5 Easy Ways to Achieve Tax Debt Reduction

tax debt reduction

5 Tips for Tax Debt Reduction

Everyone is required to file a tax return form once a year, and sometimes people pile on tax debt until they are “up to their necks” in it. If this sounds like you, then you will need to take certain steps towards tax debt reduction.

Unfortunately, many people are at a complete loss when it comes to resolving their tax debt issues. There are a couple of easy steps, discussed below, and all of them are more pleasant than the alternative of having to go to prison for tax evasion!

Hardship Agreements

A common reason for why people decline to file tax returns is because of financial hardships, which can occur for a number of reasons. If you find yourself in such a situation, you may be able to qualify for a hardship agreement by filling out IRS Form 443A.

The IRS will then look into whatever is preventing you from paying up and calculate how long it will probably last. If they approve the form, they will order a halt to any further collection activity from you for the time being. However, you will still have to pay those taxes eventually, unless the hardship lasts for more than ten years.

Compromise Offers

A compromise offer is the form of tax debt reduction that you turn to if you owe too much to be able to pay it all within a reasonable amount of time. In order to convince the IRS that such is indeed the case with you, you will need to file the necessary paperwork and pay a fee of $150 for the task of reviewing.

You will also have to make a reasonable offer if you want the IRS to even consider it. If they do, then the next thing to do is to fill out Form 656 and return it with all necessary attachments plus the amount of payment due.

Penalty Abatement

As with all cases in which money is owed, taxes call for payment of interest when not paid on time. Another tax debt reduction plan, called penalty abatement, is appropriate for cases when you have a valid reason—again, natural disasters and acts of terrorism are perfectly good ones. For this you fill out Form 843, and the IRS will reduce or even eliminate the amount of money you owe in penalties.

Hire a Good Lawyer


Hiring the right tax lawyer can spell the difference between winning and losing a battle with the IRS. The local bar association can recommend one, and the yellow pages will also help. It is essential, to be proactive in this area. Finding a tax lawyer even before you need one is important, so that person will know your financial situation before the IRS comes after you.

You may not be able to afford a lawyer’s fees. (No surprise there, given the financial difficulties that you may be currently struggling with!) In that case you will need a free attorney. To find one, contact your local legal aid office and ask whom they would recommend. Also seek aid from an IRS office near you. If possible, try and enlist one who has previously worked for the IRS or has been hired for many cases.

Where to Go on the Web

Tax debt reduction is also available on the Web. One place that you can go to is Tax Relief Source. The first thing to do is to fill out the form there, which includes the amount of money you owe, whether it is on the federal or state level, and your primary tax problem.

The last box consists of a pull down menu with nine options, among them “assets seized,” “wage garnishment,” “innocent spouse,” and “bank account levy.” The company provides much advice on how proceed, including how to get a competent tax lawyer and how to get wage garnishments and bank account levies stopped. The clients who have used the services of this company have testified to its effectiveness in keeping the IRS out of their lives.

These tips will most definitely help you during your tax debt reduction journey.