Overdue tax payments are a significant problem for many people in the United States. At the close of the September 2021 federal fiscal year, taxpayers owe the Internal Revenue Service more than $133 billion. There is hope, though, if you are one of the millions who owe money to the Internal Revenue Service. If you're having difficulties making your tax payments, here's what you can do about it. 1

How Does Tax Relief Work?

For this article, "tax relief" will refer to any government-sponsored initiatives that aim to lessen the financial burden imposed by taxes. Tax deductions, tax credits, and tax exclusions are all examples of tax relief. Extraordinary tax relief is another aid given to victims of natural disasters in the United States.

What Is The Procedure For Obtaining Tax Relief?

According to Bell, tax relief options change depending on the taxpayer's tax burden and financial situation. He notes that the optimal tax plan for one person may not be the best one for another.

To find out which IRS program is right for them, I advise taxpayers to visit IRS.gov. You may be able to get extra time to pay or negotiate a lower settlement amount if you file for tax relief. If you have unpaid taxes, you have various alternatives from which to choose, but here are three of the best.

Arrangements for Quicker Settlement

If your total tax liability, including penalties and interest, is less than $100,000, you may qualify for a more manageable short-term payment plan from the Internal Revenue Service. You can take up to 180 days to settle your debt in full without being charged any interest.

However, late fees and interest will continue until the debt is fully paid. Applying for a temporary payment plan with the IRS can be done online or by calling 800-829-1040.

Arrangements for Monthly Payments

You can get an installment arrangement to pay your taxes over a more extended period if you can't afford to pay them all at once or within 180 days. An IRS-approved payment plan is a long-term simplified installment agreement. When you borrow less than $50,000, you may qualify for a 72-month repayment plan.

Compromise Offer

To negotiate a lower tax obligation with the Internal Revenue Service, you might submit an offer in compromise (OIC). You make an offer to settle with the Internal Revenue Service (IRS) for less than the whole amount that is owed, and the IRS accepts this as a compromise and cancels the remaining balance.

Look at how it operates below: If you owe the Internal Revenue Service $50,000, for example, and you want to settle the amount, you may give $10,000. If the IRS accepts your offer, your debt balance will be reduced from $50,000 to $40,000.

IRS Classification as "Currently Not Collectible"

The Internal Revenue Service will not attempt to garnish your account while it is so labeled. However, late fees and interest may keep piling onto your debt.

If you discover you are eligible for a tax refund while your tax debt is suspended, the IRS will use that return against your obligation. To be recognized as a CNC, you must complete any outstanding tax returns and disclose your revenue and costs to the Internal Revenue Service.

You Might Use a Professional Tax Help Service

It's tempting to look into hiring a tax relief firm to help you get out from under your tax burden. These organizations aid clients in settling tax debt. Companies say they can wipe off tax arrears and put a halt to IRS tax collecting. Consumer groups warn that many tax relief firms are fronts for con artists while acknowledging that other tax relief companies are legitimate.

How Do Tax Reduction Firms Operate?

Bell advises taxpayers to "perform their due diligence" before working with any tax relief firm by checking out their "credentials and track record." The FTC reports that despite the firms' claims that they can aid those with tax debts, they often fail to do so in practice.

Most individuals do not qualify for the programs these fraudsters promote, the corporations do not settle the tax bill, and the taxpayers sometimes do not even file the proper paperwork to the IRS requesting participation in the programs that were discussed, according to the FTC's website.