One of the two main “unavoidables” in life, and arguably the one that can cause a lot more financial havoc, is taxes. We often have a love-hate relationship with taxes, because we certainly need many of the things they pay for, but nobody likes getting a smaller paycheck than what they earned. If you overpay a little, there is that annual tax refund that can really help as well.
What if you are one of the millions of Americans who find themselves on the wrong end of the whom-owes-who tax equation. Without leveraging tax relief, owing back taxes can have several serious consequences, ranging from simply taking what you owe from your next refund to imposing liens on your property, and even filing criminal charges for the most extreme situations. Let’s take a look at 5 ways to get immediate tax relief.
- Working With A Tax Relief Company
Working with a company that provides tax relief is a route that many people take every year. There are many companies that offer honest, trustworthy tax debt solutions, but there is also a large number that do not. Some are only out to make money and don’t have much regard for the situation the debtor finds themselves in after working with them.
Most tax relief companies may help you fill out the paperwork and follow the process, but ultimately they cannot force the IRS to agree to any potential settlement. The IRS rejects a large number of the applications for offers in compromise that are filed, and in many cases, you will need to pay the tax relief company fees or costs upfront.
- IRS Payment Plans
If you are behind on your taxes or owe the IRS other fees and penalties, you may be able to work directly with them to arrange a payment plan for your tax debt. While these payment plans do still permit the addition of interest and fees, they also provide an easy way to clear your tax debt with minimal hassle. There are options available for both short-term and long-term payment plans.
There are a few downsides to IRS payment plans, however, in addition to the continuing interest and penalties. You do not get any break on the total owed, and if you owe more than $25,000, the only available method for payments is for automatic withdrawals from an existing bank account. You will also face processing fees for both credit and debit card payments, of either a flat fee or a percentage, depending on the payment method.
- Offers In Compromise
If you owe back taxes you may also be able to find significant tax relief in applying for an “offer in compromise” which is an offer that the IRS accepts for payment, that is less than what you owe. This is often an option for those who simply cannot possibly pay the total debt, or if doing so would create an undue financial hardship.
One of the big downsides to applying for offers in compromise is that they are often rejected by the IRS. Since they have to accept the offer, they are the sole source of approval, and they approve less than half of the overall applications that are filed.
- Fresh Start Initiative
The IRS has recently created the Fresh Start program to help those with outstanding tax debts to free themselves of it. The program is similar to their offer in compromise system, however, it reduces the requirements for obtaining an offer in compromise.
The Fresh Start Initiative not only lowers the total amount of tax debt that is required to obtain an offer in compromise but also increases the general chances of approval. There are tools on the IRS official offer on the compromise page that can help you determine if that method is right for your situation and debt level.
- Become “Currently Not Collectible”
This is one of the more difficult ways of getting tax relief, but it can immediately stop collection efforts and other issues temporarily, however, the IRS is still permitted to file a tax lien on you or your property. Applying to the IRS for Currently Not Collectible status will involve filing a statement with them, and proving that you cannot pay your taxes due to living expenses.
No matter how serious your tax debt is, there is a way for you to find immediate tax relief. For those with relatively low debt levels, payment arrangements may be the best solution. However, if you have a more significant tax debt, you may need to look into the Fresh Start program, or even arrange to apply for an offer in compromise. If you need tax relief, there is a solution for yo