Not only you owe the taxes to the government, but also the interest and penalties eventually for what you did not pay on time. To help you deal with such cases, government has introduced tax debt relief programs for taxpayers. This helps you to pay back your tax bills that you were unable to pay.

Here are some tax debt relief options that you can choose for tax settlement with the Internal Revenue Service (IRS).

1. Short-term and long-term installment agreements

Under short-term payment plans, you can pay back your tax debt within 120 days if your total tax debt, including fees and interest, do not exceed $100,000. In long-term payment plans, you get more than 120 days to pay back your debts if your tax debt is $50,000 or less including fees and interest. These tax debt settlement plans can help you avoid tax debt collection actions like wage garnishments.

2. Innocent spouse relief

If you filed a joint tax return with your spouse and there was an error that underestimated the amount of taxes you owe, then you can apply for innocent spouse relief. You can send Form 8857, within two years of IRS initial collection, to request IRS for relief from your tax liabilities, plus related penalties and interest.

3. Offer in compromise (OIC)

An Offer in Compromise (OIC) is another form of tax debt relief which allows you to settle your tax debts for less than the full tax amount you owed. The IRS will decide to grant OIC based on your income, expenses, asset equity, and ability to pay.

4. Currently not collectible (CNC)

The IRS can temporarily label you tax paying abilities as Currently not Collectible if you prove that financially you are not in a condition to pay your debts at this time. The IRS will tell you when you are expected to pay.