Know when it’s time to seek professional tax help for your tax debt.
Have you received letters from the IRS demanding payment for past-due tax bills? Do you have a massive tax bill due soon, but no idea how you can afford to pay it?
If you’re dealing with challenging financial circumstances and need IRS tax debt relief, the good news is you can get help. The IRS offers programs for taxpayers who fall behind on their tax liabilities.
IRS tax debt relief program experts like those at Alleviate Tax can help you settle your tax debt for less than you owe. Our team can help you apply for programs like a payment plan, offer-in-compromise, penalty abatement, or one of the many other forms of help.
Simply put, tax relief help can alleviate your tax burden and get you back on track with the IRS.
But what are some of the options for dealing with the IRS? Can you do it on your own? Or is it better to seek help from a tax professional?
COMMON REASONS Why PEOPLE HAVE TAX DEBT ISSUES
The cause for your tax debt can determine the type of IRS tax debt relief program you may qualify for. Tax debt issues can arise from a variety of circumstances:
- Failure to pay estimated tax payments on time
- Retirement fund early withdrawal penalties
- Tax return preparation mistakes
- Under‐withholding payroll taxes
- Failure to file tax returns
- Gambling winnings
- IRS audits
Whatever the issue, Alleviate Tax can help you find the right solution.
What To Do If You Owe the IRS a Lot of Money
If you can’t pay the entire amount of taxes by the due date, the best course of action is to file your return on time and pay whatever amount you can to avoid higher penalties and interest.
Once you’ve filed your returns on time and paid a portion of the tax payment to the IRS, the next step is to contact the IRS to make arrangements to pay the remaining balance.
However, you may not want to tackle this challenging scenario on your own.
Tax debt relief program experts like Alleviate Tax can help you determine what tax relief options are available to you and negotiate with the IRS on your behalf. Knowing what options you’re entitled to puts you in a stronger negotiating position with the IRS. Contacting Alleviate Tax is a wise starting point.
What Happens If You Owe the IRS Money and Don’t Pay?
If you decide to simply ignore your debt, the IRS can take legal action to try to collect its money. The federal agency can put a lien on your property, levy your bank account, or garnish your wages. If you’re criminally charged with tax evasion by the IRS, you may even face prison time for not paying your tax debt.
Can You Go To Jail for Failing to Pay Your Taxes?
Realistically speaking, the frequency of the IRS imposing jail time on taxpayers who have tax debt is low. That said, there is still a chance that if the IRS deems your particular case valuable enough, they can take legal action, and that includes jail time. Mostly, this happens when the IRS suspects tax evasion or someone has a huge tax bill.
How to Avoid Going to Jail for Failure to Pay Taxes
The safest way to avoid jail time because of tax debt is to reach out to the IRS sooner than later to make arrangements to settle the tax debt in some way. The worst thing to do is simply ignore the debt and remain silent. If you need help dealing with the IRS, Alleviate Tax has a team of experts who can help you through every step of the process.
Does the IRS Forgive Tax Debt?
The IRS doesn’t simply forgive tax debt in general. But there are many programs the IRS offers that can significantly reduce your overall tax burden, including interest and penalties. Through an “offer in compromise,” you may be able to settle your debt for an amount you can afford.
If there’s no way you can pay the full tax amount due by the due date, it’s crucial to file your return on time and pay whatever amount you can financially manage. This will help you avoid incurring even higher penalties and interest overall.
What Types of Tax Debt Relief Are Available?
The IRS has a variety of tax debt relief programs that tax debt relief providers like Alleviate Tax can help you with:
- Audit Representation and Tax Preparation Mistake Assistance
- Innocent Spouse Tax Debt Relief
- Separation of Liability Tax Debt Relief
- Equitable Tax Debt Relief
- Currently-Not-Collectible Status Tax Debt Relief
- Federal Tax Lien Relief
- Interest and Penalty Tax Debt Relief
The program that’s best for you will depend on how much you owe, your unique financial circumstances, and how long you’ve owed the IRS. It will also depend on your current income and assets. You have a higher chance of tax debt forgiveness if you have very low income and no assets.
On the other hand, if the IRS sees you have property or investments you can sell or leverage to pay off your tax debt, they will expect you to pay the full amount.
How Do I Get My IRS Debt Forgiven?
The IRS forgives tax debt through a variety of programs. The experts at Alleviate Tax can help determine which one is best for you.
Offer-in-Compromise
An offer-in-compromise is one of the most widely discussed programs available for tax debt relief. Yet, nearly two-thirds of applicants don’t qualify. Working with a professional tax debt relief firm can improve the likelihood of the IRS accepting your offer.
Alleviate Tax has saved taxpayers more than $37,257,412 million in tax debt through offer-in-compromise programs, and nearly $6.5 million in 2023.
Innocent Spouse Relief
If your spouse made errors on your joint tax return, and you weren’t aware of the errors, you may qualify for innocent spouse relief. Likewise, if you owe joint tax debt but have since divorced or legally separated, you may not be responsible for paying those taxes owed.
Currently-Not-Collectible
If paying your taxes would cause undue financial hardship and you are barely making enough money to cover basic living expenses, or if you have no income or assets, filing for currently-not-collectible status can pause collections actions while you get back on your feet.
Note that the tax debt doesn’t disappear, but CNC can give you more time to pay.
Partial Pay Installment Agreement
An IRS installment agreement or payment plan can give you up to 72 months to pay off your tax debt if you owe less than $50,000.
If you qualify for a Partial Pay Installment Agreement, or PPIA, the remaining balance after 72 months will be forgiven.
Penalty Abatement
The IRS automatically waived penalties for many businesses and individuals in 2021 and 2022 for tax debt owed based on 2020 and 2021 returns. But even if you have tax debt from other years, you may qualify for a first-time penalty abatement.
It’s important to understand the steps to take to file for penalty abatement. Getting help from tax experts can ensure you follow the correct process to have penalties forgiven.
Can I Negotiate with the IRS Myself?
Whether you need to file a complicated Form 656 for an offer-in-compromise, or want to apply online for a payment plan, dealing with the IRS can be confusing and scary. You can negotiate on your own. But it might mean hours waiting on the phone, filling out forms incorrectly only to have them returned, and other delays. Meanwhile, penalties and interest will continue to pile up and your stress will grow.
Whatever your tax debt scenario is, Alleviate Tax is here to help you get back on track with the IRS and leave your financial stresses behind. Reach out to one of our tax debt relief specialists today and alleviate your tax debt burdens.
FAQs
How much will the IRS usually settle for?
There is no specific dollar figure for tax debt forgiveness, since everyone’s financial situation is different. The IRS will usually accept a settlement for an amount you can reasonably afford to pay. The IRS will consider your income, expenses, savings, investment, assets, and even the likelihood of future income when it determines how much it can collect from you before the Collections Statute Expiration Date (CSED).
Can IRS debt be waived?
The IRS can waive failure-to-file and failure-to-pay penalties on a one-time basis. Many programs, including IRS Fresh Start, can help people negotiate their tax debt down to a more manageable amount.
Who qualifies for IRS penalty forgiveness?
If you have filed the same type of tax return for the past three years before the penalty was assessed and didn’t receive any penalties in that time, you may qualify for one-time penalty abate. If you had a penalty removed under a rule other than first-time abate, you may still qualify for first-time abatement. It pays to speak with a tax professional to determine if you qualify.
What is the IRS 6-year rule?
If you failed to report income equal to 25% or greater of the gross income you claimed on your tax returns, the IRS has six years from the date you filed to assess those taxes, according to IRS.gov. That’s why it’s important to keep records of your income and expenses on file for at least six years.
