What are the Benefits of a Tax Debt Reduction?
If you’re struggling to pay your federal taxes, you’re not alone. The IRS reports that more than 8.2 million taxpayers had unpaid tax debt at the end of 2016. And, that number is only increasing.
The good news is, if you can’t pay your taxes in full, the IRS offers options for payment plans and even tax debt reduction. One popular option is the IRS Fresh Start program which was created to help taxpayers who are having difficulty paying their taxes.
The benefits of the IRS Fresh Start program include:
- An increase in the amount you can owe before the IRS initiates collection actions
- More time to pay off your debt
- A reduced monthly payment amount
- The ability to catch up on back taxes without a penalty
How to Apply for an Offer in Compromise
If you owe the IRS fresh start initiative back taxes and can’t afford to pay in full, you may be able to settle your debt for less than what you owe through the Offer in Compromise (OIC) program. An OIC is an agreement between you and the IRS that settles your tax debt for a lesser amount. The IRS Fresh Start Program expanded the OIC program to make it easier for taxpayers to qualify.
To apply for an Offer in Compromise, you must complete and submit Form 656, Offer in Compromise, along with a $186 application fee and initial payment. You can submit your offer online, by mail, or in person at a local IRS office.
Your offer will be evaluated based on several factors, including your ability to pay, your current financial situation, and your compliance history with the IRS. If your offer is accepted, you’ll be required to make monthly payments until your tax debt is paid in full.
Tips and Strategies on Reducing Your Tax Debt with the IRS Fresh Start Program
If you’re struggling to pay your taxes, the IRS Fresh Start Program may be able to help. With this program, you can get help with paying your taxes and reducing your tax debt. Here are some tips and strategies for reducing your tax debt with the IRS Fresh Start Program:
1. Apply for an installment agreement:
If you can’t afford to pay your taxes in full, you can apply for an installment agreement with the IRS. This will allow you to make monthly payments toward your tax debt.
2. Request a hardship extension:
If you’re facing financial hardship, you may be able to request a hardship extension from the IRS. This will give you more time to pay off your tax debt.
3. Negotiate a payment plan:
If you’re unable to pay your taxes in full, you may be able to negotiate a payment plan with the IRS. This can help you reduce your overall tax debt.
4. Set up direct deposit:
You can set up direct deposit with the IRS so that your tax payments are automatically withdrawn from your bank account each month. This can help make sure that you never miss a payment and helps reduce the amount of interest and penalties that accrue on your tax debt.
5. Seek professional help:
If you’re struggling to deal with your tax debt, consider seeking professional help from a tax professional or financial advisor. They can help you understand all of your options and find the best way to reduce your tax.
In conclusion, the IRS Fresh Start Program can be a great way to reduce your tax debt and get back on track with the IRS. With this program, you have access to reduced payment amounts and extended payment plans that make it easier for you to manage your debt while still paying off what you owe. Best of all, it is simple and straightforward process that just about anyone can take advantage of. So, if you’re struggling with tax debt, don’t hesitate – look into the IRS Fresh Start Program today!a