IRS is responsible for collecting the tax and ensuring the sustenance of the legal tax system in the country. However, when the tax-collecting agency has to decide between either of two, the latter takes precedence. To put it in layman language, when the IRS thinks that collecting the whole tax debt from financially struggling citizens in San Jose, CA, they forgive the tax debt to the extent that it eases the pressure from taxpayers. To achieve this, the IRS has many permanent as well as temporary relief options under its hood. The eligibility of taxpayers to get any or all of those options varies and depends upon circumstances.
Let Us Discuss All The Options Under The IRS Debt Forgiveness Program in San Jose, CA One By One.
The Installment Agreement is the most popular and equally one of the most convenient options under tax relief programs. Installment Agreements or AIs make it possible for taxpayers to pay their tax debt in smaller, affordable monthly installments for up to 72 months. This option is most popular because of its affordability and the targeted market for this relief is middle income salaried and self-employed individuals. The maximum limit for this program is set at $50,000 which means that if the amount of tax debt exceeds this threshold, taxpayers can no longer get this.
Offer in Compromise:
Another popular relief program is the Offer in Compromise or OIC. This relief option is actually a settlement contract between the IRS and taxpayer, under which the taxpayers plead that they cannot pay down their taxes and if they are forced to pay the tax, they will suffer a remarkable and un-recovering financial loss. What needs to be kept in mind while looking to get OIC, is never aim to use this program to manipulate the authority. If you mislead the IRS about your finances, it can cause more worries for you in the form of penalties, fines and even cause criminal proceedings.
Currently Not Collectible:
OIC is the program for those that can no longer earn as they previously did and IRS compromises with what they can get. But in case of temporary financial struggle, where the taxpayers are not able to earn normally, the IRS put the sign of Currently Not Collectible or CNC label on their tax account, which puts their account on pause and the IRS agent won’t bother the taxpayer for the period mentioned. However, IRS agents will keep in contact with taxpayers during the period for continuous assessment of their financial status.
Innocent Spouse Relief:
Although IRS generally deals with the couple filing jointly as one taxpayer and they both are equally responsible for tax payment. But when there is a tax debt stemming from negligence or misconduct of one spouse, the other one can get the Innocent Spouse Relief.
The IRS offers all these options so that the taxpayers have options in case of financial hardship. These options allow the tax system to keep flourishing and the taxpayers don’t feel pressured all the time. These types of programs also allow the IRS to separate the genuine struggling taxpayers from wilful defaulters. Hence, it is essential that these programs stay available to the taxpayers.
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.