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What is IRS Tax Relief?

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  • Written By: John Lister
  • Edited By: Bronwyn Harris
  • Last Modified Date: 30 November 2016
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IRS tax relief is a phrase which refers to arrangements the Internal Revenue Service makes with taxpayers to ease their situation. This can include writing off some or all of the tax owed or offering more flexible ways to pay off the tax liabilities. In some cases, a taxpayer may be able to get an extension for submitting their tax return without penalty.

One form of IRS tax relief is an offer in compromise. This where the IRS agrees to a request from a taxpayer to settle their liabilities without paying the full amount. The procedure for the IRS approving or denying such claims is somewhat complicated and bureaucratic. As a general principle, it is more likely to be granted to people with a good history of paying previous tax bills who have been financially responsible but have now fallen into financial troubles, often for reasons beyond their control.

An installment agreement is where the IRS allows a taxpayer to settle their liabilities in full, but to pay over a longer period than is normally allowed. Such agreements will usually mean the unpaid debt continues to accrue interest and penalty charges, but the IRS will not continue the usual collection process for overdue debts. When making an installment agreement, it is particularly important to agree an affordable repayment schedule as missing a single repayment can start the collection process again.

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One of the less well-known forms of IRS tax relief is that offered to victims of disasters. When the President declares an area as having become a disaster zone, the IRS will often give taxpayers longer to submit their annual tax returns to take account of the upheaval they may have suffered. Where citizens have suffered property damage in a disaster, the IRS may be required to reduce their tax bills to help make up some of the costs of fixing the damage.

You should take care when dealing with a company offering to help you obtain IRS tax relief. In many cases, such companies can offer a valuable service which saves you time and effort. However, you should check costs carefully as they may be very high; in some cases you could achieve the same results by dealing directly with IRS officials. You should be particularly wary of any firm guaranteeing to save you money on your tax bill by obtaining relief. It is usually not possible to guarantee such a result.

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jholcomb
Post 3

There are also special relief programs based on certain economic situations. For instance, not everyone knows that forgiven debt is considered income, and if you do a short sell on a house, for instance, you can run up quite a tax bill.

How so? Well, imagine that you have a mortgage for $300K but the value of your house has dropped. You need to sell your house, but you can only get $250K for it. Your lender recognizes that you can't pay your mortgage anymore and that you don't have $50K lying around, so they agree to accept the $250K. You take a ding to your credit and move on.

*But* under normal circumstances, you would then owe

taxes on that whole $50K! As you can imagine, that's quite a pinch for people. So in some years, Congress has passed exceptions to this rule and people doing short sales, foreclosures, deeds in lieu, etc. have not had to pay taxes on the forgiven debt.
MissDaphne
Post 2

@anon118152 - Your aunt should contact the person who prepared her taxes for more information. Is she sure that she is expecting a refund?

You don't say whether you are in the US, but that's what my information is for. Assuming that your aunt really is due a refund and that the person did file her tax return, your aunt can contact the IRS to find out the status of her refund.

The website is called "Where's My Refund?" To use it, your aunt will need to know her Social Security number, her filing status (meaning single, married filing jointly, etc.) and the exact amount of the refund she thinks she is owed. She'll have to wait 72 hours after e-filing or four full weeks after filing a paper return. Hope she gets her check soon!

anon118152
Post 1

my aunt wants to claim her tax refund. she asked someone to file for her tax refund but until now she hasn't received any refund? please enlighten?

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