Tax Debt settlement
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Tax debt settlement is a process that helps taxpayers who owe the IRS or state government money to negotiate and pay off their tax debt for less than the full amount owed. This process can help taxpayers avoid harsh penalties, such as wage garnishments, levies, or liens, and can provide relief from the financial burden of unpaid taxes.
There are several ways to settle tax debt, and the best option for a taxpayer will depend on their specific situation. Some of the most common tax debt settlement options include:
Offer in Compromise (OIC)
There are several ways to settle tax debt, and the best option for a taxpayer will depend on their specific situation. Some of the most common tax debt settlement options include:
Installment Agreement
This is a payment plan that allows taxpayers to pay off their tax debt in monthly installments over time. This option is often the best choice for taxpayers who cannot afford to pay their tax debt in full upfront.
Currently Not Collectible (CNC)
This is a temporary status that can be granted to taxpayers who are experiencing financial hardship and cannot afford to pay their tax debt. While in CNC status, the IRS will not take collection actions against the taxpayer, but interest and penalties will continue to accrue.
Penalty Abatement
This is a program that allows taxpayers to request a reduction or elimination of penalties that have been assessed on their tax debt. Penalties may be abated if the taxpayer can demonstrate reasonable cause for not paying the taxes on time.
When considering tax debt settlement options, it’s important to work with a qualified tax professional who can guide you through the process and help you choose the best option for your situation. Tax professionals can help you negotiate with the RS or state government on your behalf and ensure that you receive the best possible outcome.
In conclusion, tax debt settlement can be a lifeline for taxpayers who are struggling to pay their taxes. With the help of a qualified tax professional, taxpayers can explore their options and find a solution that works for them. Whether it’s an offer in compromise, installment agreement, or penalty abatement, settling tax debt can provide much-needed relief and peace of mind.
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Tax-debt relief refers to your options for resolving a debt you owe to the government.
The relief options available through the RS typically involve a payment plan or negotiating a debt settlement—also known as an offer-in-compromise. The best option for a tax debtor depends on their specific financial situation.
If you’re experiencing any of the items on this list, you’ll want to explore your options for tax-debt relief as soon as possible:
- You have overdue taxes and don’t have a way to cover the bill.
- The RS has sent you letters regarding your debt.
- The RS has hired a private debt collector to collect your debt.
- You’ve failed to file your tax return for one or more years.
- Your debt is “seriously delinquent” ($52,000 or more) and the RS has instructed the State Department to deny, revoke or confiscate your passport.