Tax Debt Relief: The Options Available

2007-03-08 10:33:40

( Financial )



There are a lot of people who are unable to pay their taxes on time. They spend copious amounts of time worrying about tax fines and penalties. However, tax debt can remedied if you choose not to ignore the problem and get help.

Tax debt may occur due to several reasons. In some instances, you get into debt because of ignorance of the law or their tax returns have been filed incorrectly. In most cases of tax debt, however, it is because of the tax payer’s financial circumstances. Due to conditions out of their control, they have difficulty in paying their taxes. In any event, the imposed penalties and interests on top of your taxes can be quite intimidating.

There are already several tax debt relief programs in place to help you out should you find yourself if this situation. Debt relief programs are designed to benefit both you and your creditor.

The first type of tax debt relief program is called Tax Relief Settlement program where you pay only a percentage of the actual taxes you owe. The percentage would depend on several factors like your age, your assets and your income.

The Offer In Compromise tax debt relief program is similar to the first. However, the percentage to be paid is determined by the tax agency after considering several factors. The first factor is called Doubt as to Liability. This is where they consider if the inaccuracies in your taxes were intentional. Doubt as to Collectibles is where they consider if the full amount of taxes owed can ever be paid.

You can opt for Offer In Compromise as your tax debt relief program if you know you will be unable to pay your taxes in full in five years. It is advisable to seek the help of a certified accountant or a professional tax consultant before filing for OIC.


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