Whenever you owe the IRS money for back taxes, it can seem like it is the end of the world. However, there are many tax relief programs out there to help you. There are also many sites like this one that offer assistance.
There are many programs available that you can choose from depending on your individual needs and the type of assistance you require. They can range from allowing you to pay less than what you owe to creating a payment plan based on how much you can pay at a time. Talking with the right people can help you figure out the right steps to take.
In the meantime, here is a breakdown of some of the more popular programs like this out there.
Offers in Compromise, or OIC, is a program that allows you to pay less than the full amount that you owe the IRS. The amount decided on is based on the largest amount that you can pay and not cause you any financial hardship.
The Installment Agreement, or IA, is usually reserved for taxpayers who owe the IRS less than $50,000. These individuals will set up direct payments through their bank. These payments can be set up for as long as 72 months based on how much you owe and the amount you can pay each month.
The Stair Step Agreement is when you pay a small initial monthly payment for the first 12 months of the agreement. At this first year, you will be required to increase your monthly payment over the course of the next four years. This way your full payment is paid within five years.
The Streamlined Installment Agreement is for those individuals who owe the IRS less than $25,000. If you qualify, you can set up direct monthly payments that will come out of your bank account automatically. You can make these payments over the course of five years.
The Partial Pay Installment Agreement is similar to the Offers in Compromise in that you pay a lesser amount than what you owe. However, instead of paying that amount all at once, you space it out. You are also required to pay during the time that is allotted to you.
The Conditional Expense Installment Agreement is when you have other financial burdens that don’t allow you the funds to properly pay your debt to the IRS. Such burdens include things like 401K payments, student loans, or credit card debt. You would still need to pay your debt within five years but your months payments would be lower. This agreement does require you to show proof of these other expenses.
If you have trouble paying your IRS taxes, they often start adding on penalties to the amount that you owe making that amount much larger. This is when Penalty Abatement can come in handy. If you have special circumstances, such as recent health problems, family death, or natural disaster, then you can get these penalties abated so you only have to pay what you actually owe.