Back taxes are a difficult financial situation to face. It can often feel impossible to get out from under the tax liability that a person owes. After all, most people owe income taxes because they don’t have enough financial capital to begin with. On top of that, the longer a person has unpaid taxes , the more interest and tax penalties that get added to their tax liability, causing the amount owed to grow and grow. In many cases, people find themselves facing a total amount that they simply cannot ever imagine paying back. That’s the time when tax relief services can offer hope for families with financial difficulties at tax season.

The IRS understands that, for some, finances can be extremely limited and satisfying their obligation may very well be impossible. Financial hardship is exactly why it offers some taxpayers tax settlement. The tax settlement process allows taxpayers to negotiate with the IRS or state tax authority to settle, or pay off, their bill for less than the amount that is actually owed, usually with an installment agreement or payment plan that could include an initial payment. When all is said and done, the taxpayer is in compliance and has paid the IRS less than their total amount owed.

For example, say a taxpayer has a $10,000 tax liability. They have a low monthly income and work a minimum wage job. They barely make enough to cover their basic living expenses, and have no disposable income for a sizable monthly payment plan. There is reason to believe that they may never have enough money to pay off their tax balance.

The taxpayer enlists a tax relief company for tax settlement help. Their tax attorneys and tax professionals negotiate a tax payment option with the IRS that allows the IRS to recoup some of the owed money while still allowing the taxpayer to afford their basic needs. With the help of a tax relief company’s services, the taxpayer negotiates to settle their tax bill for $3,000 via a monthly acuerdo de pago a plazos, oone of the tax settlement options available via the Programa Nuevo Comienzo. They come out of the negotiations in compliance with the IRS, and both parties leave satisfied.

Beyond facing a lower tax bill, there are many benefits that tax relief services services such as tax settlement provides taxpayers.

When a taxpayer owes money to the IRS, they become susceptible to tax collection activity, specifically the IRS garnishment of their wages or assets. One common way that the IRS collects on outstanding taxes is by garnishing a taxpayer’s federal income tax return. As long as a taxpayer still owes the IRS, they should expect any tax refunds to be taken by the IRS to offset their tax obligation. This process is known as tax garnishment.

Additionally, if a taxpayer remains delinquent for an extended period of time, the IRS will begin to claim their assets through processes known as tax liens and tax levies. When the IRS levies your assets, they seize your bank accounts and other assets to use their value to offset your tax obligation. When the IRS places a tax lien on your property, it allows them to take legal ownership of your property. Liens can have serious, negative ramifications on your credit score.

Every taxpayer brings a unique financial background to the process, so it’s important you understand that not all common strategies could be available to you. That said, it’s important to familiarize yourself with the options available through tax debt relief programs.

One of the important options you may not have heard about is called offers in compromise. In the case of a taxpayer whose earning potential is far below what the Internal Revenue Service can expect to collect within 10 years, they can enter into an offer in compromise agreement, which ultimately negotiates your federal payments far below your outstanding tax balance. While the offers in compromise application is publicly available from the IRS, it’s worth the time to talk to a tax professional before applying. Offers in compromise can vary significantly, from a partial payment installment agreement (with monthly payments over several years) to an initial payment with a payment plan to just a series of lump sum payments. Again, the tax settlement company you work with can help you determine if a lump sum payment or monthly installment plan would be best for you.

One other relief program is the innocent spouse relief, which essentially exempts you from tax penalties caused by a spouse misleading you or not reporting income on your joint tax return. Innocent spouse relief isn’t easy to gain, but with the right legwork with a tax relief company, you can claim this exemption to avoid penalties for late payments or even having to pay for an installment plan.

Another avenue a tax relief company might offer is pursuing the currently not collectible status, or CNC status for short. You could apply for CNC status if the IRS is likely to start collection activities based or place tax levies on your property. There are several situations where you could lose this status.

These three strategies aren’t the only benefits to seeking a tax settlement. There’s penalty relief if you’re affected by natural disasters or other calamities such as a death in the family. There’s penalty abatement that, if you meet the requirements, can remove several penalties stacked up because of late payments, etc.

Seeking tax settlement options from experienced tax professionals can yield significant results for taxpayers like you.