December 6, 2013 | Tax Debt
IRS Debt Relief Program
The ability to qualify for a IRS debt relief program is contingent upon meeting certain criteria set by the tax law and IRS administrative tax rules. The two types of IRS debt relief programs are a 1) part pay installment agreement, and the second is an Offer in Compromise. Both of these programs require that all unfiled tax returns have been filed, and that you are current with the current period tax liabilities.
The first IRS debt relief program is a part pay installment agreement. The reason it is called part pay is that it is an IRS installment agreement in which you will not pay off the tax debt in full over the remaining collection statute of limitations (typically 10 years). Often this is a result of an income level that is only sufficient to support basic living expenses, which leaves little for the IRS to have to pay down the tax debt. Since the IRS will ultimately have to write off the balance of the unpaid tax debt, they will require the submission of a form 433-F or 433-A to prove out your income, expenses and assets. I have found from experience that this technique is very useful since it does not require a down payment like an Offer in Compromise would, and it takes much less time to enter into this type of agreement than an Offer in Compromise.
The second IRS debt relief program is a Offer in Compromise. This program produces great results if you qualify and you have the right fact pattern of a large tax debt owed, with little income after paying basic expenses, and no substantial assets. Also, you can not be currently in a bankruptcy. The penalties and interest on the unpaid tax debt will still accrue while your offer in being evaluated. There is a $150 fee, and the offer can be paid in either a lump-sum, with 20% down with the offer papers, and the balance in five or fewer payments within 24 months of the offer being accepted. The other payment option would be to enter into a periodic payment program with the IRS for the offer amount, all being paid within 24 months from the date of acceptance. In general; if you pay in five or fewer months from the date of acceptance, the lower the IRS will accept.
From my experience either IRS debt relief program produces significant benefits to bring the tax debt down to the point it is affordable to pay off.
Attorney Timothy Hart
Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]