With the commencement of a new year comes the time for Salem residents to start thinking about taxes. Those who are deeply in debt may count tax debts and penalties among their liabilities. The perception of the Internal Revenue Service as being unmerciful in cases of unpaid taxes notwithstanding, there may be methods to achieve tax debt relief that will not hinder one’s ability to pay his or her other debts.
The IRS offers programs to assist those who, due to a high back-tax obligation or having been assessed a number of penalties, are unable to realistically settle their debts within the current year. These include:
- An Offer in Compromise: This method may allow one to reach to reach a settlement on his or her tax debt with the promise to immediately pay in full.
- Payment installments: If one owes less than $50,000, he or she may qualify to pay his or her tax liability over time.
- Penalty relief: This program can forgive unemployed individuals of their penalties. To qualify, one cannot owe more than $50,000 in tax, and cannot list an income exceeding $100,000 if filing as single or $200,000 if married and filing jointly.
For those who do not qualify for any of the tax debt relief programs offered through the IRS, bankruptcy may be their best option. Income taxes may be included in a Chapter 7. However, the debts must be at least three years old, and one has to have had filed a tax return for those years. The tax debt must also meet the requirements of the “240-day rule,” which according to the American Bar Association means that the debt must have been assessed 240 days before the bankruptcy filing date in order to be included.
