What Is Tax Relief?
Tax relief is any program or strategy that helps reduce, manage, or eliminate tax debt.
While it doesn’t always erase your full balance, it can make repayment more affordable, stop aggressive collection actions, and provide a pathway toward financial stability.
How to Get Tax Relief Through IRS Programs
The IRS offers several types of relief, depending on your financial situation:
- Installment Agreements: Set up monthly payments to resolve your balance over time.
- Offer in Compromise (OIC): Settle your tax debt for less than the full amount owed if you can demonstrate limited ability to pay. Learn more about how the IRS calculates your Reasonable Collection Potential in our detailed guide.
- Penalty Abatement: Request removal of penalties under first-time abatement or reasonable cause rules. See our blog on IRS Penalty Abatement: How to Remove IRS Penalties for step-by-step details.
- IRS Fresh Start Program: An IRS initiative that expanded access to these programs. Find out who qualifies for the IRS Fresh Start Program in our eligibility guide.
Steps to Apply for Tax Relief
- File All Tax Returns: The IRS won’t approve relief if you’re not current.
- Review Your Financial Situation: Gather pay stubs, bank records, and expense details.
- Determine the Right Option: Decide whether a payment plan, OIC, or penalty abatement best fits your circumstances.
- Submit the Application: Use the appropriate IRS forms (e.g., Form 9465 for installment agreements, Form 656 for OIC).
- Provide Documentation: Support claims of hardship with medical bills, job loss records, or other evidence.
When Professional Help Is Recommended
Tax relief programs can be complex, and small mistakes may cause delays or denials. A licensed tax professional can:
- Evaluate which IRS program best fits your case.
- Ensure your financial details meet IRS requirements.
- Represent you in negotiations, especially when calculating your RCP or preparing a penalty relief request.
Working with an expert can improve your chances of approval and reduce stress during the process.
Exploring the IRS’s tax relief options can help you find the right path forward, but success often depends on the details of your financial profile.
That’s why understanding how the IRS calculates your Reasonable Collection Potential is so important.
By knowing how equity in your assets and your future income affect the outcome, you’ll be better prepared to choose the program that fits your situation and increases your chances of approval.
While this discussion covered the broader steps involved in seeking IRS tax relief, the next post will dive deeper into the specifics of how to submit an IRS penalty abatement.
The next article will explain how reasonable cause and first-time abatement programs work, along with examples of when the IRS may grant penalty relief. Be sure to read it if you want a more detailed look at reducing IRS penalties.