Tax debt relief can be an emotional and complicated process. Often, it involves other aspects of a person’s financial life, such as a need for business debt relief, payroll tax issues, personal and/or credit card debt, loss or reduction of income, and other financial difficulties. Fortunately, alternatives exist that can help individuals and businesses seek constructive solutions, often without having to resort to bankruptcy or litigation.
Credit Cards: Not Just a Consumer Problem
Many business debt relief firms state that credit card debt is the first sign of trouble for some businesses. Problems with unsecured, revolving debt can lead to cash flow trouble that can end in even more serious problems such as tax liens and foreclosures. Many times, companies find themselves needing tax debt relief, on top of resolving other payables issues. Since the IRS is automatically the first to receive any funding from any sort of asset liquidation, seeking tax debt relief often becomes the top priority for businesses with cash flow woes.
Looking for Tax Debt Relief Help
Many companies offer business tax debt relief assistance and advice. They can help companies develop plans to satisfy debts incurred because of shortages in business income tax, self-employment taxes, payroll or employment taxes, or excise taxes (for applicable companies).
Tax Debt Relief: Penalty Abatement
Unfortunately, when you fail to file and pay taxes on time, the penalty and interest meter starts running. However, if you or your appointed representative can show good reasons why you fell behind—illness or death of a family member or important business partner, natural disaster, or a long period of unemployment, perhaps—you may be able to receive a penalty abatement from the IRS. This can greatly reduce the amount you owe and be an important step toward tax debt relief.
Tax Debt Relief: Payment Plans
If you are unable to pay your taxes when they are due, you may be able to negotiate a payment plan with the IRS. Especially if you owe $25,000 or less, you can file Form 9465, Installment Agreement Request, and the IRS may allow you up to 60 months to pay the taxes you owe. Since penalties and interest continue to accrue, it’s best to pay off early if possible, and you must also make sure that any taxes coming due during your plan are paid on time.
Tax Debt Relief: Offers in Compromise
In rare cases (1% or less, according to some experts), the IRS will accept an offer in compromise: a settlement of your tax debt that is less than 100% of what is owed. To get an accepted Offer in Compromise, you or your representative must prove extreme financial hardship and/or the inability to pay what is owed without experiencing unduly harsh financial consequences. However, if you qualify, this form of tax debt relief can be the answer to your problem.
