Some Options for Reducing Your Tax Debt with the IRS

So you owe a lot of taxes? Groan! That's not a very happy condition, and it's probably stressful for you?but it's not the end of the world. There are several things you can do to ease the pain. Here are some possibilities you should know about.

1. ?YOU COULD MAKE AN INSTALLMENT AGREEMENT WITH THE IRS
If you don't have all the money to pay off your tax bill all at once, you can set up a monthly payment plan with the IRS. There are four types of agreements.

a) ?Guaranteed Installment Agreements
The IRS is required to agree to an installment plan if your balance due is $10,000 or less,all your tax returns have been filed, and you agree to file your tax returns on time in the future.

b) ?Streamlined Installment Agreements
You can qualify for a streamlined installment agreement if the balance you owe the IRS is $50,000 or less and you pay off the balance in 72 months or less.

All your tax returns must be filed and you must agree to file your tax returns on time in the future.

c) ?Partial Payment Installment Agreements
If your income cannot handle the minimum payments for either the guaranteed or streamlined agreements,you might qualify fora partial payment agreement in which the monthly payment is based on what you can afford.It can be set up to cover a longer repayment term and the IRS will probably file a federal tax lien to protect its interests. The IRS will re-evaluate the terms of this agreement every two years to see if you might be able to pay more.

d) ?Non-Streamlined Payment Agreement
If your balance due is over $25,000, or you need a repayment term longer than five years, or you don't meet any of the criteria for a streamlined or guaranteed installment plan, you can set up your own terms for with the IRS, but approval is not guaranteed.

The IRS will likely ask that you attempt to sell assets, take out a bank loan, or get a home equity loan so you can pay off the IRS without needing this kind of agreement.

2. ?YOU COULD MAKE AN OFFER IN COMPROMISE TO THE IRS
Sometimes the IRS will accept less than full payment (including penalties and interest) if there is doubt as to whether it will ever be possible for you to pay the full amount or if there is doubt as to whether you are actually liable for the full amount.
You must prove that the amount you are offering meets the standards set by the government as to the "Reasonable Collection Potential." It is basically the liquidation value of your assets, such as cars, real estate, and personal property, plus your monthly disposable income over a period of four or five years.

3. ?YOUR DEBT COULD BE DECLARED CURRENTLY NOT COLLECTIBLE BY THE IRS
In extreme cases the IRS can declare a taxpayer's bill as "currently not collectible"and agrees not to collect on the tax debt for a year or so.The collectability status will be continually re-evaluated.

4. ?BANKRUPTCY
Income tax debts may be eligible for discharge under Chapter 7 or Chapter 13 of the Bankruptcy Code. There are strict criteria you must meet to have your taxes discharged.

5. ?PENALTY ABATEMENT
Penalty abatement can be right for you if you can pay the tax liability owed, but believe you should not be held liable for the penalties incurred. This program allows you to pay your tax bill without penalty or interest.
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Source: http://irs.ezinemark.com/some-options-for-reducing-your-tax-debt-with-the-irs-7d37556441c1.html

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