If you’re behind on your tax debt, the IRS has a range of options that can help you. But to get into these programs, you have to apply. That means filling out forms.
Paperwork is a grueling but necessary part of the tax relief process. To get the best results for your situation, you need to fill out the forms completely and accurately. For help, contact us at Damiens Law today. Or check out the following resource for links to IRS tax relief forms and instructions.
Forms for IRS Installment Agreements
To request monthly payments on your tax debt, you should file Form 9465 (Installment Agreement Request). As of 2023, if you owe less than $50,000 and can pay off the balance within six years, you can file this form or apply online. If you owe over that amount or need more time to pay, you should file this form plus Form 433-F (covered below).
Installment agreements are relatively easy to get. But that doesn’t mean they’re your best option. Unfortunately, almost half of people default on their IRS payment plans, and that can lead to a worse situation. To ensure this is the right option for your situation, you may want to consult with a tax attorney.
Forms for Partial Payment Installment Agreements
If you can’t afford to pay off the tax debt by the end of the collection statute (the last date the IRS can legally collect the debt), you will also need to file Form 433-F with your payment plan request. The IRS will use the info on 433-F to determine if you qualify for a partial payment installment agreement (PPIA).
With a PPIA, you make a monthly payment until the collection period expires. Then, the IRS settles the rest of the debt. This can save you a lot of money, but the agreement isn’t set in stone. The IRS checks your financial situation every couple of years, and if your finances improve, you may need to make higher payments or pay in full.
Forms for Short-Term Payment Extension Due to Undue Hardship
Use Form 1127 to ask for more time if you can’t afford to pay the tax due on a tax return or from an audit. On this form, you will note the type of tax and then, you’ll explain why forcing you to pay would cause financial hardship.
For example, you may say that paying the tax bill would prevent you from paying your home utility bills or your mortgage. You may explain that the tax bill would force you to shut your business. The IRS reviews requests on a case-by-case basis.
You can request up to six months for tax due from a return. If the tax is due to an audit, you can request up to 18 months, unless you failed the audit due to fraud. The IRS will give you more time in rare situations.
Check out more details about — Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship).
Forms for IRS Offer in Compromise
An offer is when the IRS lets you pay off your tax debt for less than you owe. People can save intense amounts of money through this program, but it’s hard to qualify. You should always work with a pro who vets your situation fully before promising that you can get this type of relief.
To apply, you need to complete Form 656-B (Offer in Compromise Booklet). This booklet contains instructions and the following three forms:
- Form 656 (Offer in Compromise)
- Form 433-A OIC (Collection Information Statement for Wage Earners and Self-Employed Individuals)
- Form 433-B OIC (Collection Information Statement for Businesses)
You use Form 656 to explain how much you owe and make your offer to the IRS. Then, you use the other forms to substantiate your financial situation. If you’re applying for relief on business taxes, you will probably have to fill out both forms, and your partners may also need to fill out their own 433-A forms.
Penalty Abatement Request Form
IRS penalties can add a lot to your tax bill. Depending on the penalty, they can double many bills. The good news is that you can apply for penalty abatement with Forms 843 (Claim for Refund and Request for Abatement).
Form for Currently Not Collectible Status
To request currently not collectible status, you need to make a written or verbal request to the IRS. Then, you should file Form 433-F or Form 433-A and/or Form 433-B.
The 433 forms are financial statements. You list out your income, bills, everything you own, and your debts. Then, the IRS reviews this information to see if you qualify for CNC status. If so, the agency won’t try to collect your tax debt. However, they will revisit the situation periodically to see if anything changes. If you don’t have much money and you’re trying to get the IRS off your back, this can be a great option.
Innocent Spouse Relief Form
What if the tax debt is due to your spouse? In usual situations, both spouses are responsible for the tax due when they filed jointly. But in extenuating circumstances, the IRS will separate the tax bill. This is called innocent spouse relief.
To qualify, you typically have to show that you didn’t know about the income related to the tax bill and that there was no reason for you to know. To apply use Form 8857 (Request for Innocent Spouse Relief).
Note this is an extremely detailed form, and it has places where you can record information about abuse or coercion. If domestic violence is involved in your situation, you can mark the form to alert the IRS employees so they can handle your case with additional empathy. However, it’s certainly not required to disclose this on your form.
Injured Spouse Relief Form
You should apply for this program if the IRS took your tax refund for your spouse’s debts. Use Form 8379 (Injured Spouse Allocation) to apply.
To explain, say your spouse owes child support or back taxes from a return filed before you were married. The IRS will take your tax refund to cover the debt. To get your part of the refund, you need to apply as an injured spouse.
Forms to Appeal Collection Actions
If you disagree with a lien or levy from the IRS, you can appeal by filing Form 12153 (Request for a Collection Due Process or Equivalent Hearing). You only have a very limited amount of time to request a CDP, and if you miss the window, you can use this form to request an equivalent hearing.
The hearing lets you explain why you disagree with the collection action. But you also need to propose alternatives. For instance, you may say that a lien will prevent you from taking out a loan against an asset. Then, you may ask the IRS to subordinate its lien so that you can take out a loan and use the money to pay your bill.
You can use Form 9423 (Collection Appeal Request) to appeal collection actions. For example, if an IRS employee says they are going to garnish your wages, you can file this form to protest the garnishment. You must ask to speak to the employee’s manager first. Be very careful when filing this form. You can’t appeal the decision.
To learn more about your appeal rights, you can look into Publication 1660 (Collection Appeal Rights) or talk directly with a tax professional.
Forms to Remove Tax Liens
There are a few different forms that you can use to ask the IRS to withdraw, subordinate, or discharge a tax lien. All of these concepts have unique applications, and a tax attorney can direct you to the right option for your situation.
To ask the IRS to withdraw a tax lien, you should file Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien). You can use this form in the following situations:
- The lien was filed early.
- The IRS didn’t follow the right procedures when filing the lien.
- You’re making payments, and your payment plan agreement didn’t say that a lien would be filed.
- You will be able to pay the tax more easily if the IRS withdraws the lien.
- Withdrawing the lien is in the best interest of you and the government.
Then, provide a written explanation to back up your request.
To request a lien subordination, file Form 14134 (Application for Certificate of Subordination of Federal Tax Lien). You should use this form if you want the IRS to put its lien behind another creditor. For example, this often applies if you want to use an asset as collateral to pay your tax debt.
For lien discharge, you should use Form 14135 (Application for Certificate of Discharge of Property from Federal Tax Lien). This is when the IRS removes a lien from a specific piece of property.
Form to Request Help from the Taxpayer Advocate Service
The Taxpayer Advocate Service is an independent part of the IRS, and they can help when you can’t fix an issue through the regular channels. They can also intervene if an IRS employee is not respecting your rights. To get their help file Form 911 (Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)).
Get Help With IRS Forms
You don’t want to just file tax relief forms blindly. Instead, you need to ensure that you’re applying to the optimal program for your situation. Then, you need to ensure that you fill out the form as accurately as possible.
Some details are straightforward, but many of these forms require written explanations. A tax attorney who understands the tax code and what the IRS wants to hear can help you create the strongest possible argument.
The IRS website notes the amount of time required for each of these forms. It breaks down the process into studying the tax code, gathering information, and filing the form. With many of these forms, the IRS estimates at least eight hours and sometimes longer. However, in a lot of cases, the agency really underestimates the amount of time it would take to learn about the tax code.
You don’t have to deal with this on your own. To get help filing these forms or making a plan to resolve your tax debt, contact us today. At Damien’s Law, we work hard to get our clients the best results possible. We can help you navigate the maze of IRS and state forms that you need to file to get relief.
