There are many tax payers out there who are stressed over the huge tax bills they need to clear with the IRS. Many of them are probably experiencing financial hardships to the point of bankruptcy. If you are going through this kind of tough situation, you have no need to be frustrated, because there are many approaches you can take to clear your outstanding tax bill.
The IRS has a program called the Fresh Start initiative, aimed at simplifying the payment of taxes through an Offer in Compromise or Installment Agreement plan. If you have a debt of $25,000 or below, you could qualify for a Streamline Installment Agreement. However, you must have been filing all of your tax returns to qualify for this option.
With the Installment Agreement plan, you are permitted to pay your tax dues monthly over a period of time until you have paid your last cent. The Offer in Compromise on the other hand, allows you to pay your tax bill at less the total amount you owe.
When applying for the Installment Agreement, all you need to do is choose an appropriate monthly payment that will clear your tax debt within two years including interest before the expiration of the statute of limitations. To establish the correct amount, you can make use of the loan amortization calculator.
The Offer in Compromise now caters for taxpayers with higher income and balances. To apply for the OIC, you will need to fill out a Form 656B. It has some changes and also provides you with a shorter time period for the income on which your offer is subject to.
If you have been making payments and you want to be certain that your debt will not come up in future, file and submit Form 4506-T and indicate the years which you have been making payments. The maximum number you can indicate is four years. After submitting it, you will receive feedback on your account’s status.
Applying for these tax reliefs are straightforward. All you need to do is follow the instructions to the letter and ensure that all the required records and statements are included. Once you are granted a payment plan, it is important to stick to it and make the payments as agreed. Do not forget to make and safely keep copies of the documents you filed and the payments made.
