Impossible To Pay That IRS Bill? How About A Fresh Start...?
Pandemic, recession, joblessness, and what not! These unprecedented times have a toll on each one of us. Tax liabilities are something that we owe as an obligation; there is no other choice. If you are facing financial hardships and struggling to pay taxes on time, consider paying your tax liability in installments. The IRS initiated the Fresh Start Program to help struggling taxpayers ease their tax burdens. The initiative works through an Offer in Compromise agreement provided you meet the eligibility criteria.
Offer in Compromise:
If you can’t pay your full tax liability, you can still satisfy the IRS. You can settle with less or in installments through an offer. OIC is an agreement between you and the IRS for resettling your tax liability.
The IRS Assessment:
When you submit your application for an OIC agreement, the IRS will assess your tax profile. A few important points they look at to assess your application:
Your Ability to pay taxes
Your Income resources and Expenses
Assessment of your assets and liabilities e.g. Mortgage or Loans
If the IRS makes an assessment and decides that you can pay your tax liability, you cannot qualify for an OIC, that’s for starters. Check out some of the prerequisites to enhance your chance to qualify. Consider the following important points before applying:
File all your tax return documents
Attach the tax debt notice (at least one)
Deposit estimated required payments for the current year
Fill in all the forms – Pretty basic, no?
Your Tax Liability Payment Options:
Once your application is approved, you can make the tax payments in installments or lump sum amount. Both options provide you ample time to pay; these options will work like this:
You’ll pay 20% of your estimated tax liability upfront with your application. If your application is approved, the remaining payments will be made in 5 months or less.
Payment through Installments:
You’ll make the same initial payment. The remaining tax liability can be paid in installments from 6 to 24 months.
Continue making your installment payments. Failure to do so can result in your offer termination or rejection. You can get exemption with this only if you meet the low-income criteria and approved by the IRS.
Photo by Karolina Grabowska from Pexels
Greetings Tax Payers of America! As of January 10th, 2020, federal tax returns may be filed online for FREE!
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