What is Tax Debt Relief and How Can It Help You?

Brookline, NH Resident Seeks Help from Her Tax Burden

The IRS offers tax debt relief for those that owe money in taxes but cannot afford to pay it all back in one lump sum. One of the most common forms of tax debt relief is an IRS payment plan. This can be a short-term or long-term plan to make it more manageable to pay off your tax debt. Another option is to negotiate the amount you owe, in an effort to bring down the total, by applying for an OIC (offer in compromise). If accepted by the IRS, this can reduce your total debt and lay out a payment plan that works for you.

A Brookline resident had amassed a hefty amount of money owed in taxes. Concerned that she would never be able to pay the debt back, she contacted the Merrimack Tax Associates team for support.

Setting Up Payment Plans for Paying Back Your Tax Debt

The most common way to pay back a large tax debt when you do not have the money for this is by working with the IRS to set up a payment plan. There are both short and long-term payment plans, with the time period and monthly amount agreed upon by the taxpayer and the IRS. Interest and penalties will accrue until the debt is fully paid off. With a short-term payment plan, the debt must be paid entirely in 180 days or less. The amount owed must be $100,000 or less to qualify for a short-term payment plan. If the taxpayer does not anticipate being able to pay off the debt in six months, a long-term payment plan is a better option. The taxes owed must be $50,000 or less to set up a long-term payment plan. You can apply for a payment plan directly on the IRS’ website at https://www.irs.gov/payments/online-payment-agreement-application.

Negotiating Your IRS Debt

It may be possible to negotiate down the amount of money owed in back taxes with an OIC (offer in compromise). The IRS does have strict requirements for OICs, but this may be a viable option for those that owe a significant amount of money in back taxes. To apply for an OIC, you will need to complete IRS Form 656, Form 433-A, and pay a $205 application fee. If the IRS believes that your offer is the most money you can afford to pay and is reasonable, then it will be accepted. The approval process can take as long as 24 months, so you will need to be patient as you wait for a response from the IRS.

The Brookline resident was able to work with the Merrimack Tax Associates team and the IRS to set up a short-term payment plan for repaying her tax debt. She can now rest easier knowing that she will be able to repay her debt in a matter of months.