If the Service is after you or your assets, knowing your IRS tax debt relief options is the key to saving your cash and your sanity.\u00a0 If you don\u2019t understand your rights and responsibilities, the IRS will roll over you, taking what they want.\u00a0 Here, I will describe how to keep the IRS at bay.\u00a0 You can find more detailed information on each option throughout this site.<\/p>\n
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First, let me define IRS tax debt relief<\/strong>.\u00a0 A tax debt is an amount you owe to the Internal Revenue Service, including interest and penalties, after you file a return, you are audited and agree with the results, or a tax dispute runs it course.\u00a0 In other words, IRS tax debt relief is focused on helping you resolve a tax debt after the amount due becomes permanent.<\/p>\n If you don\u2019t agree with the results of an audit, you have options, such as filing an appeal or taking the issue to tax court.\u00a0 Though, if you fail to file timely, your right to fight on will be lost.\u00a0 If you believe the IRS is wrong, then you need a local tax attorney to handle your appeal or tax court petition.\u00a0 If the amount at issue is too small for an attorney, then you have the right to represent yourself in tax court.\u00a0 Though, I must say I have never seen this go well.<\/p>\n <\/p>\n If the balance due has become permanent, or you have no plan to fight, then you have several IRS tax debt relief options.\u00a0 The most common, and often the best among them, is the installment agreement.\u00a0 When you negotiate an installment agreement with the IRS, you agree to make monthly payments and the IRS agrees to cease all hostile collection actions, so long as you keep paying.<\/p>\n The issue of contention with an IRS installment agreement is the amount you will pay each month.\u00a0 It\u2019s based on the information you provide on Forms 433-A and 433-B, and the supporting documents you submit.\u00a0 These usually include your W-2, bank statements and proof of all bills\u2026 you didn\u2019t think the IRS would take your word for your income and expenses, did you?<\/p>\n The key to negotiating a successful installment agreement is organizing your finances, paying off any bills that the IRS won\u2019t allow after the agreement is in place (such as credit cards), and making your 433-A and 433-B statements match the allowed expense standards.\u00a0 For information on these standards, go to www.IRS.gov<\/a> and search for \u201callowed collection standards.\u201d\u00a0 You will find out how much the IRS will allow for rent, food and clothing, automobile and all kinds of other expenses.\u00a0 Amounts vary by county and family size.<\/p>\n Note that an installment agreement can be one of the most powerful IRS tax debt relief options.\u00a0 This is because 1) the IRS has 10 years from the date of the assessment (usually when you filed your tax return or when the audit became final) to collect from you, and 2) the amount you will pay in an installment agreement is based on what you can afford, not the amount due.<\/p>\n <\/p>\n So, your monthly payment should be about the same whether you owe the IRS $50,000 or $500,000.\u00a0 If all you can afford is $1,000 per month, that\u2019s what you\u2019ll pay.\u00a0 If your remaining collection statute is 4 years (because you\u2019ve held the IRS off for 6 of the 10 years), then you will pay about $48,000.<\/p>\n At the end of the 4 years, your tax debt will be eliminated and you will be free of the great collector.\u00a0 The slate will be wiped clean and you get to start over.<\/p>\n There are a few caveats to this.\u00a0 First, tax liens might survive the 10-year collection statute.\u00a0 Also, the IRS will be more aggressive to collect on any assets, such as your home, on a debt of $500,000, and not so aggressive on a debt of $50,000.\u00a0 If you have no assets for them to take, this isn\u2019t an issue\u2026 and the reason planning well in advance gives you the advantage when seeking IRS tax debt relief.<\/p>\n I would like to point out that this site is focused on people with tax debts of over $20,000.\u00a0 If you owe just a few thousand dollars, you don\u2019t need to complete Forms 433-A or 433-B or negotiate with the IRS.\u00a0 You can simply call in and request an installment agreement of $500 per month.\u00a0 So long as you keep paying, the IRS will leave you alone.<\/p>\n Finally, the above example assumes your income in the 4 years remaining on your collection statute does not increase.\u00a0 If your income goes up, or your allowed expenses go down, then the IRS will want the excess.\u00a0 If you get a raise, all of it will go to the collector.<\/p>\n <\/p>\n The installment agreement described above, where you pay only a portion of the debt and the collection statute expires, is called a partial pay agreement.\u00a0 The IRS will watch the tax returns you file, and ask for updated financial information several times during the 4 years.\u00a0 If you\u2019re in a partial pay agreement, you must be very careful with \u201cextra\u201d deposits into your bank account and ensure your expenses remain constant.\u00a0 Also, you should not get married or make any other significant life changes while you are in an installment agreement.<\/p>\n While you are listed as currently uncollectible, the 10-year collection statute continues to run.\u00a0 So, if you convince the IRS to allow you into this category, you can run out the clock, pay nothing, and get a fresh start at the end of the period.<\/p>\n The process to be considered currently uncollectible is the same as for an installment agreement.\u00a0 You complete Forms 433-A and 433-B and provide the supporting documents to prove your case.\u00a0 The most important part of this process is organizing your finances and financial statement to match the allowed standards.<\/p>\n Also, like the partial pay installment agreement, the IRS will review your finances every so often to determine if you still qualify for currently uncollectible status.\u00a0 If you send in a tax return with more income, or updated Forms 433-A and B show your income has increased, you will be taken off uncollectible and put in to an installment agreement.<\/p>\n <\/p>\n The next form of IRS tax debt relief is bankruptcy.\u00a0 A tax debt qualifies to be discharged in a Chapter 13 bankruptcy if 3 years have passed from the due date of the return, or 2 years from the date the debt was assessed.\u00a0 This means that the IRS gets 2 to 3 years to come after you before you can discharge the debt in bankruptcy.<\/p>\n A tax debt is assessed after you have been audited and the balance due becomes final, or you file a return late.\u00a0 For example, if you file your 2011 tax return in 2014, the IRS has until 2016 to collect from you.\u00a0 If you file your 2013 return on April 15, 2014, you must wait until April 16, 2017 to dump that bill in bankruptcy.<\/p>\n Please note that I am not an expert in bankruptcy.\u00a0 I am focused on IRS tax debt relief and have been working as a tax attorney for 12+ years.\u00a0 For additional information on bankruptcy, I recommend you contact a local attorney.<\/p>\n <\/p>\n The next form of tax debt relief is the innocent spouse claim.\u00a0 If you qualify, you can eliminate the amount of the tax debt that came from your spouse.\u00a0 In most cases, this requires you to be divorced, and you were not active in your spouse\u2019s business, had no idea that taxes were not being paid, and did not benefit from the income that should have been taxed.<\/p>\n An IRS innocent spouse claim can be difficult to prove.\u00a0 The innocent spouse often derived some benefit from the income\u2026 it paid for the house you lived in, bought expensive clothes, etc.<\/p>\n Though, I have seen a number of successful innocent spouse claims.\u00a0 The most important component is that the \u201cguilty\u201d spouse was running a business that you had no involvement in.<\/p>\nWhat If The Courts Fail<\/h2>\n
How Will You Make Payments<\/h2>\n
What Are The Payment Options<\/h2>\n
What Are Your Other Options<\/h2>\n
What About Your Spouse<\/h2>\n