There are three primary tax relief options.
Are you one of the millions of American who owe back taxes? There are several different resolution options available to you.
Offer in Compromise (OIC)
An Offer in Compromise, often times referred to as settling your liability for “Pennies on the dollar” or “Fresh start program” is one option. Typically, the IRS will perform an analysis to determine whether it is in their best interest to accept a smaller “one-time” payment to satisfy the tax due.
How does the IRS make that determination? Despite claims to the contrary, it is not a negotiation! The offer amount you can submit is not based upon a percentage of the tax owed or some fancy negotiation. Rather, it is a formula driven process based on an income / expense analysis and whether you have any appreciable equity in assets. If after the analysis, the IRS determines that they will not be able to collect the tax based upon your financial situation, they will accept a lesser amount pursuant to the formula. The reality is that some taxpayers live “paycheck to paycheck” and have very little or no disposable income left over after all of their bills are paid. Those who fall under that category will qualify for an OIC.
Currently Non Collectible or “Hardship Status”
As with the OIC, the IRS will review your income and allowable expenses to determine your ability to pay on a monthly basis. Like millions of Americans who live paycheck to paycheck with no disposable income at the end of the month, you may be placed in Non-collectible Status. This means that the IRS will not seek any monthly payment from you toward their tax liability. The IRS may, however, review your income annually to determine whether they should review your Non-collectible Status.
Installment Agreements
If you feel you can pay your past due tax balance on a monthly basis, then an Installment Agreement may be the option for you. The IRS will review your income and expenses and determine what the disposable amount of income is at the end of the month. That disposable amount of monthly income becomes your Installment Agreement.
Streamlined Installment Agreement
If you owe less than $50,000 and can afford to pay the balance within 72 months, the IRS will place you on a Streamlined Installment Agreement. No financial information is needed for a Streamline Installment Agreement and the IRS will not file a lien with the County Recorder’s office. If you owe more than $50,000 and less than $100,000 – and can pay the balance off within 84 months – the IRS will also place you on a Streamline Installment Agreement however, the IRS will file a lien with the County Recorder’s office.
How can Wiztax help?
You can get started for free by answering 6 simple questions. Once you sign-up:
- Wiztax guides you through a series of questions.
- Makes the appropriate calculations.
- Presents you with all the options that are available to you.
- Shows you what your payments would be or what offer amount you can submit.
- Fills out the IRS Forms for you.
- Presents you with simple instructions on next steps.
It’s that easy – and if you ever get stuck, you can call or email us. All included.
6 Simple Questions. Free Evaluation.
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