If you’re facing tax debt, know that you’re not alone—and there are ways to manage and reduce what you owe. With a bit of planning and some professional help, you can start taking steps to relieve this burden.
1. Set up an IRS payment plan
The IRS offers payment plans that let you pay off your debt over time instead of all at once. Here are the options:
- Short-term payment plans: generally for smaller balances, giving you up to 120 days to pay.
- Long-term installment agreements: for larger amounts, allowing monthly payments over a longer period.
Setting up a payment plan with the IRS can make your tax debt more manageable, breaking it down into smaller, more affordable chunks.
2. Look into offer in compromise (OIC)
An Offer in Compromise (OIC) allows some taxpayers to settle their tax debt for less than they owe if paying in full would cause financial hardship.
- Eligibility requirements: the IRS considers factors like your income, expenses, and asset equity.
- Application process: the OIC process can be complex, and applications are not guaranteed to be approved.
Since it involves negotiations with the IRS, many people choose to work with a tax resolution service for help in navigating this process.
3. Request penalty abatement
If you owe because of penalties on missed payments, you may qualify for penalty abatement, which means getting some fees removed. There are several types:
- First-time penalty abatement: available if this is your first time having tax trouble.
- Reasonable cause penalty abatement: if you missed a payment due to specific circumstances, like illness or a natural disaster.
Penalty abatement can reduce your debt and give you some breathing room, and a tax professional can help determine if you qualify.
4. Use currently not collectible (CNC) status
If you can’t pay due to financial hardship, you might qualify for Currently Not Collectible (CNC) status, which temporarily stops the IRS from trying to collect on your debt.
- How it works: you must demonstrate that paying would make it impossible to cover basic living expenses.
- Temporary relief: this status doesn’t erase the debt but can provide temporary relief until you’re able to pay.
Applying for CNC status can be a good short-term solution, and working with a tax resolution service can make the application process smoother.
5. Consider expert assistance from a tax resolution service
Navigating tax debt options can be complicated. Tax resolution services specialize in helping people like you manage and potentially reduce tax debt. These services can assist with:
- Negotiating payment plans with the IRS
- Handling offers in compromise applications
- Seeking penalty abatement
A tax resolution service can make this journey less overwhelming and ensure that you’re exploring every option available to you.
Tax debt can feel heavy, but with a plan and the right support, you can work toward relief. Whether it’s setting up a payment plan, requesting penalty relief, or getting help from a tax resolution service, you don’t have to handle it alone. Taking that first step could be the start of a debt-free future.
