www.taxprofessionals.com - TaxProfessionals.com
Posted by Dennis Jao

Are You Indebted to The IRS But Can't Pay? You May Be Eligible For Help.

Are You Indebted to The IRS But Can't Pay? You May Be Eligible For Help.

Even the wealthy class, who do not have any burden paying their taxes, do not like paying taxes. However, there's a difference between not wanting to pay taxes and finding it difficult to pay them.

Failure to pay taxes is a federal crime. If you owe taxes, the government is empowered by law to seize assets to cover the debts. In severe cases of evading tax, defaulters may be jailed. But that would be after escaping several means by the IRS to get the money. But it's not everyone who can't pay taxes that would have the IRS breathing down their necks or having their assets auctioned off. And except in rare cases, hardly would anyone who can't pay taxes go to jail, especially when such a person is facing severe financial difficulties.

If, for any reason, paying taxes becomes extremely difficult, there are options available. We'll explore available means of help as offered by the IRS.

People who earn monthly income are naturally almost immune to such shocks as they pay their tax debts in small installments preventing the need to bear in bulk during tax season. Many even have their income tax withheld from their paychecks. But many people still suffer from the inability to settle tax debts when due. The IRS has several means of providing help for those who have financial difficulties and may not pay the debt owed.

Because some people face financial difficulties, paying taxes could considerably add to their burdens. For such people, the IRS has developed a means of providing help to relieve the burden.

State Tax Reliefs

States have different tax relief programs. The reliefs vary from state to state, but they are primarily designed to waive specific penalties for financially incapacitated.


One of such platforms is the Currently Not Collectible (CNC) status, which freezes the collection of tax debts until the person can resume payment. A person's account may remain in CNC for as long as the financial difficulties remain. This status is only available to the very vulnerable, and certain conditions are outlined for those who wish to benefit. For example, such persons must have no income at all or have expenses that are more than their income. Those whose only means of payment is social security are also eligible for the CNC status.

The CNC status doesn't eliminate your tax debt. What it does is prevent the IRS from using the law to recoup the money while you're still unable to pay. HOWEVER, the IRS would not look away from refunds if a person is qualified for refunds while on a CNC status; the IRS would still appropriate any refunds accruable to the beneficiary to pay the debt. If you're unable to settle your tax debts, you will keep accruing penalties and interest on the outstanding amount owed.

HOWEVER, the IRS keeps sending you timely reminders to update you on your financial obligations.  

Installment Agreement

If you believe you have problems paying your taxes in full, you can apply for approval for installment payment. With Form 9465, you can request an Installment Agreement Request when you file your tax return. However, this request is hardly granted for those who owe less than $10,000. Under the agreement, the IRS allows for monthly installments until the bill is settled.

Offer In Compromise OIC

The OIC allows the IRS to give taxpayers leverage to pay less than the amount they owe. This option is hardly used as a first option and is only used when other options are exhausted. Another kind of compromise which the IRS offers is penalty and interest abatement, which people who are financially disabled can enjoy. Penalties and interests may thus be forgiven, but it must be noted that this only occurs in limited circumstances. However, people who qualify for these compromises must prove that they are indeed severely incapacitated. The debts, it should be noted, remain and can't be forgiven.



Dennis Jao
Contact Member