Tax debt can be overwhelming, and if you’re dealing with a back tax issue, you’re not alone: Currently, over 11 million Americans owe a total of more than $125 billion in back taxes, and that number is only increasing. 

Fortunately, various relief programs are available to help alleviate the burden. These options differ based on the type of debt you owe, whether it’s state, federal, personal income, or business-related. 

Understanding the available relief options can make a significant difference in managing your financial situation and getting back on track. Let’s break down the types of tax relief that can assist individuals and businesses alike.

[Remember: You never have to tackle your complicated tax situation alone. In addition to the relief programs outlined here, you also have the option of contacting Traxion Tax today to discuss a customized plan for resolving your tax debt once and for all. To get started, call (303) 376-9797 now.

State Tax Relief

State tax debt arises when you owe taxes to the state government because of unpaid prior income taxes or other taxable financial event. Because each state has its own tax laws, the first step in resolving state tax debt is understanding your state’s specific process for handling delinquent taxes, penalties, and interest.

Most states offer a variety of relief options similar to federal programs, such as installment agreements or offers in compromise, which allow taxpayers to settle their debt for less than the full amount owed – but only if they qualify. Some states may also have specific hardship programs for those facing severe financial challenges, including those who have lost their job or who have experienced a medical crisis.

Each state also typically has an appeals process, so if you disagree with your state tax assessment or the amount owed, you can engage with the state tax agency promptly to explore your options. Taking advantage of state tax relief can prevent further penalties, interest, and even garnishments on wages or bank accounts.

Federal Tax Relief

Federal tax relief focuses on taxes owed to the IRS and is often the most well-known area of tax debt relief. The IRS offers several programs designed to help taxpayers manage and resolve their outstanding federal tax debts. Here are some common options:

• Installment Agreements: If you cannot pay your tax debt in full, the IRS may allow you to make monthly payments over time. There are both short-term and long-term installment plans, depending on how much you owe and your financial circumstances.

• Offer in Compromise (OIC): This program allows qualifying taxpayers to settle their tax debt for less than the full amount owed. However, approval for an OIC is challenging, as the IRS will only accept the offer if they believe the amount is the most they can reasonably expect to collect based on your income, expenses, and asset equity.

• Currently Not Collectible (CNC) Status: If you are facing severe financial hardship, you may be able to request CNC status, which temporarily halts IRS collection activities. While interest and penalties may still accrue, you won’t be subject to wage garnishments or asset seizures.

Federal tax relief programs provide an essential lifeline for many taxpayers facing significant IRS debt, and working with a tax resolution expert can help ensure you explore all available options.

Income Tax Relief

Income tax debt can occur at both the federal and state levels, and relief options are available for individuals who owe back taxes on their earnings. If you’re unable to pay your income taxes when they’re due, it’s crucial to act swiftly, as penalties and interest can escalate quickly.

Some potential solutions for income tax relief include:

• Payment Plans: As mentioned earlier, installment agreements allow you to break up the payment of your tax debt over a period of time. These plans can reduce the immediate financial strain and give you the flexibility to manage your other expenses.

• Penalty Abatement: If you’ve incurred penalties due to late filing or late payment, you may be eligible for penalty abatement. This relief is often granted for taxpayers who can demonstrate reasonable cause for their delinquency, such as a medical emergency or natural disaster.

• Tax Settlements: Depending on your financial situation, you may qualify for an offer in compromise to settle your income tax debt for less than what is owed.

It’s important to consult with a tax professional to assess your income tax debt and find the best solution for your situation. That’s why Traxion Tax is here – schedule a free consultation with a tax expert now by visiting this page. 

Business Tax Relief

For business owners, tax debt can create significant challenges, affecting cash flow, operations, and even the viability of the company. Business tax debt typically includes payroll taxes, corporate income taxes, and sales taxes.

The IRS and state tax agencies offer business tax relief programs, such as:

• Employment Tax Installment Agreements: If you owe back payroll taxes, the IRS may allow your business to enter into a payment plan. It’s crucial to stay current with future tax filings and payments while repaying your past-due amounts.

• Penalty Abatement: Like individual taxpayers, businesses may qualify for penalty relief under specific circumstances.

• Trust Fund Recovery Penalty: For businesses that have withheld payroll taxes from employees but failed to pay them to the IRS, owners and responsible parties may face personal liability. In these cases, seeking relief through installment plans or offers in compromise may be critical.

Business tax relief programs can help ensure that your company continues to operate smoothly while resolving past tax obligations.

Emergency Tax Levy Relief

A tax levy occurs when the IRS or state tax authority seizes your assets—such as bank accounts, wages, or property—to satisfy unpaid tax debt. Levies are serious and can cause immediate financial harm, but relief options exist to help you address the situation.

These include:

• Release of Levy: In some cases, the IRS may release a levy if it causes an undue financial hardship. To request a release, you must provide evidence of your financial situation and explore other tax relief programs like installment agreements or offers in compromise.

• Levy Appeal: Taxpayers can also appeal a levy through the IRS’s Collection Due Process program, which can temporarily halt the levy while your appeal is considered.

Responding promptly to a tax levy is essential, as delays can result in the loss of critical financial assets. Working with a tax professional can help you navigate the process and find the best route to relief.

The Value of Getting Help

Tax debts don’t happen overnight. It can take years for a tax problem to materialize into a full-blown crisis, and every case is different.

As such, the best option for resolving each tax debt situation is similarly unique. This is why consulting with a tax debt resolution expert can be the single best decision you make on your path to peace of mind.

Traxion Tax provides the guidance and expertise you need to explore relief programs and achieve a resolution that works for you, regardless of how much you’ve owed, to whom, and for how long. 

Learn more about how we can help you by calling (303) 376-9797 now.