IRS Expands Tax Relief Program for Indebted Taxpayers

People who are behind on their taxes may be happy to learn that the Internal Revenue Service has recently implemented a major expansion of its Offers in Compromise program. The program allows delinquent taxpayers to negotiate a settlement with the IRS for less than the amount they owe in back taxes if they cannot afford to pay the full amount due.

With many Americans still reeling from the financial effects of the Great Recession, more and more taxpayers have expressed a need for tax relief in recent years. According to a recent report from Reuters, the IRS received 59,411 new requests for Offers in Compromise in 2011, an increase of 28 percent from just four years earlier.

In response to the realities of today's difficult economy, the IRS has loosened the eligibility requirements for the Offers in Compromise program to allow more taxpayers to participate. Other changes to the program will allow participants to pay off their debts more quickly than in the past, often while making smaller payments than would have been required under the old guidelines.

To qualify to participate in the Offers in Compromise program, a taxpayer must be unable to pay the full amount due on his or her back taxes. When evaluating a request for an Offer in Compromise, the IRS will evaluate a taxpayer's income and assets to determine his or her ability to pay. Depending on the circumstances, according to the new guidelines, participants in the program will generally pay off their debts over a period of a few months to as much as two years.

In addition to Offers in Compromise, there are other options available to help people who cannot afford to pay their back taxes. For instance, some taxpayers may be able to negotiate a payment plan that allows them to pay off their tax debts gradually over a specified period of time. In cases of severe financial hardship, it may even be possible for a distressed taxpayer to receive temporary relief by having his or her tax liability declared currently uncollectable. For a more thorough discussion of your options when faced with an unmanageable tax debt, contact a knowledgeable tax settlement attorney in your area.