How to Achieve Tax Relief from IRS

If you owe back taxes, penalties or interest to the IRS, which you cannot afford to pay, you may be eligible for various tax relief options. The IRS has developed a Fresh Start Initiative, which includes programs that will help qualified taxpayers meet some outstanding income tax obligations. These include pursuing an Offer-in-Compromise and less stringent thresholds for successfully requesting an Installment Agreement. The application process for either of these is fairly simple, and any taxpayer can apply without the need of a lawyer or other tax relief agency.

Method 1

Method 1 of 3:

Entering Into an Installment Agreement

1
Check your balance due to the IRS. In case you are not sure of the amount that you owe, the IRS has made it easy to check on the outstanding balance.
- Individual taxpayers in the United States can call 1-800-829-1040, Monday through Friday, from 7 a.m. to 7 p.m., local time.
- Business taxpayers in the United States can call 1-800-829-4933, Monday through Friday, from 7 a.m. to 7 p.m., local time.
- International callers can reach the International Taxpayer Service Call Center at 267-941-1000, Monday through Friday, from 6 a.m. to 11 p.m., Eastern time. (This is not a toll free call.)
2
Determine whether you qualify for an installment agreement. The IRS has established a “Fresh Start” program to help taxpayers who are unable to pay their tax obligations in full. An installment agreement is a plan that will allow certain qualifying taxpayers the ability to pay their tax debt over time. In order to qualify, each of the following must be true:^{[1]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
- you must have an outstanding tax debt of no more than $50,000, including all interest and penalties
- you have filed all tax returns, whether or not you have made payments
- you must be able to pay your debt over a maximum period of six years.
Advertisement
3
Apply for an Online Payment Agreement. To apply for an installment agreement, first visit the IRS.gov website, and then follow the links to “Payments” and “Online Payment Agreement.” Once there, review the list of information that you will need to enter in order to submit an application:^{[2]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
- name
- email address
- mailing address from most recent tax return
- date of birth
- filing status
- social security number, spouse’s social security number (if filed jointly) or tax ID number
4
Log in to your private IRS online account. Select the button to “Apply as Individual.” On the subsequent screen, you will be prompted to enter your login ID and password.^{[3]XResearch source}
- If you have not yet used this service before, you will need to open an account first. This process takes about five to ten minutes and is fully self-explanatory. Follow the directions and create your account, then return to the log in screen.
- You will need a cell phone each time you log in to this service. For your security, in addition to having you enter a userid and password, the IRS will send you a text message with a one-time access code. You will need to enter that code to proceed with the log-in process.
5
Select the payment plan that best suits your ability to pay. If you wish to enter into an Online Payment Agreement, you begin by determining what you can pay, and how soon you can pay off the debt. You need to consider this step carefully and choose a plan that you will be able to pay.
- First you will be asked to enter the amount that you owe. You will need to get this from your earlier check on your balance.
- Select a payment duration. Your first two options are 60 days or 120 days. If you select one of these options, you will have low interest and penalties added to your tax obligation, and you will have no user fees. The third option, paying monthly over a longer period of time, will have higher interest and penalties, and will require the payment of a user fee of up to $120. However, stretching the amount for up to six years will reduce the amount due each month.
6
Finalize the details of your payment plan. If you select the 60 day or 120 day option, you will be given a specific date by which your full payment is due. You will also receive a warning that failure to pay by that date may result in tax liens or other legal action.
- If you select the monthly payment option, you will be prompted to enter the amount of monthly payment that you can afford to pay, and the date of each month that you will make the payment. You then need to select either a direct debit agreement, which will withdraw payments from your bank account each month, or the installment agreement, which requires you to send in the payment each month.
Whichever plan you establish, you will be prompted to review the details of the plan and confirm that you will comply. Before confirming, make sure that you will be able to make the payments and meet the due date. If you fail to do comply with the plan you propose, the IRS will have the power to assess additional interest or penalties, or levy tax liens on your property. If you are successful in paying off your debt, then additional interest assessments will be over.
Advertisement

Method 2

Method 2 of 3:

Making an Offer in Compromise

1
Determine your eligibility for an Offer in Compromise. This is a plan, as part of the IRS Fresh Start Initiative, that may allow some qualified taxpayers to settle for a tax payment that is less than the full amount due. As a threshold matter, the following elements must all be true:^{[4]XResearch source}
- you do not have an open bankruptcy proceeding
- you have filed all required tax returns
- you must have made all estimated tax payments, if any
- if you are an employer, you must have submitted all federal tax deposits.
You can find this by navigating to the IRS.gov homepage, then select the “Payments” tab and then the link to “Offer in Compromise.” Download or print and read the Offer in Compromise instruction booklet. This booklet is IRS Publication number 656-B. From the “Offer in Compromise” screen, you can download this and read it online, or you may choose to print and read it. This publication contains useful information about the Offer in Compromise program and the instructions for applying.^{[5]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
3
Submit your offer using the application form. Considering the amount of your total tax obligation, and your overall ability to pay, you will use the application form to make an offer to the IRS. Present what you believe is a reasonable offer, which you believe is the most you can reasonably afford to pay. The form you need is included in the information booklet, together with instructions for completion. Read the instructions and complete the form carefully and accurately. Make sure your responses are legible.^{[6]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
- Private individuals will use Form 433-A (included in booklet)
- Businesses will use Form 433-B (included in booklet)
- The instruction booklet and online tools include worksheets that will help you calculate a reasonable offer.
4
Select and indicate a payment option. You may choose one of two options for making payments. The first is the Lump Sum Cash option, and the second is the Periodic Payment option. Your offer amount and your payment choice will determine the amount of your initial payment and ongoing payments.^{[7]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
- Under the Lump Sum Cash option, you will pay an initial amount equal to 20% of your offer. Then wait for formal approval of your offer, and you will be instructed to pay the remainder over five equal installments.
- Under the Periodic Payment option, you will divide your offer over a number of monthly payments. Make the first payment with your application, and continue submitting monthly payments while you await a decision.
5
Await a decision on your Offer in Compromise. The IRS will consider several factors in reviewing your offer. When the review is complete, you will receive a notice that your offer has been accepted, modified, or rejected in full.^{[8]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source} Your application will be judged based on:
- your income
- overall ability to pay
- other expenses
- evaluation of all asset equity.
- If your offer is rejected, you may appeal the rejection in writing, by submitting IRS Form 13711. This form is available at https://www.irs.gov/pub/irs-pdf/f13711.pdf.
Advertisement

Method 3

Method 3 of 3:

Seeking a Tax Penalty or Interest Abatement

1
Determine if you are eligible for a penalty or interest abatement. The IRS will consider an abatement (forgiveness) of a tax penalty or interest payment under some limited circumstances. You may qualify if the following are all true:^{[9]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
- you have never before been required to file a tax return, OR you have had no tax penalties for the prior three years
- you have filed all required tax returns or extensions on time
- you have paid, or arranged to pay, any taxes that are due.
If you have an outstanding tax obligation, the IRS recommends that you get it paid before you submit a request for abatement. The interest on the penalty will continue to accrue until the tax is fully paid. By waiting, you will be able to request an abatement for the full amount.^{[10]XTrustworthy SourceInternal Revenue ServiceU.S. government agency in charge of managing the Federal Tax CodeGo to source}
3
Complete IRS Form 843. Form 843 is the Claim for Refund and Request for Abatement form. You can find links to Form 843 and its instructions at https://www.irs.gov/uac/form-843-claim-for-refund-and-request-for-abatement.
- To complete Form 843, you will need your basic identifying information and an explanation of the interest, payment or penalty that you are seeking to abate.
- Provide an explanation for seeking the abatement. The instructions for Form 843 state that the IRS will only grant abatements for interest that are caused by IRS delay or error. You will need to provide an explanation to support your request not to pay.
4
Submit your application by mail. The instructions for Form 843 contain directions for mailing in your completed application. The office to send your application will be different, depending on your reason for seeking the abatement or the notice that you received from the IRS assessing the penalty or interest initially. Check the instructions carefully and send your abatement request to the appropriate office.
- Keep a copy of your completed application for your records.
- After your completed application is submitted, wait for a reply with a decision. If you wish to check on the status of your application after a reasonable amount of time, you may contact the telephone number that appears on the notice that you received that assessed the penalty or interest.
Advertisement

Expert Q&A

Search

Add New Question

Ask a Question

200 characters left

Include your email address to get a message when this question is answered.

Submit

Tips

The IRS offers a free service for legal assistance, known as the Taxpayer Advocate Service. This is an independent service within the IRS. You may contact the Taxpayer Advocate Service at 877-777-4778.
Thanks
Helpful0 Not Helpful0
Always pay attention to notices from the IRS. Ignoring notices that may be bad news will not make them go away. The problem will only get worse.
Thanks
Helpful0 Not Helpful0

Warnings

The Federal Trade Commission warns taxpayers to watch out for so-called tax relief agencies that may offer to help you get tax relief. The only tax relief that you can get are the items outlined in this article, and you can do those on your own. Be especially skeptical if an agency makes any guarantees or requires any large payments up front.^{[11]XTrustworthy SourceFederal Trade CommissionWebsite with up-to-date information for consumers from the Federal Trade CommissonGo to source}
Thanks
Helpful0 Not Helpful0