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Is It Really Possible to Reduce Your Federal Tax Debt?

When you owe federal tax debt, you might feel like you would do just about anything to get rid of it. However, you also probably have an understandable mistrust of companies offering you the ability to reduce your tax debt–and possibly get rid of it entirely. Although it is good to be wary of these promises, there are legitimate IRS programs in place that do remove some or all of your tax debt, saving you money.

With the Fresh Start initiative, it is easier for taxpayers to negotiate with the IRS for a more affordable way to pay off their tax debt. For some, this might just be an Installment Agreement, which is a payment plan with affordable monthly payments over a period of time, typically five years. Many taxpayers have also taken advantage of some of the other tax debt relief programs offered by the IRS.

Penalty Abatement

The penalties on your tax debt quickly add up, and for many, that is where it becomes an unmanageable situation. You might have penalties for unpaid taxes or unfiled tax returns. If you meet certain criteria, it is possible to reduce or even remove these penalty fees. The main criterion is simply that you had reasonable cause for missing the deadline. First-time offenders have an easier time of meeting the criteria than those who have been late to file and/or late to pay in the past. Typically, this does not include any interest that accrues. For many, simply removing the penalties from their tax debt brings the total back down to an affordable amount.

Offer In Compromise

An Offer in Compromise is another way that you can significantly reduce your tax liability. This settlement program allows individuals to negotiate with the IRS to pay a one-time payment much lower than their tax debt. They pay this amount, and the rest of the tax debt is forgiven. These offers do exist; however, it is important that you recognize that they are the most difficult IRS tax relief settlement option for which to be approved. There are very strict criteria that must be met. Since the Fresh Start Initiative, more people are approved than in the past. However, that number remains at about 40 percent of applicants.

File a Return

For many taxpayers, simply filing a return is the way to significantly reduce their federal tax debt. When a return is not filed, the IRS submits what is known as a Substitute for Return (SFR). The IRS uses what information they have for your income to determine your tax liability and only give you the standard deduction. This typically leads to you owing more than you should. When you replace it with an actual tax return that includes all your information, including all deductions and credits for which you qualify, you typically owe much less. Many taxpayers find they actually are owed a refund!

Other Programs

There are other tax relief settlement programs offered by the IRS, such as the Innocent Spouse Relief and Currently Not Collectible, that also help taxpayers find ways to reduce their tax burden and once again get compliant with the IRS.

Why Use Tax Professionals?

If these programs are offered by the IRS, you might be wondering why you need to consult tax relief experts like those at Fidelity Tax Relief. The answer is that you benefit from the company’s experience and relationship with the IRS. Because tax professionals have handled numerous cases for clients, they know the steps you need to take to apply for one of these programs. They also can assess your situation and choose the right tax relief scenario for you. Furthermore, they use experience to guide you to determine the right number to negotiate with, improving your chances of approval. For an Offer in Compromise, this could make all the difference.

It is not a marketing scheme. It is possible to significantly reduce your federal tax debt. However, that does not mean that there are not scammers out there looking to take advantage of your situation. A reputable tax relief company does play an invaluable role in helping you to secure a settlement with the IRS to get you back on track with your finances.

At Fidelity Tax Relief, we will work closely with you to find the right settlement option for you. We also have a relationship with the IRS, so we can talk directly with an agent rather than getting the runaround. One of the biggest benefits of using our tax professionals is simply the reduction of hassle and stress. We work on your behalf with the IRS to negotiate a solution, so you do not have to. If you are ready to discuss your situation and see if working with us to get a tax debt relief program in place is the right move for you, call us at 877-372-2520 today.

Time is running out!​

When you owe money on your federal taxes, one of the common collection actions taken is IRS tax garnishment, typically on your wages or salary. Wage garnishment can leave a person with very little money on which to live. 

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