COVID-19 has hit many Americans hard in the pocketbook, so it’s no surprise that more than 20 million taxpayers now owe back taxes.
The IRS has responded by helping people in various ways, starting with the People First Initiative (PFI) announced in March 2020. This program suspended certain tax debt collection efforts from April 1 to July 15 of 2020, assisting many taxpayers who had payments looming.
In November, the IRS announced a follow-on to the PFI, the Taxpayer Relief Initiative, which expands and extends the PFI’s benefits. The initiative makes it easier for taxpayers to pay their debts over time and in ways that work best for them.
Check out the latest assistance efforts from the IRS to see if they might help you clear your back taxes with more ease.
Pandemic or no, the IRS offers both short and long-term payment plans for qualifying taxpayers who have tax debts. A short-term payment plan usually requires paying taxes in 120 days or less (though that has temporarily changed due to the pandemic, as we’ll discuss). A long-term payment plan, called an installment agreement, sets up a monthly payment amount aimed at clearing the tax bill in six years or fewer.
Individuals may be qualified for a short-term payment plan if they owe less than $100,000 in combined tax, penalties, and interest. They may be qualified for an installment agreement if they owe $50,000 or less in combined tax, penalties, and interest and filed all required returns. Businesses may qualify for an installment agreement if they owe $25,000 or less in combined tax, penalties, and interest and filed all required returns. Sole proprietors and independent contractors should apply for a payment plan as an individual.
In most cases, taxpayers can apply for payment plans and installment agreements online through IRS.gov.
The Taxpayer Relief Initiative helps taxpayers with tax debt by extending the time they have to pay off their debt, providing flexibility in various circumstances, easing paperwork requirements, and providing more control over the amount and timing of payments.
Here are key provisions of the Initiative:
Taxpayers who owe back taxes can get other forms of relief by contacting the IRS by phone or in writing. These options include:
The most important thing to do in trying to get effective tax relief is to communicate with the IRS immediately about your situation.
"If you're having a tax issue, don't go silent," writes Darren Guillot, IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. "Please don't ignore the notice arriving in your mailbox. These problems don't get better with time."
The IRS understands the challenging financial situation for many these days and is bringing flexibility to tax rules to ease the burden of those who owe back taxes. If you’re one of them, call the IRS right away, and then let Taxfyle help you get your taxes in order to ensure a future free of such stress.
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