Tax debt has become a common issue in the last few years, as the COVID lockdowns and the cost-of-living crisis have affected many people’s financial situations. Fortunately, the IRS provides several tax relief and tax forgiveness options. How long does it take to access these programs, and why is working with an experienced Louisiana tax resolution expert so crucial?
HOW LONG DOES IT TAKE TO RECEIVE TAX RELIEF OR TAX FORGIVENESS?
It’s impossible to say precisely how long it will take you to get tax relief without reviewing your situation first. There are many programs, and each works differently. If you’re setting up an installment agreement, and you have a small amount of debt, you can expect relief almost straight away. On the other hand, receiving Currently Not Collectible status or submitting an Offer in Compromise can take many months.
The Installment Agreement is the easiest form of tax relief, and it’s open to almost everyone. It involves breaking up the payments into manageable chunks and spreading them out over several years. If you owe less than $50,000 and there are no complicating factors, you can set up your payment plan within a few minutes and get the necessary relief. You can either call the IRS or arrange the plan online.
If you owe between 50,000 and 100,000, you have to pay off your debt within 84 months via direct debit. Although the initial phone call only takes a few minutes, the setup of the direct debit might take up to six weeks. Debts of over $100,000 are more complex to handle, and setting up an IA will take more time. Always contact a tax expert if you have a large amount of debt because they can help you to negotiate effectively with the IRS.
Currently Not Collectible
Currently Not Collectible status is designed for people who are unable to pay off their debts without experiencing financial hardships. They might have lost their jobs or been forced to stop working due to an illness or other unforeseen circumstances. While CNC is a good option for those who are experiencing financial issues, it’s worth noting that the debts do not go away, and interest keeps accumulating.
The application process can take several months because the IRS must check your details and verify that you are unable to pay your outstanding balance. The best way to start is to reach out to a tax professional and ask them for help with your situation. They can let you know what forms and documents you need to prepare, so you can get an answer from the IRS as quickly as possible.
Offer in Compromise
The Offer in Compromise is the best option for those who can pay a part of their debt, but not the full amount. It is one of the most popular programs because it allows taxpayers to permanently reduce the amount they owe. However, it’s very difficult to get an OIC accepted because the IRS believes that everyone should be able to pay their debts.
Your OIC must be finalized two years after the IRS receives your initial payment and Form 656. For small amounts, it typically takes four to six months for your request to be processed. For amounts over $50,000, you can expect to wait seven to twelve months. The decision is made based on your income, assets, and liabilities.
Innocent Spouse Relief
If your spouse made a mistake on your joint tax return, you are responsible for the resulting debt unless you claim Innocent Spouse Relief. This tax forgiveness option is open to anyone who was unaware of their spouse’s actions and had no reason to be suspicious at the time of filing. It’s important to note that Innocent Spouse Relief can only be claimed within the first two years, so the form must be sent to the IRS as soon as possible.
Once you’ve made your application, the IRS will contact your spouse to find out more about your situation. Then, they will check all your documents to determine whether you’re eligible. This process can take up to six months. During the waiting period, you have to file your taxes as usual. If your request is accepted, the IRS will collect the outstanding amount from your spouse, and you will no longer be involved.
When you fail to file your return or pay your taxes on time, the IRS adds penalties to your account. The maximum penalties are up to 25% of your outstanding balance. Additionally, you may be charged interest. One of the easiest ways of reducing your tax burden is getting your penalties abated. This is possible if you’ve never had issues with the IRS before or you have a valid reason for filing or paying late.
Written penalty abatement requests are usually reviewed within 12 weeks. If your request is denied, you can appeal this decision. However, it might take several months for your appeal to be resolved. To avoid this issue, reach out to a Louisiana tax resolution specialist before submitting your abatement request. A professional can review your documentation and make sure you’re filing all the necessary forms correctly and at the right time.
HOW DO I KNOW WHICH FORGIVENESS OPTION TO CHOOSE?
As you can see, there are many options for people who are worried about paying their taxes. To get the most out of the forgiveness program and prevent further issues, it’s important to select the correct option. The best way to do so is to compile all your financial information and read about each of these programs. Think about which ones could be suitable for you.
Then, get in touch with a tax resolution expert and ask them to review your documentation. Based on your income, expenses, and assets, they will let you know which programs you’re eligible for. They can also help you to consider other options, such as using a personal loan, which might be cheaper than an Installment Agreement if you have a good credit score.
HOW CAN A LOUISIANA TAX RESOLUTION SPECIALIST HELP SPEED UP THE PROCESS?
When applying for tax resolution programs, it’s important to keep deadlines and restrictions in mind. If you send your application too late, you might no longer be eligible for some of the IRS’s forgiveness programs. Additionally, your application might be delayed if you fail to include all the necessary documentation.
When you work with a tax resolution specialist, you don’t have to worry about costly delays. The expert knows how to correctly fill in each form and what information is needed, so they can make sure that nothing is missing. As a result, you can expect to get a decision faster. It’s also worth noting that some tax experts, like Bryon here at Geaux, used to work at the IRS. They understand how the system works and can streamline your application.
If you’re having trouble keeping up with your tax bills, you can apply for one of the IRS’s tax forgiveness programs. The time it takes for you to receive relief varies depending on the forgiveness option you’ve chosen and the size of your debt. Send us a message at Geaux Tax Resolution to get more information about our services. Our Louisiana tax resolution specialists can help you with your tax issue, no matter how complex it is.