Owe money to the IRS?

The good news: you have options.

The IRS offers you five debt relief options, four which are under the Fresh Start Program:

• Offer in Compromise (OIC) - settle your tax debt for less than what you owe

• Currently Not Collectible (CNC) - temporarily delay the collection of your debt

• Installment Agreements - monthly payment plans

• Penalty Abatement - relief from certain types of penalties
  

The other option would be Innocent Spouse Relief which could remove tax debt responsibility if your spouse (or ex) caused the problem without your knowledge.

As any program, each has its own qualifications. Let’s dive deeper into what each one of these programs offer:


     1. Offer in Compromise (OIC) - Settle for Less

If you can’t afford to pay your tax bill in full, you may qualify for Offer in Compromise, which allows you to settle your tax debt for less than what you owe. The IRS considers factors like:

1. Your income b) your assets c) your expenses and d) your ability to pay 

This is one of the most sought-after options, but it’s also the most difficult to qualify for. Only about 40% of applicants are accepted so it is very important to make sure you apply correctly.


     2. Currently Non-Collectible Status (CNC) - A Temporary Break

The IRS may designate your account as a CNC if you are experiencing financial hardship and are unable to make payments at this time. This means that the IRS will temporarily halt collection actions such as wage garnishments and bank account levies.

This is typically a temporary fix while you improve your financial situation, though, and penalties and interest continue to accrue.

Click here to learn more about CNC status. 

     3. Installment Agreements - Set Up a Payment Plan

These agreements allow you to make monthly payments rather than a single payment in case you need more time to pay off your tax debt.

Basic plans come in two forms:

• Short-term: For debts under $100,000, typically paid off within 180 days.

• Long-term: For debts under $50,000, allowing monthly payments for up to 6 years.

The downside? You will pay more the longer you wait because you will still be responsible for interest and penalties.


     4. Penalty Abatement - Reduce Extra Fees

If tax penalties have made your debt unmanageable, you may qualify for Penalty Abatement. Which removes penalties due to:

➡️ A first-time tax issue

➡️ A medical emergency

➡️ A natural disaster

➡️ Other reasonable causes

This can drastically lower your overall balance if approved.


     5. Innocent Spouse Relief

If your spouse (or former spouse) made errors or omissions on a joint tax return without your knowledge, you may qualify for Innocent Spouse Relief. This option can remove your responsibility for the additional tax, interest, and penalties caused by their actions.

There are three types:

• Innocent Spouse Relief

If your spouse improperly reported or left out income on your joint tax return, and you had no knowledge (or reason to know) of the issue, you may be relieved from the tax debt associated with those errors.

• Relief by separation of liability

This applies if you are divorced, legally separated, or no longer living with your spouse. The IRS allows you to separate your portion of the tax liability from your spouse’s, so you’re only responsible for what’s fairly yours.

• Equitable relief

If you don’t qualify for the first two, you may still be eligible for Equitable Relief. This is a broader option for situations where holding you liable would simply be unfair.

For example, if your spouse misled you, or you faced circumstances like abuse or financial control that prevented you from knowing about the tax issue.


The Catch?

Not everyone qualifies for these programs. The IRS has strict eligibility requirements, and navigating the application process can be complicated.

Ignoring tax debt will only make things worse and increase your debt.

That’s where a tax relief company comes in.

At Tax Relief Advocates (TRA), we specialize in helping taxpayers find the best solution for their IRS debt. Whether you’re looking to settle through an Offer in Compromise, set up a manageable payment plan, or seek penalty relief, our experts will guide you through the process and maximize your chances of approval.

Don’t let tax debt take over your life–get the relief you deserve today! Contact TRA today.