Tax debt relief isn’t a single solution but rather a range of IRS programs designed to help taxpayers who cannot pay their full tax liability, whether you need a few months to gather funds after an unexpected life event, years to pay through an installment plan, temporary relief from collection while facing financial hardship, or even settlement for less than the full amount owed. The IRS offers structured resolution options that scale from short-term payment extensions (up to 120 days) for those who need brief breathing room, to long-term installment agreements lasting multiple years for taxpayers with moderate debt, Currently Non-Collectible status for those experiencing genuine financial hardship where payments would create undue burden, and the Offer in Compromise program for qualifying individuals who can demonstrate they cannot pay the full balance based on their income, expenses, and assets. Understanding which tax debt relief option matches your specific financial situation, debt amount, and ability to pay becomes critical because choosing the wrong approach wastes time and money—while the right program stops IRS collection actions like liens, levies, and wage garnishments that many taxpayers fear. The worst response to tax debt is ignoring it, which only compounds the problem as interest and penalties accumulate and IRS collection pressure escalates from reminder notices to aggressive enforcement actions. Knowing how to access relief (what documentation the IRS requires, what compliance standards you must meet, and which program fits your circumstances) transforms an overwhelming tax problem into a manageable resolution plan, whether that means paying your debt over time, temporarily pausing collections until your financial situation improves, or settling for a reduced amount if you qualify.
Regardless of the amount or circumstances that led up to the tax debt, if you owe back taxes, you need some form of tax debt relief. Fortunately, the IRS has many programs available for relieving your tax debt. The IRS has programs that range from an extension of 120 days to full pay your debt to installment agreements that can extend many years. For those taxpayers that are unable to pay, the IRS offers a currently non-collectable status where no payments are required on the tax debt. For qualifying taxpayers, they also have the Offer in Compromise program that allows taxpayers to settle their tax debt for less than they owe.
Throughout our years providing tax debt relief, we have found that most taxpayers panic when they realize they are going to have a tax bill that they are unable to pay. Some taxpayers do not file the returns. Others will file the return and then live in fear of the IRS issuing liens, levies, and garnishments against them. Many people do not know how to resolve their tax debt, and instead try to ignore it. However, if there is one consistent factor with tax debt it is that it is not going to go away on its own. Ignoring your tax debt just leads to a larger problem down the road. Interest and penalties will accrue on the original debt. The IRS will increase their collection pressure from sending reminder notices to issuing liens and levies.
These taxpayers need tax debt relief; however, they do not know what options are available to them or how to get the relief that they need. As soon as you are aware that you are going to owe a tax debt that you are unable to pay, contact our office. We are happy to discuss your situation with you and explain your tax debt relief options. If after meeting with you we determine that your tax issue is something you can handle on your own, we will provide guidance on what steps you need to take to resolve your current debt and make sure that you are not going to owe in the future. If your issues instead require representation, we will create an individualized plan to get you the best tax debt relief possible.
The first resolution option available to most taxpayers is an installment agreement. There are many different options available for installment agreements depending on the amount of back tax debt you have incurred. One of the most common types of installment agreements is for taxpayers with a tax debt of $50,000 or less. You will be able to establish a streamlined installment agreement for a duration of 72 months. For example, a taxpayer with a tax debt of $42,000 will qualify for an installment agreement of around $583.33 per month. Another new installment agreement option was established for higher balance taxpayers that owe between $50,000 and 100,000. They can qualify for a streamlined 84 month installment agreement on these balances while this test program is still in effect. The last installment agreement option available to most taxpayers is an installment agreement based on collectability. Based on your collection potential from the evaluation of your income to allowable expenses, the IRS may establish a payment arrangement for the amount you are determined to be collectable at.
A second resolution option available to qualifying taxpayers is to be placed into a currently non-collectable status. While your account is in this status the IRS will not attempt to collect on your remaining tax debt balance. This program is a temporary form of tax debt relief as your account could be reopened in a future year for collections upon the IRS determination that you have collection potential. You may qualify for this program if your income to allowable expenses shows that you have a negative balance monthly. This in effect indicates to the IRS that it would cause you a financial hardship if they continued to try to collect your outstanding tax debt.
The third resolution option available to qualifying taxpayers is the Offer in Compromise program. To qualify for the Offer in Compromise program a taxpayer will need to submit their financial information along with all of their asset information. The IRS will also require you to submit all of your supporting documentation so they can make a determination of your eligibility for this tax debt relief program. If you qualify for this program, you could resolve your balance for much less than the amount of tax debt owed. You will also be required to submit a check for a filing fee for the Offer along with a second check for a percentage of the total offer amount. Once an offer is accepted, you will be required to stay in full compliance with the IRS in order to keep the offer from defaulting. A defaulted offer will reinstate your tax balance in full with additional interest and penalties that have accrued. A resolution expert can go through all your information to evaluate whether or not you are a good candidate for this excellent program.
You can contact our office today to schedule a consultation to go through all your information and determine if this program or one of the others is a good fit for you. Whether you’re a business owner, self-employed individual, or facing personal tax challenges, understanding your options is essential. For those dealing with complex situations, exploring bankruptcy options for tax debt or seeking audit representation may provide additional pathways to resolution.
Michigan taxpayers in cities like Ann Arbor and Warren benefit from working with professionals who understand both federal tax requirements and state tax obligations. Additional resources like SCORE provide business counseling, while the Journal of Accountancy offers insights into tax strategies. Understanding consumer financial protections helps you identify legitimate services, and reviewing tax law resources clarifies your rights throughout the resolution process.
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