5 Ways to End Your IRS Back Tax Debt Problems

The worst possible debt is tax debt which can literally suffocate you. This may sound a bit dramatic, but tax debts are something that cannot be taken for granted. It would help if you prioritized it above all the other financial obligations. Otherwise, the IRS will overburden you with debts. And who would want that? 

So, if you’re also looking for ways to end your IRS back Tax Debt problems, then you’ve come to the right place. 

With the advanced Information Returns Processing (IRP) system of the IRS, they can access all the details about the total tax amount they owe. It also marks those taxpayers who don’t file, and after that, the IRS directly sends a notice with the estimated tax amount through which they can file a return on your behalf. 

To deal with IRS back tax debt problems, some solutions can help you, known as debt relief. And that’s what we are here to talk about. So, let’s begin! 

Top 5 Ways to end IRS back tax debt problems

You can end the IRS back tax debt problems in numerous ways. Among these, starting with a payment plan works most effectively. The thing with tax debt is that you cannot ignore it. You can only end its related problems by paying it off as soon as possible, as it could be pretty serious.

Another tax relief that you need is payroll tax debt relief. This is for businesses with payroll tax debt. This could be because of anything like inability because of financial issues, technical error, or shutting down of business. But despite these reasons, you owe the unpaid tax amount to the IRS. This is why having payroll tax debt relief is highly crucial.

And to help you know how to pay off the debt and get rid of it for good. Here are some of the ways that you must check out:

Start with a Payment Plan

Do it first if you haven’t applied for an IRS payment plan yet. It has two options–a short-term payment plan and a long-term payment process. To choose the best option here, you need a tax advisor by your side to guide you. The terms for these two IRS payment plan options are: 

Short-term payment plan 

  • The debt owed by you must be less than $100,000
  • No step-up fee is charged. 
  • The debt must be paid within 180 days. 
  • It adds penalties and interest to the total balance until it’s completely paid.
  • You can pay the debt by check, saving accounts, or card, as per your preference. 

Long-term Payment Plan 

  • The debt owed by you must be $50,000 or less. 
  • You must have filed your tax returns. 
  • The repayment stays more than 180 days. 
  • It charges $31-225 as a setup fee until the low-income standard of the IRS is met. 
  • It adds penalties and interest to the total balance until it’s completely paid.
  • You can pay the debt amount every month through your automatic bank account withdrawal. 

Whichever plan you choose, there is always a possibility of revising the current program and altering it according to your requirements and capacity to pay the debt. 

Filing tax returns 

Not filing your tax returns is considered a legitimate crime. That’s why filing even if you owe back tax to the IRS is mandatory. And even if you haven’t paid your taxes in the last two years, you must file yearly. Plus, this will help you know the exact tax amount you owe. For this purpose as well, a tax advisor is needed to help you out. 

If you don’t pay your tax for a long time, the IRS issues the levy notice, which makes the whole situation pretty serious. The IRS levy notice reminds the taxpayers about the bank’s intent to levy wages, bank accounts, and state tax refund if the tax has not been paid. 

The best way to avoid IRS levy notices is by filing tax returns and paying them within the due date.

File for Currently Not Collectible Status 

For those who do not have any particular means to pay the debt, Currently Not Collectible (CNC) status comes into use. In this status, you inform the IRS about your financial condition and that you are not in a position to pay the debt. The IRS later reviews the economic situation and then decides to approve or disapprove it. Once they agree, the IRS will stop all attempts to collect the debt. 

However, the penalty and interest assessments are still applied, regardless of CNC status filing. So basically, CNC relieves you from the burden of paying taxes until your financial position is secured, but the tax debt will keep on increasing. 

Offer in Compromise (OIC) 

Offer in Compromise (OIC) is widely known as how the IRS makes a tax debt settlement plan. In this method, you have to pay a portion of the debt amount in exchange for the discharge of the remaining balance. 

First, the IRS comprehensively reviews your financial status, based on which it evaluates your ability to pay the total debt amount. If the evaluation comes negative, then they agree to a settlement. 

It’s important to know that the payments in the OIC case need to be paid within two years of the agreement. If missed, additional penalties are added.

Hiring tax-relief company 

You need a professional tax advisor to help you with all the tax debt relief methods. So why not hire a tax-relief company that can end all IRS back tax debt issues you have? 

This way becomes more effective because the IRS often rejects the offer in compromise applications. But with a professional, you can evaluate the total debt you owe, set up your payment plan according to that, and check out whether you are eligible for the offer in compromise. 

One such top-rated tax relief company is Jones tax relief. They are licensed tax professionals who help people get the tax relief they deserve. Jones tax relief helps their clients negotiate tax forgiveness and tax payment plans. Whether the debt is small or complex, Jones tax relief solutions help with everything.