If you owe taxes but can’t pay the IRS all you owe, consider filing Form 9465 (Installment Agreement Request) with your tax return to request an installment payment plan. In certain situations, the IRS cannot deny an installment payment request if you owe less than $ 10,000. That said, you must pay as much as you can when you file your tax return. Even if your installment payment request is approved, you will be charged interest and possibly a late payment penalty on taxes that are unpaid by the due date. You can avoid collection notices and other IRS actions, such as a Federal Tax Debt Lien Notice or an IRS lien, by directly establishing an installment payment plan and paying your plan premiums.

If you owe back taxes, the IRS has several tax relief programs to help you, including its Fresh Start initiative :

  • Generally, the plan installment payment (Installment Agreement) is available for people who cannot pay their total tax debt at once. This program allows people to pay small monthly payments until they finish paying all the debt.

o Under the Fresh Start initiative, the IRS raised the tax debt limit amount for simplified installment plans from $ 25,000 to $ 50,000, and extended the repayment period for five to six years. Taxpayers who owe less than $ 50,000 can submit their application on the IRS website and do not have to complete the Collection Information Statement (form 433-A, form 433-B, or form 433-F) from the IRS. 

  • An offer in compromise (OIC Offer in Compromise or in English) allows taxpayers to permanently resolve their tax debt by paying a lower amount to the due. Offering in transaction or OIC is an important tool to help people, but it only applies in limited circumstances; this is an option that is available only to those taxpayers who have exhausted the other payment options.
  • Under its Fresh Start initiative, the IRS expanded the offer-in-transaction program coverage to help more taxpayers with payment problems. However, the IRS will not accept such an offer if it believes that the taxpayer can pay his debt as a lump sum or through an installment payment plan. On its website the IRS offers guidance in choosing a tax professional to file an OIC.

In very limited circumstances, the IRS may grant a reduction or reduction of the penalty amount to people who have not paid their taxes due to extreme hardship. If the taxpayer meets very strict criteria, the IRS can waive the fines. The reduction or reduction of interest is a resource that is applied in even more restricted cases and it is very rare that it is granted. Although these programs may eliminate penalties or interest, you continue to owe taxes. If a tax relief company promises you that they can eliminate your interest and / or penalties, be careful; Available relief is limited regardless of who represents you.

Based on what the IRS reports, you can apply to access an installment payment plan, an offer in compromise, or a reduction in the amount of the fine or interest without the help of a third party. If you prefer someone to help you negotiate with the IRS, know that you can only be represented by certain tax professionals before the IRS Collection Division – Registered Agents (federally authorized tax professionals who are empowered to represent taxpayers before all administrative levels of the IRS), Certified Public Accountants (CPAs), and attorneys. The services offered by the professionals mentioned must include an in-person meeting in which they must explain what their options are and the corresponding cost structure. 

If you are asked to make an advance payment to represent you in a tax collection matter, carefully review the refund policy before signing a contract. Also find out if a certain billing fee will apply if you cancel company services – a flat fee applied to the work of all employees of a firm, not just to tax professionals. A certain high billing fee can quickly consume a large part of your prepayment, even in the first stage of representation.

 

State tax relief programs

The process for settling debts with state tax agencies is very similar to the process implemented by the IRS, although it may vary between different states. For example, in some states, taxpayers can be waived of fines, but cannot have their interest waived. In other states, interest may be waived but cannot be exempted from paying fines. And in some states, you can’t reduce the amount of legitimate tax debt at all. For more information, contact the comptroller’s office in your state of residence. 

 

Problems with tax relief companies and representatives

The IRS Office of Professional Responsibility focuses on questionable practices in the tax debt resolution sector. The IRS office dealing with issues related to tax settlement preparers will process the complaint and, where applicable, forward it to the IRS Office of Professional Responsibility for investigation. 

Behaviors that warrant filing a complaint with the IRS include cases of companies or individuals that:

  • They promise you that they will get you some kind of relief for your tax debts.
  • They misrepresent the amount of time it will take to process a tax debt relief application.
  • Or that they omit important information from the asset statements of the financial statements filed with the IRS. 

You can also file a complaint with the FTC online or by calling 1-877-FTC-HELP. The FTC enters consumer complaints into a secure electronic database called the Consumer Sentinel Network, which is an investigative tool used by hundreds of criminal and civil law enforcement agencies in the United States and the United States. Foreign.

 

Recommendations for taxpayers

If you owe back taxes and are having trouble meeting your tax obligations:

  • Read the notices the IRS or your state comptroller’s office sends you. Find out what your alternatives are about collecting the taxes owed.
  • Save yourself the added hassle and ignore the promises of any company that tells you that you “qualify” or that you are “eligible” to participate in a taxpayer relief program to resolve your tax debt. Only the IRS or your state comptroller general can make that determination. Read the IRS Offer in Compromise booklet, form 656-B, and use this electronic tool from the IRS to see if you are eligible for the offer in the transaction program.
  • Think twice if a company requires you to pay the full charges in advance without giving you an explanation of how you will be billed for services or if you will be reimbursed for unused services.