Federal Tax Relief Hardship Program

Dealing with issues of tax debt can be a hard and stressful situation for taxpayers. Fortunately, the IRS hardship program is here to help. The federal tax relief hardship program is for taxpayers who are unable to pay their back taxes. In other words, taxpayers in need can apply for the IRS' Currently Not Collectable status. You can qualify for the IRS hardship program if you can’t pay taxes after paying for basic living expenses. Likewise, while you’re in the IRS hardship program, the IRS cannot take collection measures out on you. In other words, the IRS cannot:

  • Seize your property.

  • Take your paycheck.

  • Wipeout your bank account.

However, being in the IRS hardship program doesn’t mean you won’t have to pay back taxes. The government just gives you a more stress-free way to handle them, like the IRS Fresh Start program.

What is the IRS Hardship Program?

The federal tax relief hardship program is designed for individuals who aren’t in a position to pay their tax debt. Another term used to describe the IRS hardship program is Currently not Collectible. In other words, the government places a hold on any collection activities on your account. This means that the IRS will not be able to seize your property or take money from your paycheck. Essentially, the government will stop attempting to collect back taxes from you. However, you will still owe back taxes. Additionally, the government will remind you every year of how much you owe. However, the IRS hardship program doesn’t stop IRS penalties and interest. Even though you are in the program, the IRS will continue to charge you penalties and interest. Therefore, while you’re in the IRS hardship program, it’s a good idea to come up with a tax relief plan.

How Long Does the IRS Hardship Program last?

Depending on your situation, you could be in an IRS hardship program for up to 10 years. Typically, the IRS has 10 years to collect back taxes. After the 10 years is up, the IRS is supposed to remove the back taxes. For instance, let’s say you filed taxes in 2010 and you owe back taxes. In that case, the IRS could collect the back taxes until 2021. If you filed for Currently Not Collectible status in 2010, the IRS will leave you alone. Additionally, you could stay in the IRS hardship program until 2021. After 2021, the IRS will remove the taxes you owed from 2010.

How do I stay in the IRS Hardship program?

The IRS will continue to review your financial situation every two years. For instance, if your income increases, you may be taken out of the program. In other words, if the IRS determines you’re able to pay back taxes, you’ll have to pay. In that case, the best thing to do is to come up with a tax relief plan. Work with a tax relief professional who can determine the best course of action to pay back taxes. The professionals at FinishLine Tax Solutions have years of experience helping their clients out of tax debt. Likewise, we have years of experience dealing directly with the IRS. In other words, we know how the IRS works. Our experience will help you get out of tax debt and back on the road to financial freedom.

What if I owe new back taxes?

Let’s say you filed taxes in 2020 and turns out you owe. What happens if you are currently in an IRS hardship program? In that case, the new taxes will not be automatically included in the IRS hardship status. The IRS treats each new tax year separately. Therefore, your 2010 taxes will be treated completely differently from your 2021 taxes. In other words, the IRS can still pursue you for the new 2020 taxes, but not the 2010 taxes. Should you find yourself in a situation like this, it’s often recommended that you pay off the new taxes. If you are unable to pay your new taxes, you can also place them in the IRS hardship program. However, it can be difficult to do this if every year you owe taxes.

How do I pay back taxes while in the IRS Hardship program?

It’s possible to pay back taxes even when you’re in the federal tax relief hardship program. In other words, if you have some extra money to make a small payment, you should. Additionally, the IRS recommends making payments while you’re in the IRS hardship program. However, paying back taxes shouldn’t affect your IRS hardship status.

The IRS Fresh Start program

If you have some taxes in the IRS hardship program but want to pay back current taxes, there are options. Additionally, if you come out of the hardship program and need to pay back new taxes, there are options. The IRS offers the Fresh Start program for taxpayers who want an affordable way to pay back taxes. In other words, the IRS Fresh Start program allows taxpayers to pay off the substantial tax debt in six years. Each month, you’ll make payments based on your current income. Your payment amount will also be based on the value of your liquid assets. At the end of six years, your tax debt should be paid off in full.

How is the IRS Fresh Start program helpful?

The IRS Fresh Start program is a very helpful tool for taxpayers to pay off taxes. In other words, the program offers a simple way to pay off tax debts. Additionally, the Fresh Start program allows you to avoid many downsides of owing taxes, including:

  • Interest

  • Penalties

  • Tax liens

  • Seizure of assets

  • Wage garnishments

Taxpayers who owe $50,000 or less to the IRS can apply for the Fresh Start program. Additionally, the IRS offers three repayment options from which to choose.

IRS Fresh Start Program Repayment Options

The IRS provides three payment plans within the IRS Fresh Start program. In other words, taxpayers have the flexibility of choosing from three different payback plans.

  • First, the IRS offers an extended installment agreement. This payment plan gives taxpayers up to six years to pay off the tax debt in affordable monthly payments.
  • Second, the IRS offers an Offer in Compromise. While an OIC is rare, it gives taxpayers the opportunity to settle their tax debt for much less. Oftentimes, the settlement amount is much lower than the actual value of your tax debt.
  • Third, the IRS offers a tax lien withdrawal. This option is available for taxpayers who can pay off their debt via direct debit. Additionally, this option lowers the threshold for which the IRS will place a tax lien on your account.

Which IRS Fresh Start payment plan is right for me?

You may be unsure of what IRS Fresh Start repayment option is best for you. In that case, you may want to hire a professional tax resolution specialist to advise you. Additionally, a tax professional can file the needed IRS forms to assist you in repayment options. The goal is to choose the repayment plan that best suits your current finances.

 

How Do I Apply for the IRS Fresh Start Program?

There are several guidelines you must follow when applying for the IRS Fresh Start program. First, taxpayers must file all of their back and current tax returns. The IRS does not allow for the request of payment plan options with outstanding tax returns. Additionally, taxpayers must file all future tax returns on time while enrolled in the Fresh Start program. First, the taxpayer must fill out and submit the IRS Form 9465. Enrolling in the program can be time-consuming and confusing. For that reason, it’s beneficial to work with a tax resolution specialist. A tax professional can ensure that you enroll successfully in the payment plan of your choice.

 

Avoid Debt with the IRS Fresh Start Program

Owing the federal government taxes can put unnecessary hardship on your finances. Taxpayers can avoid going into debt and settle their debt more affordably with the IRS Fresh Start program. The professionals at FinishLine Tax Solutions can help you choose the best repayment option for your finances. If you need help applying for the IRS Fresh Start program, call the professionals at FinishLine today. Additionally, if you want to apply for Currently Not Collectible status, we can help there too.

Get Tax Help from the Professionals

If you’re in a tough financial situation, it shouldn’t be made even harder by tax debt. The IRS understands that and that’s why they created the IRS hardship program. However, don't be mistaken, the IRS will still do whatever they can to get their money. Taxpayers who are unable to pay back taxes can apply for this program. Additionally, the experts at FinishLine Tax Solutions will be there to help every step of the way. If you’re looking to get out of tax debt for good, call us immediately. When dealing with tax debt, the smartest thing to do is to act and act quickly. At FinishLine Tax Solutions, we can help. In other words, we’ll get you to the tax finish line. Call us today and discover how we can get you on the road to financial freedom.

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