You’re Too Sick to Work But Owe the IRS a Lot of Money: What Are Your Options?

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From sick days to SSDI, many Americans miss out on much-needed income due to severe medical conditions. This can impart significant financial stress, particularly for those already dealing with tax debt. Thankfully, the IRS offers options such as penalty relief and installment plan adjustments to help taxpayers focus on recovery.

Adjusting Your Installment Plan

The IRS is surprisingly lenient about changing existing installment plan agreements. This actually makes sense — low payments are better than none at all. Depending on your current payment amount, income, and other circumstances, you may be able to secure dramatically reduced installments while sick. Your chances of doing so are far higher if you enter negotiations equipped with ample evidence of your current situation.

The IRS typically mandates a fee for installment payment adjustments, but this can be waived or reimbursed for select taxpayers. Otherwise, the fee may still prove worthwhile if it allows you to gain the relief of significantly lowered monthly payments.

Penalty Relief Due to Reasonable Cause

If you recently failed to file a tax return or pay up on time, your mistake may be excused — but only if you are able to establish a reasonable cause. The IRS assigns a variety of circumstances to this category, including the incapacitation or serious illness of the taxpayer.

You’ll find it much easier to secure penalty relief if you submit ample documentation, including hospital records or letters from physicians. Keep in mind, however, that you and the IRS may differ in your definition of a ‘serious’ illness.

Don’t let medical concerns get in the way of resolving your tax debt. While you focus on your recovery, the team at the Highland Tax Group can negotiate with the IRS on your behalf. To learn more about our tax resolution services, call 720-398-6088 or contact us online.