The Internal Revenue Service (IRS) does not have a reputation for leniency toward those owing back taxes. The truth is the IRS offers tax debt relief options for U.S. taxpayers suffering from financial hardship. The COVID-19 pandemic created more financial hardship and unemployment than usual and the IRS is aware of this fact.
The IRS has even reassessed its tax debt relief programs to find additional ways to help people pay their tax bills with more ease.
The IRS offers several methods to ease your tax debt. Tax credits, deductions and even forgiveness are all possible as tax debt relief options for you.
- An Offer in Compromise (OIC) negotiates a lower debt amount than previously owed.
- The IRS repayment plan allows you to pay off your tax debt in installments over time.
- Penalty abatement removes fees, interest and other charges added to your total debt amount due to late payments/filing.
Qualifying for one or more of these options depends on your income and prior status with the IRS. Qualifying is also affected by having verifiable medical and physical disabilities, which prevented you from being able to pay your taxes.
COVID-19-related leniency policies are also currently in place. Short-term payment plan options are extended from 120 days to 180 days. There is some new flexibility granted to people unable to honor this or their Offer in Compromise terms. New taxes owed are automatically added to existing installment plans to avoid default risks.
People owing less than $250,000 are now permitted to set up installment plans without the need for prior authorization or additional income verification. The IRS also facilitates an Online Payment Agreement where taxpayers with Direct Debit Installment Agreements are permitted to request lower monthly payment amounts and different recurring due dates.