Tax relief services are an essential resource for individuals and businesses struggling to pay taxes. These services can help you negotiate with the IRS, create payment plans, and reduce the total taxes owed. However, not all tax relief services are the same. This article explores the various types of tax relief services available.
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Offer in Compromise (OIC)
It’s an agreement between the taxpayer and the IRS that allows a tax debt settlement for less than the total amount owed. This is a popular option for those who cannot pay their entire tax debt but want to avoid severe consequences, such as wage garnishment or bank levies.
To qualify for an OIC, the taxpayer must demonstrate that they cannot pay their total tax debt and that the offer amount represents the maximum amount the IRS can expect to collect within a reasonable period. Submitting an OIC can be complex and requires detailed financial information, making it an ideal option for those seeking professional help.
It allows taxpayers to pay off their tax debt over time. This option suits those who cannot pay their total tax debt but can afford to make monthly payments. The IRS offers different installment agreements, including a guaranteed installment agreement, available for those who owe $10,000 or less, and a streamlined installment agreement, available for those who owe $50,000 or less. For those who owe more than $50,000, a partial payment installment agreement may be a suitable option.
Penalty abatement is a tax relief service that allows taxpayers to waive or reduce penalties. Penalties can be assessed for various reasons, including failure to file or pay taxes on time, underpayment of estimated taxes, and accuracy-related penalties.
To qualify for penalty abatement, the taxpayer must demonstrate that they had a reasonable cause for failing to file or pay taxes on time. The process of requesting penalty abatement can be complex, making it an ideal option for those who seek professional help.
Currently Not Collectible (CNC)
Currently, Not Collectible (CNC) is a tax relief service that allows taxpayers to suspend tax debt collection temporarily. This option is suitable for those struggling financially and unable to pay their tax debt.
To qualify for CNC, the taxpayer must demonstrate their inability to settle their tax debt and that if they did so, it would increase their difficulties. The IRS will review the taxpayer’s financial situation and determine whether to grant CNC status.
Innocent Spouse Relief
Innocent Spouse Relief is a type of tax relief service that allows taxpayers to avoid joint and several liabilities for tax debt. This option is suitable for those who filed a joint tax return with their spouse or former spouse and were unaware of errors or omissions on the return.
Qualification for this requires the taxpayer to demonstrate that they had no knowledge of the errors or omissions on the tax return and hold them responsible for the tax debt if unjust. Requesting Innocent Spouse Relief can be complex, making it an ideal option for those seeking professional help.
To sum up, different types of tax relief services are available for individuals and businesses struggling to pay their taxes. Each service type has its own requirements and eligibility criteria, making it essential to understand the options available and seek professional help when necessary.