Quick answer: yes, IRS debt relief is possible. It is certainly not a given, and obtaining tax debt relief will require prompt, open communication between the taxpayer and the IRS, but there are various avenues by which taxpayers may receive consideration and assistance in settling tax debt.
The most important rule in obtaining IRS debt relief—or any kind of debt relief, for that matter—is to clearly and promptly communicate with the IRS. If you have a big tax bill and you know you can’t pay it, you may be tempted to delay filing—don’t! It’s not against the law to not have the money to pay the IRS, but it is against the law to fail to file a timely return. If you are in this situation, file your return and attach a notice that you lack the funds to pay.
You may also request information from the IRS about how you can remain in compliance. The IRS will treat this very differently—and more favorably—than a failure to file. You can also send in Form 9465, Installment Agreement Request, with your return—or, you can allow the IRS to send it to you when they receive your notice that you are unable to pay.
Talking with the IRS
You may wish to contact the IRS by phone, fax, or email in order to discuss IRS debt relief. You may also wish to go in person to a local office of the IRS to discuss your case in person. Despite the negative image often portrayed, IRS agents will usually be helpful and courteous in assisting taxpayers who wish to remain in compliance while seeking IRS debt relief.
However you decide to contact them, they can help you work out a plan to avoid garnishment of wages, loss of your home or retirement assets, or other unpleasant possibilities. If you do set up an installment plan, it is very important that you closely adhere to the terms—if the plan is revoked, the IRS will not usually reinstate it.
Enrolled Agents and IRS Debt Relief
Enrolled agents are practitioners licensed by the federal government to represent taxpayers before the IRS. An enrolled agent can help you develop a plan for IRS debt relief and can then legally negotiate on your behalf with the IRS to help you implement your tax debt relief plan. It’s important to note that only enrolled agents, attorneys, and CPAs can represent taxpayers before the IRS. Other firms may offer advice and assistance, but they cannot legally represent you with the IRS in debt relief negotiations.
Offers in Compromise
If your financial situation indicates severe hardship, you may be able to obtain IRS debt relief by means of an offer in compromise—basically, a way to settle your obligation for less than the full amount. Offers in compromise are granted by the IRS on a case-by-case basis, however, and often it is in your best interest to seek the advice of an attorney, a CPA, or an enrolled agent before attempting an offer in compromise for IRS debt relief.