Owing back taxes to the IRS is a situation that many individuals and businesses find themselves in — sometimes due to financial hardship, sometimes due to oversight, and sometimes because the tax system’s complexity made compliance harder than expected. Left unaddressed, a tax liability can compound significantly through interest and penalties, making the eventual resolution far more costly than timely compliance would have been. The IRS offers several programs designed to help taxpayers resolve unpaid tax obligations, and understanding which options are available is the first step toward getting back into compliance.
Mandelbaum Barrett PC attorney Steven Holt published an article for ROI-NJ on IRS tax amnesty programs. Holt practices in the firm’s tax law practice, advising individuals and businesses on tax compliance, IRS resolution matters, and related tax planning. His ROI-NJ article reflects the firm’s commitment to helping New Jersey taxpayers understand the legal tools available to resolve tax disputes and restore their standing with the IRS.
Key IRS Tax Resolution Programs
The IRS maintains several programs that allow taxpayers to resolve outstanding tax liabilities, often on more favorable terms than straightforward collection. The Offer in Compromise program allows qualifying taxpayers to settle a tax debt for less than the full amount owed when full payment would create financial hardship or there is genuine doubt about the amount owed. Not every taxpayer qualifies — the IRS evaluates ability to pay, assets, and income in determining whether to accept an offer.
Installment agreements allow taxpayers who cannot pay in full immediately to pay their balance over time in monthly installments. The IRS offers several types of installment arrangements, including streamlined agreements for qualifying balances that generally do not require detailed financial disclosure. Currently not collectible status is available for taxpayers who can demonstrate that collection would create extreme hardship — the IRS suspends collection activity, though interest and penalties continue to accrue.
Penalty abatement programs, including first-time penalty abatement and abatement based on reasonable cause, allow taxpayers to request relief from certain penalties for failure to file or failure to pay. For taxpayers with a history of compliance who experienced a one-time failure, first-time penalty abatement can eliminate substantial penalties and reduce the overall balance owed.
Voluntary Disclosure and International Tax Issues
Taxpayers with unreported foreign financial accounts or international tax issues have access to the IRS Voluntary Disclosure Program, which provides a pathway to come into compliance on undisclosed foreign assets while reducing the risk of criminal prosecution. The terms of disclosure programs have evolved over time, but the core principle remains that voluntary disclosure before the IRS contacts the taxpayer is treated more favorably than disclosure made in response to an audit or investigation.
According to the Internal Revenue Service, various relief and resolution programs exist for taxpayers facing different circumstances. An experienced tax attorney can evaluate the specific facts and recommend the approach most likely to produce the most favorable resolution.
Contact Mandelbaum Barrett PC for Tax Law Guidance
If you have questions about IRS tax resolution programs, unpaid taxes, penalty abatement, or other tax law matters in New Jersey, the tax law team at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help individuals and businesses navigate IRS issues and find the most effective path to tax resolution.