Under some conditions, taxpayers are able to have their tax debt partly forgiven. When the IRS decides to forgive a tax debt, the current financial condition of a taxpayer is reviewed. After all, the IRS cannot collect more than a taxpayer can actually pay. So, if a collection action by the IRS would cause a taxpayer to experience a financial crisis, the agency cannot collect the back taxes.
An Offer in Compromise
To obtain tax relief in Brooklyn then, a taxpayer who only has the financial resources to pay only part of his tax debt can apply for a payment plan known as an Offer in Compromise, or OIC. In accordance to the monetary capacity of the taxpayer, the IRS substantially reduces the total tax debt to a manageable amount. This reduced amount can be remitted in a lump sum or in established monthly installments.
Factors That Are Considered
To make it simpler to receive assistance with Brooklyn tax relief or for taxpayers to use an OIC, the IRS makes several stipulations, depending on each person’s unique set of circumstances or facts. Items that are considered include the taxpayer’s ability to pay, their income, expenses, and asset equity.
The Taxpayer Must Be Current with His Tax Filings
The tax relief option should not be considered before a taxpayer reviews all the payment plans. Also, before the IRS can consider an OIC offer, the taxpayer must be current with all his filing and payment requirements. For example, a taxpayer is not eligible for an OIC if he or she is currently initiating bankruptcy proceedings.
The initial payment for this tax relief alternative will vary based on the taxpayer’s offer and the payment option they select. For example, if the payer submits a lump sum amount, he or she needs to remit an initial payment of 20% with his OIC application. When they receive a written acceptance, they can pay the remainder of the balance, usually in five payments or fewer.
