IRS Hardship Program: A possible relief if you owe back taxes to the IRS

The IRS Hardship program, also known as the Currently Not Collectible (CNC) status, is a program that allows taxpayers who are experiencing financial hardship to postpone paying their taxes. If you are approved for CNC status, the IRS will not take any collection action against you, such as garnishing your wages or seizing your assets, until your financial situation improves.

Potential benefits to the IRS Hardship program

Relief from collection action: As mentioned, if you are approved for CNC status, the IRS will not take any collection action against you. This can provide much-needed relief if you are struggling to pay your taxes and are being harassed by the IRS.
Time to pay: If you are approved for CNC status, you will have time to pay your taxes when your financial situation improves. This can be especially helpful if you are going through a temporary financial setback, such as a job loss or a medical emergency.
Interest and penalties may be reduced: If you are approved for CNC status, the IRS may agree to reduce or suspend the interest and penalties that have accumulated on your taxes. This can help to lower the overall amount that you owe.
Avoiding tax liens and levies: If you are approved for CNC status, the IRS will not file a tax lien or levy against you. A tax lien is a legal claim against your property to secure payment of your taxes, while a levy is the actual seizure of your property to satisfy your tax debt.
It’s important to note that the IRS Hardship program is not a permanent solution. If your financial situation improves, you will be expected to resume paying your taxes. Additionally, the IRS may review your case periodically to ensure that you are still experiencing financial hardship.

How can I get approved for CNC status by the IRS

To apply for Currently Not Collectible (CNC) status with the IRS, you will need to provide financial information to demonstrate that you are unable to pay your taxes. You will also need to provide information about your income, expenses, and assets.

Here are the steps to apply for CNC status:

Gather your financial information: You will need to provide detailed information about your income, expenses, and assets. This includes information about your employment, any business income or expenses, your monthly bills and expenses, and any assets you own, such as a home or car.
Complete Form 433-F: This is the Collection Information Statement for Wage Earners and Self-Employed Individuals. This form is used by the IRS to gather information about your financial situation. You can download Form 433-F from the IRS website or request a copy by calling the IRS.
Submit your financial information to the IRS: You can submit your financial information to the IRS by mail, fax, or online through the IRS’s e-Services portal. Make sure to include a completed Form 433-F and any other supporting documentation.
Wait for a response from the IRS: It may take several weeks or months for the IRS to review your financial information and make a decision on your CNC status. The IRS may also request additional information or documentation before making a decision.
If you are approved for CNC status, the IRS will send you a letter stating that your case has been placed in CNC status. If you are not approved, the IRS will continue to pursue collection action against you. If you disagree with the IRS’s decision, you can appeal the decision through the IRS’s appeals process.

Are there tax relief companies that I can seek help from to get CNC status approved?

Yes, there are companies that specialize in providing tax relief services to individuals and businesses who are struggling to pay their taxes. These companies may be able to help you apply for Currently Not Collectible (CNC) status with the IRS or negotiate a payment plan or offer in compromise.

It’s important to be careful when choosing a tax relief company, as some companies may not be legitimate or may charge high fees for their services.

Here are a few things to consider when choosing a tax relief company:

Research the company: Check the company’s reputation by reading online reviews and checking with the Better Business Bureau.
Look for a company that is transparent about its fees: Choose a company that is upfront about its fees and does not require you to pay a large upfront fee.
Make sure the company is legitimate: Avoid companies that make unrealistic promises or guarantee that they can reduce your tax debt.
Make sure the company has access to tax experts, such as an enrolled agent or a tax attorney in-house.
It’s generally a good idea to get a consultation before hiring a tax relief company. You may want to all the questions answered, to get advice on the best course of action for your situation.

What questions to ask before hiring a tax relief expert services

If you are considering hiring a tax relief expert, it’s important to do your due diligence to ensure that you are working with a reputable and competent professional. Here are a few questions you may want to ask before hiring a tax relief expert:

What is your background and experience in tax relief? Look for a professional who has relevant experience and credentials, such as an enrolled agent or a tax attorney.
How do you charge for your services? Look for a professional who is upfront about their fees and does not require you to pay a large upfront fee.
Can you provide references from past clients? Ask for references from past clients to get an idea of the professional’s track record. Check testimonials online. These are from legitimate clients that have used the services from this company in the past.
What is your success rate in negotiating with the IRS? Look for a professional who has a proven track record of successfully negotiating with the IRS.
Do you have any specialties or areas of expertise? Consider hiring a professional who has specific expertise in your area of need, such as negotiating an offer in compromise or applying for Currently Not Collectible (CNC) status.
What is your policy on communication and availability? Look for a professional who is responsive and available to answer your questions and provide updates on your case.
What is your policy on confidentiality? Choose a professional who is committed to protecting your privacy and keeping your information confidential.

At FinishLine Tax solutions, our experts have been helping individuals with special tax situations nationwide and can help you with your tax problem. FinishLine ranked #1304 on Inc. Magazine‘s 2022 Inc. 5000, a prestigious list of the nation’s fastest-growing private companies.

Back Taxes Help: How to Set Up a Payment Plan With the IRS

Back taxes can drive you into significant debt due to penalties and accumulating interests. You may also lose your assets due to liens imposed by the IRS. Setting up a payment plan is the best way to avoid such consequences while organizing your finances.

The IRS allows taxpayers to pay their debt using various installment plans. It also offers tax forgiveness programs to reduce the burden of delinquent taxes.

Here, we discuss ways to set up a payment plan with the IRS. We will also cover some debt relief programs you can consider.

Apply Online

One way to set up a payment plan with the IRS is by applying online. Log in to your e-filing portal using your account ID. After that, complete Form 9465 (installment agreement request) and submit it.

This document will require you to provide details needed during payment plan processing. Such may include the amount you owe, your employer, and your bank information. It also provides a section inquiring about the amount you can afford and the date you want to remit the installments.

Contact the IRS by Phone

Another way to set up an installment plan is by calling the IRS. Use the number 800-829-1040 to apply for debt relief for personal taxes. On the other hand, if you need an installment plan for your business, use 800-829-4933.

The IRS may provide phone numbers on the bill or notice sent by mail. Contact this number if you do not want to fill out the payment plan form. The agent will then request some information and use it to request a payment plan on your behalf.

Apply by Mail

The method used to set up a payment plan by mail can vary. If you request a tax relief program while submitting your returns, attach Form 9465 to the front. However, send the document to the nearest IRS office if you mailed your tax return forms or filed them online.

Contact a Tax Resolution Expert

Working with a tax resolution expert is the best way to set up an installment plan with the IRS. Professionals can review your financial documents and help you file back taxes. They will also consider your income and expenses before recommending a suitable tax relief program.

When setting up a tax forgiveness plan with an expert’s help, they will identify all the documents needed for the process. Afterward, they will guide you in filling out various forms or do it for you. The expert will then verify your application before submitting it to the IRS.

IRS Tax Payment Plans to Consider

The IRS has several IRS fresh start programs to help you deal with back taxes. Such include:

Short-term installment plan
Long-term installment program
An Offer in Compromise
IRS Hardship program

The short-term installment plan is available if you owe a total amount of less than $100,000. When applying for this program, you won’t pay a setup fee. Still, you will have to clear the total debt in 180 days or less.

If you owe the IRS less than $50k, you may qualify for a long-term installment plan. The setup fee is $31 when applying online and $107 when using other methods.

An IRS offer in compromise lets you pay less than what you owe. However, you must remit 20% of the debt when sending your application. If the IRS approves your request, you may clear the balance in installments.

An IRS hardship program stops all debt collection measures. Such may include imposing tax liens and freezing bank accounts. Still, the interest and penalties on the owed amount will continue accruing until you can pay.

Reach Out to FinishLine Tax Solutions to Set Up a Payment Plan

Getting tax relief services from expert tax relief companies ensures you opt for a program suitable for your financial capability. At FinishLine Tax Solutions, we provide reliable back taxes help.

Our CPAs and tax attorneys will offer all the guidance and assistance you need. They may also advise ways to manage debt and deal with a tax audit. Call us now for a consultation.

Offer in Compromise – Is this a good tax relief strategy?

An Offer in Compromise (OIC) is a helpful tax relief strategy since, if successful, it clears your outstanding tax debt completely. Most other tax relief options have an outstanding amount that may continue to accrue penalties and interest. However, before the IRS accepts your OIC application, you must go through various steps that include submitting extensive documentation to support your claim.

The IRS determines whether or not your application will be accepted, but you can improve your chances by submitting a compelling application. In this article, learn how Offer in Compromise works as a tax relief solution and how our tax debt relief professionals can help you make your application.

What Are Offers in Compromise?

An Offer in Compromise (OIC) is an effective method to eliminate your tax debt. It is a federal program where the taxpayer settles the outstanding debt for cents to every dollar owed. Low-income families can pay their debt for considerably less than they owe.

OIC is open to all income levels and ages, but the IRS does not accept all applications. Their acceptance rate changes from year to year, but it has accepted 25-45% of applications in the last few years.

Eligibility for Offers in Compromise

Several strict pre-qualifiers make a taxpayer eligible for tax settlement through OIC. First, the IRS looks at your reason for requesting OIC tax settlement, and they only consider applications where:

It is not certain that the IRS correctly assessed your outstanding taxes
It is not certain that the IRS will be able to recover the full amount, e.g. if you owe more than your assets and income
Paying off your tax debt in full will cause the taxpayer undue economic hardship – called effective tax administration

For reasons 2 and 3 above, the IRS also considers the following:

Whether you can pay and how much you may be able to pay
Your current income
Your current assets
Your current expenses

The IRS will generally accept OIC that meets the maximum amount you can pay within a reasonable period. You are ineligible for OIC settlement, however, if:

You have ongoing bankruptcy proceedings
You have not been paying your required installments/payments
You have not filed your federal tax returns
If self-employed with employees, you have not submitted the requisite federal tax deposits

Generally, the IRS only accepts offers in compromise greater than or equal to a tax liability’s collection potential.

How to Submit an Offer in Compromise

The smallest offer the IRS accepts as OIC depends on your financial ability. Businesses use form 433-B to reveal their financial state, while self-employed or employed wage-earners should use Form 433-A. You should reveal the following:

Income and expenses
If you declared bankruptcy
Whether you own a safe deposit box and its contents
If you have benefited from an estate, trust, or life insurance policy and its details
Any bank account balances, investments, available credit, and cash life insurance policies
Any tangible and intangible assets

College or private school expenses and charitable and voluntary retirement contributions are not allowable expenses. Once you have these details, it’s important to get a tax professional to help you assess the minimum offer value.

Apart from the offer, you must submit several forms, including collection information statements, the application fee, and proof of payment of the first instalment of your offer. If you wish to pay a lump sum, the first payment should be at least 20 percent of the total offer. If the IRS accepts your OIC, you must pay the remaining amount in no more than five payments.

Get Help with Your Offer in Compromise at Finishline Tax Solutions

You can use the IRS OIC pre-qualifier tool to check whether you are eligible for OIC. However, note that eligibility does not translate to acceptance. For example, if you can pay your outstanding taxes through an instalment agreement, you don’t qualify for an OIC tax settlement.

There are many steps to filing an OIC application and even appealing upon rejection. Our Finishline Tax professionals can help you with these steps to maximize your chances of a favorable outcome.

IRS Hardship Program: How can it help you?

Are you behind on your taxes, and there is no way you can pay them off? Don’t worry! The IRS has got your covered. You might think that the IRS is the last place where you would seek help during a monetary crisis. However, the IRS offers a number of tax relief programs for taxpayers who are going through extreme economic hardship. One such option is the IRS hardship program.

Under the IRS hardship program, a person might qualify for the ‘Currently Not Collectible’ status. Once you get this status, the IRS cannot take your property or paycheck for fulfilling the outstanding tax debt. Learn more about the IRS hardship programs from experienced tax resolution service providers. These professional experts can also help you get a payment plan with the IRS.

Reasons for which you can get the CNC status

There are a number of reasons for which you can get the CNC status through the IRS hardship program. The basic stipulation is that a person is qualified for the CNC status if the collection of the debt would create a financial crisis for them where they are not able to pay essential living expenses. However, you would have to prove your hardship to the IRS. For this, you will be submitting financial information using Form 433A/433F or Form 433B – the former is for self-employed or individual taxpayers while the latter is for partnerships and corporations. Through the Collection Information Statement and the supporting documents, the IRS will get the following information:

Everything you own, including bank accounts, real estate properties, investment portfolios, cars, motorcycles, trucks, boats, life insurance, retirement savings, etc.
Expense statements of the last 3 months
Income statements for the last 3 months
The market value of every asset you have
A three-month average of expenses and income on the basis of category

Under the IRS Hardship Program, the taxpayers also need to disclose sensitive financial information. This is why some taxpayers opt for an online payment agreement. The online payment agreements do not only have less disclosure but are also easier to qualify in comparison to the IRS Hardship Program.

Who is qualified for the IRS Hardship Program?

Once you have been declared CNC under the IRS Hardship Program, no collection actions will be taken against you for collecting the tax debt. These collection actions include:

Tax Lien – Legal claim by the government on your property, including personal, real asset, and financial assets.
Tax Levy – Selling away your property for settling the outstanding debt.
Garnished wages – Collecting a portion of your income until the debt is settled off.

All the rules of the IRS Hardship Program are applicable for 10 years which is also the duration the federal agency has for collecting back taxes. After 10 years, the statute of limitations is enforced. Every two years after declaring the CNC status, the IRS will be reviewing your information. They do this to check if you still are eligible for the IRS Hardship program. If they find that you are financially capable of paying your tax debt, they will revoke the IRS Hardship program and remove your CNC status.

When you are in the IRS Hardship Program, the government won’t be seizing your property, wiping your account, or taking away your paycheck. But, this doesn’t mean that you are off the hook. The CNC status just stops the collection actions. The interests and penalties will still accrue on your debt. Here are some of the penalties you will be facing for not paying your taxes and late filing.

Penalties you will be facing for not paying your taxes and late filing

If you don’t file your returns by 15th April, the return due date or the extended date you receive after filing for an extension, you will be charged 5% of the unpaid tax every month for up to 5 months.
Failure to Pay

Not paying the taxes by the due date or the extended date can result in a penalty of 5% of the unpaid tax. In case of an approved installment period, you will be charged 0.25% of the debt. If you pay within 10 days after receiving the Notice of Intent to Levy, a penalty of 1% of the tax debt will be charged. For every month you don’t pay the taxes, there will be a recurrent charge until the penalty reaches 25% of the debt or you pay off the debt.

Even if your account is currently under the IRS Hardship program, it doesn’t mean that your status won’t roll over automatically. The IRS considers your eligibility for the program separately. If possible, you should pay the new taxes immediately. It won’t have any effect on your CNC status from the past years.

However, if you are not able to pay the new taxes also, you can request CNC status under the IRS Hardship Program for that year as well. With each year, it will become increasingly difficult to get that status. Also, the IRS will penalize you, and in the end, you might be forced to pay the debt using alternative payment methods like Installment Agreement or Offer in Compromise. If you are eligible for the IRS Hardship program, it is best that you hire professional experts. They will be advocating on your behalf and help you get the best tax relief option available.

IRS Hardship Program