthly payments on your credit card.
- If you don’t pay off the credit card before the 0% introductory offer expires, you’ll face a larger credit card balance.
Before you rush to pay your tax bill by credit card, consider reaching out to Alleviate Tax to explore other options that could reduce your overall tax debt.
Take Out a Personal Loan
Just like paying your taxes by credit card, a personal loan is another tactic to get the IRS off your back. But, as with a credit card payment, a personal loan can affect your credit score. Personal loans may have added fees, such as loan origination fees or pre-payment penalties.
Before taking on another form of debt to pay your taxes, make sure your budget can manage the monthly payments.
Should You Pay Your Tax Debt Without Hiring a Tax Expert?
Even if you have a lump sum of cash available to pay past-due tax debt, you may want to negotiate with the IRS to waive or reverse fees and penalties. You should never have to pay more than you have to when it comes to income tax.
Concerned about taxes this year or your rapidly growing tax bill? Let Alleviate Tax help.
PPA
Find out what people are asking about tax debt relief.
How can I get my tax debt forgiven?
The IRS has several programs available to help people have all or part of their tax debt forgiven. It can be scary to deal with the IRS. A reputable tax debt relief company can help you negotiate a payment plan or debt settlement with the IRS on your behalf.
Is there really a tax debt relief program?
The IRS offers several programs to help taxpayers with tax debt relief, including the offer-in-compromise (formerly the IRS Fresh Start program), currently not collectible status, or a partial pay installment agreement.
Do I qualify for IRS Fresh Start 2024?
If you qualify for the IRS Fresh Start program, now called an offer-in-compromise, you may be able to settle your tax debt for less than you owe. To qualify, the IRS will consider how much you can reasonably afford to pay and may accept a settlement for that reduced amount.
