Tax Relief Options for the IRS
Each year on the 15th of April, the IRS comes for its proverbial pound of flesh and each year, thousands of Americans go in hiding. Of course hiding isn’t good, because sooner or later the IRS and its blood thirsty hounds will flush out those people, most of who feel that their circumstance is utterly hopeless.
Not having the money to pay the IRS is of course not a good thing, but the situation is far from hopeless. With the right kind of advice and assistance, the April 15 jitters can be avoided entirely. This is what I’ll show you in the next couple of minutes. So come from under the table and join me on this journey of discovery and hope.
If you do nothing else, do this
Whether you have the money or not doesn’t (or shouldn’t) avail you of the responsibility of filing your returns. Filing isn’t paying and not filing is what ticks off the guys in suits over at the IRS. So, even if you don’t have the money to settle with the IRS, fill in the forms and send it off. Once you’ve done that, you can begin to explore the tax relief options available to you.
Here’s a list of them:
1. Make a phone call: this may seem simplistic but getting in touch with the IRS is one of the best ways to set about rectifying your tax problems. The first thing a phone call does is puts the IRS on notice about your circumstances. When they don’t see a payment come in from you, their records will show that you phoned up and explained the difficulties you are having. Understand too that you are not alone; thousands of Americans like you don’t have the cash and can’t pay. The IRS knows this and has to as a matter of practicality make accommodations. The jails are packed, after all, aren’t they?
2. Tap your credit card for emergency funds: if you have room on your credit card it is sensible to use it to pay your IRS tax bill. The interest charges will be a lot less compared to the late fees and interest charges that the IRS will charge you and you have the option of paying later. It’s not the cheapest best option but if you are really worried about owing the IRS don’t hesitate to pull the trigger on this one.
3. Apply for a payment extension: this option is falls directly under IRS tax relief and therefore must be formally applied for. The application process is pretty straightforward and can be completed on the IRS website. You can apply for extension up to 120 days but penalties and interest charges will still be applied to the amount owed. But even with these penalties it is still a lifeline for you to get some cash together and pay off the IRS. You can also apply for the extension over the phone by calling 1-800-829-1040.
4. Tapping idle equity in your home: if you own a house that is not upside down with equity at the moment, you may be able to refinance, extract some cash from the process and pay off the IRS. This option is tricky though because even if you have idle equity, the amount of cash you get (if any) will still be hinged on your credit worthiness. Bear in mind too that refinancing could expose you to market risks and with the uncertainty in the market presently, “anything can happen”.
5. Apply for an installment agreement: like the payment extension mentioned above, an installment agreement will give you a bit of time to come up with the cash to pay the IRS. The difference in this instance being that you must owe $25,000 or less to qualify. On the plus side, you get more than the 120 days given under a payment extension. If you owe a substantial amount and are unsure about where the first dollar is coming from, this is a sound option.
6. Consider applying for an offer in compromise: this option is a bit trickier as the IRS makes qualification a tad difficult. Under this option you are basically saying to the IRS: “look, I can’t pay you all of what I owe, can you take a portion of it and forgive any balance outstanding?” Naturally such an agreement will leave the IRS out of pocket so to speak and so offers in compromise are best utilized under the guidance of a qualified tax professional.
The options laid out above are all viable and should be explored. Some you can undertake on your own, but if you owe the IRS a lot of money, enlisting the help of a qualified tax specialist should be your first port of call. Tax laws as you may well know are very complex and change all the time; presenting your case to the IRS (without professional help) could do you more harm than good if you get things wrong. By enlisting the help of a qualified tax professional, you also get the added bonus of tax planning—something that should if applied correctly, should save you the stress of owing the IRS in the first place. Good luck!