Federal tax relief is offered to citizens who are unable to pay their federal or state taxes due to valid reasons such as job loss or divorce. There are four main types of relief, including an Offer in Compromise contract and Non-Collectable Status. To receive relief, an appeal must be filed with the IRS or government agency. Hiring a tax attorney is recommended.
Federal tax relief refers to a system or arrangement in which the Internal Revenue Service (IRS) or other tax officials provide a citizen who is unable or unable to pay their federal or state taxes. This offer is extended to those who have not paid taxes due to any illegal or criminal activity. Valid reasons for receiving federal tax benefits include job loss, divorce, or other financial factors beyond the person’s control. Assistance programs are implemented to help those in need pay off their tax debts.
There are different types of federal tax benefits, each of them assigned to specific cases, when necessary. To determine the type of relief one may be eligible for, tax officials will do a thorough check of the person’s financial situation and tax payment history. By collecting and researching all the appropriate information, they can choose to offer one of four main types of tax benefits.
The first type of federal tax exemption is known as an Offer in Compromise contract. This is where the indebted person agrees to pay less than what was previously owed. The individual will work with the government to decide on an amount that is fair to both parties, with the final amount based primarily on income and ability to pay. This amount must be paid in full by agreement or mutual agreement.
Another type of federal tax exemption is the Installment Contract. With this agreement, the individual can pay the full amount or the lower amount after completing a complete review of his finances, but instead of paying in one lump sum, he will make monthly installments until the debt is paid off. Again, the amount paid in each installment will be based on the individual’s financial situation and ability to pay.
For those who simply cannot afford to pay any amount of their tax debt, tax officials can grant them relief known as Non-Collectable Status. This federal tax exemption option is generally reserved for those who have lost their jobs, become disabled, or become financially unable to make small payments without experiencing huge financial hardship.
Spouses and former spouses of delinquent taxpayers also receive federal tax relief when they are forced to make payments on a tax debt they do not owe. While in many locations a couple’s finances and debts are on file, in some cases, one spouse is not at fault for the tax debt and is eligible for the Innocent Spouses Program. This clears the non-faulty party of any debt to the federal government incurred by the guilty spouse.
In order to receive any type of federal tax exemption, you must file an appeal with the IRS or government agency, stating the reasons behind the non-payment. Hiring an experienced tax attorney is a good idea when possible because these professionals know the ins and outs of the tax system and can help individuals find options that ordinary citizens may not be aware of. If a lawyer is out of the question financially, it may be possible to find someone who will do the job for free or for free. To find a lawyer who works for free, contact area lawyers or write to the nearest bar association for information.
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