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How to Get Out of IRS Debt

If you find yourself owing money to the Internal Revenue Service (IRS) for unpaid taxes, it can be a stressful and overwhelming situation. However, there are several ways to get out of IRS debt and resolve your tax problems. In this blog post, we'll discuss some strategies for getting out of IRS debt, including paying off the debt in full, setting up a payment plan, and settling the debt for less than what you owe through the Offer in Compromise (OIC) program.

  1. Pay off the debt in full: The easiest way to get out of IRS debt is to pay it off in full. If you have the money to do so, you can simply write a check or make a payment online to the IRS. If you're unable to pay off the entire debt at once, you may be able to set up a short-term payment plan, known as a “partial payment installment agreement,” to pay off the debt in full over a period of time.

  2. Set up a payment plan: If you are unable to pay off the debt in full, you may be able to set up a payment plan with the IRS. This can be done through an installment agreement, where you pay off your debt in monthly payments over a period of time. There are several types of installment agreements, including regular installment agreements, streamlined installment agreements, and partial payment installment agreements. Depending on your income, you may be able to get a reduced payment plan.

  3. Offer in Compromise: The Offer in Compromise (OIC) program is a way to settle your tax debt for less than the full amount you owe. The IRS will consider your ability to pay, income, expenses and assets to determine if you qualify for this program. This is a good option for those who are unable to pay their tax debt in full or through a payment plan. However, it's important to note that the acceptance rate for OIC is low and the process is quite complicated.

  4. Seek Professional Help: It can be helpful to seek out professional help from a tax attorney or CPA to navigate the complex process of resolving IRS debt. They can help you understand your options and assist you in dealing with the IRS.

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How to Take Advantage of the IRS Back Tax Forgiveness Program or Offer in Compromise (OIC)

The IRS offers several programs to help taxpayers resolve unpaid back taxes and get back on track with their tax obligations. One of the most popular of these programs is the IRS back tax forgiveness program, also known as the Offer in Compromise (OIC) program. In this blog post, we will explain what the IRS back tax forgiveness program is, who is eligible for it, and how to apply for it.

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liability for less than the full amount owed. The purpose of the OIC program is to give taxpayers who are unable to pay their taxes in full the opportunity to resolve their tax debt and become compliant with their tax obligations. The OIC program is considered a last resort after all other payment options have been exhausted or aren’t feasible.

To be eligible for an OIC, taxpayers must first be compliant with all of their filing and payment requirements. This means that they must have filed all required tax returns and made all required estimated tax payments for the current year. Additionally, they must be current with their federal tax deposits, if they are a business owner, and have made all required estimated tax payments.

The IRS will consider several factors when determining a taxpayer's eligibility for an OIC, including their ability to pay, their income, their expenses, and the value of their assets. Generally, taxpayers who can demonstrate that they do not have the financial means to pay their tax debt in full and that an OIC is their best option for resolving their tax debt will be considered for the program.

To apply for an OIC, taxpayers must complete and submit Form 656, Offer in Compromise, along with a non-refundable application fee and an initial payment, called a "proposal." The application fee is $205, or it may be waived for low-income taxpayers. The proposal is a percentage of the total amount owed and is based on how much the taxpayer can pay at the time of the offer, and how they intend to pay the remainder of the offer.

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