April 26, 2023 | Tax Debt | Tax Help
IRS Tax Relief Forms: Resources for Taxpayers
The Internal Revenue Service has many different options for people who get behind on their taxes. But to request help, you need to file the right forms. This guide provides an overview of the relief forms you need to file based on the resolution option you want to pursue. Keep in mind that in some cases, you may need to apply for multiple programs.
IRS Penalty Abatement
If you file or pay late, the IRS will assess penalties on your account. To request abatement, you must file Form 843 (Claim for Refund and Request for Abatement). Generally, the IRS will remove penalties if you had reasonable cause such as a serious illness or a death in the family. The agency also waives penalties for first-time offenders which includes anyone who hasn’t had a penalty in the last three years.
To apply for a monthly payment plan on your back taxes, you need to file Form 9465 (Installment Agreement Request). If you owe less than $50,000, you can file the form or set up a payment plan online, but if you owe that threshold, you must file this form.
To set up the payments to come directly out of your bank account, file Form 433-D (Installment Agreement). Or use Form 2159 (Payroll Deduction Agreement) to have the payments come directly from your paycheck. These forms are typically optional if you owe less than $25,000, but if you owe over $25,000 and less than $50,000, you must provide a financial disclosure if you don’t set up direct debits or paycheck deductions.
Taxpayers who owe $50,000 or more must make a financial disclosure if they want to set up monthly payments. The IRS generally requires a form from the 433 series such as Form 433-F (Collection Information Statement), Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals), or Form 433-B (Collection Information Statement for Businesses).
There is a fee to set up a monthly payment plan on your back taxes. Applying online and setting up direct debits reduces the fee. But you can save even more if you qualify as low-income. To apply, use Form 13844 (Application for Reduced User Fee for Installment Agreement).
Offer in Compromise Tax Relief Forms
An Offer in Compromise is when the IRS lets you pay off your back taxes for less than you owe. To apply, you need Form 656 Booklet (Offer in Compromise). This 32-page booklet contains detailed instructions as well as the following forms:
- Form 656 (Offer in Compromise) — This is the form you use to make your settlement offer and payment terms to the IRS.
- Form 433-A (OIC) — This is the form individuals, and self-employed people use to share their financial information and calculate their offer.
- Form 433-B (OIC) — Businesses use this form to note their financial details and calculate their offer.
Note that the 433 forms listed above are specifically for an offer in compromise. These forms request very similar details as the 433-A and B collection information statements, but they also guide you through the calculations to determine how the equity in your assets affects your tax settlement.
You should also use these forms if you want to apply for an offer in compromise based on effective tax administration. Usually, the IRS will only accept your offer if it is the most you can afford to pay, but you may qualify for a lower payment if you prove that forcing you to pay more would be inequitable.
Offer in Compromise — Doubt as to Liability
Doubt as to liability means that there is a legitimate doubt that you owe the full tax bill, and the IRS agrees to settle for less than you owe. To apply for this type of offer in compromise, you should file Form 656-L (Offer in Compromise Doubt as to Liability).
Delay Payment of Taxes
If you cannot pay your taxes due to financial hardship, you can request more time using Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). This form lets you specify how much time you need, and it allows you to explain why paying the tax due would cause financial hardship.
Hardship or Currently-Not-Collectible Status
The IRS will stop collection actions against you if you qualify for hardship status. There is no form designed just for this purpose, but generally, individuals and businesses file Form 433-A, B, or F (Collection Information Statement). There are links to those forms above.
Help From the Taxpayer Advocates
The Taxpayer Advocate Service is an independent part of the IRS, and they may be able to help if you cannot get a resolution by working through the IRS’s usual channels. They can also help if you’re facing economic hardship due to collection actions such as asset seizures or wage garnishments.
To request their help, file Form 911 (Request for Taxpayer Advocate Service Assistance). Don’t file this relief form if you want to make monthly payments or apply for a settlement. Instead, follow the instructions above.
Innocent Spouse Relief
If you believe that your tax liability is due to your spouse’s actions, you may qualify for innocent spouse relief. To determine if you qualify, the IRS considers factors such as why you didn’t know about the tax and if you were coerced into signing the tax return. To apply, use Form 8857 (Request for Innocent Spouse Relief).
Appealing Collection Actions
You have the right to appeal certain collection actions. For instance, you can appeal liens, levies, and garnishments. To request a collection due process hearing, use Form 12153 (Request for a Collection Due Process or Equivalent Hearing). Otherwise, use Form 9423 (Collection Appeal Request).
Generally, you must receive a notice stating your right to appeal if you want a collection due process (CDP) hearing, but you can almost always appeal through the collection appeals program (CAP). CAP gives you a faster decision, but you cannot appeal. In contrast, CDP takes a bit longer, but you have the right to appeal the decision.
Tax Lien Discharge, Subordination, or Withdrawal
To request to have a lien removed from a specific piece of property, use Form 14135 (Application for Certificate of Discharge of Property From Federal Tax Lien). File Form 14134 (Application for Certificate of Subordination of Federal Tax Lien) if you want the IRS to subordinate its lien to another creditor. If you want to request a tax lien withdrawal, file Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien).
Filing Back Taxes
To file back taxes, you need information about your income, and a tax professional can help you track down the documents you need. However, if an employer, bank, or other payer refuses to give you the documents you need, you can file Form 4852 (Substitute for Form W-2 or Form 1099-R).
Get Help With Tax Relief Today
Figuring out which tax forms you need can be complicated, and filing the wrong forms can end up costing you money in the long run. Looking for relief from back taxes or unfiled returns? We can help. The Timothy S. Hart Law Group can help you figure out the best resolution options. Then, we can file the forms you need.
To learn more, contact us today. We’ll start with a free consultation. Then, we’ll help you get relief from your IRS or state tax problems.