How does tax relief work?

IRS tax relief works by matching what you owe to one of a few IRS options. Each one has its own rules, and none of them makes the debt go away by itself. This page is general information, not legal advice.

A payment plan

The IRS says a "payment plan is an agreement with the IRS to pay the taxes you owe within an extended timeframe." IRS payment plan fees covers the setup costs and who can apply online.

An offer in compromise

The IRS offer page says an offer in compromise "may allow you to settle your tax debt for less than the full amount you owe if you can't pay in full or doing so would cause financial hardship." It adds: "We consider your income, expenses, and asset equity." How long an offer in compromise takes covers the timing.

Penalty relief

The IRS penalty relief page says: "You may qualify for penalty relief if you tried to comply with tax laws but were unable due to circumstances beyond your control."

A delay in collection

If you can't pay because of financial hardship, the IRS says it "may temporarily delay collection until your financial condition improves." It also says: "You still owe the full amount of your tax debt." That is on the IRS page about delaying collection.

What keeps growing

On a payment plan, and during a delay in collection, the IRS says: "Penalties and interest continue to accrue until your balance is paid in full." Paying part of the balance now still lowers what builds up.

Which one fits you

That depends on what you owe, what you earn and what you own. What to do when you owe the IRS and can't pay puts the options in order, and what exactly is tax relief? explains the term.