Federal Tax Relief

Another kind of federal tax relief is the Installment Agreement. With this agreement, the individual may pay the full or a lower amount after a thorough review of his finances has been completed, but instead of paying all at once he will make monthly installments until the debt is cleared. Again, the amount paid with each installment will be based on the individuals financial situation and ability to pay.

There are different kinds of federal tax relief, each being assigned to specific cases when deemed necessary. To determine the type of relief one may be eligible for, the tax officials will do a thorough check of the persons financial situation and tax payment history. Upon gathering and researching all appropriate information, they can choose to offer one of four main types of tax relief.

The first type of federal tax relief is known as an Offer in Compromise agreement. This where the indebted person agrees to pay a lower amount than previously owed. The individual will work with the government to decide upon an amount that is fair to both parties, with the final amount being based primarily on income and ability to pay. This amount must be paid in full upon mutual agreement or settlement.

For those who simply have no way of paying any amount of their tax debt, tax officials may give them a relief known as Not Collectible Status. This federal tax relief option is usually reserved for those who have lost their jobs, become disabled, or have otherwise become financially unable to make even small payments without enduring tremendous financial hardship.

Spouses and ex-spouses of delinquent tax payers are also offered federal tax relief when they are being forced to make payments on a tax debt that is not their own. Although in many locations a married couples finances and debts are filed together, in some cases one spouse is in no way at fault for the tax debt and is eligible for the Innocent Spouse Program. This clears the non-faulted party of any debt to the federal government that was incurred by the guilty spouse.