My father owes nearly 200k in back taxes with no assets or cash to pay it off

Your parents are dealing with a really tough situation. Based on what you've shared, they might qualify for an Offer in Compromise (OIC) with the IRS. This is essentially a settlement where the IRS agrees to accept less than the full amount owed. The IRS looks at a taxpayer's ability to pay, income, expenses, and asset equity to determine if they qualify. From what you've described, your parents may have a good case since their income barely covers current expenses and they have health issues adding to their financial burden. Before pursuing an OIC, consider getting your parents on an Installment Agreement temporarily. This would at least keep the IRS from taking enforced collection actions while you explore options. The IRS has been more flexible with payment plans since COVID. Another option is requesting Currently Not Collectible status. If approved, the IRS temporarily stops collection activities because they recognize the taxpayer can't pay. The debt doesn't go away, but it gives breathing room. For a tax debt this size, you'll definitely need professional help, but you don't necessarily need to pay $4,000 monthly. Look into Low Income Taxpayer Clinics (LITCs) which provide free or low-cost representation. Also, some tax resolution firms work on payment plans that might be more manageable.

I was in a somewhat similar situation with a substantial tax debt (though not quite as large as your parents') after my business failed in 2020. After trying to navigate the IRS maze myself, I stumbled across this AI tax document analysis service called taxr.ai that literally saved me thousands. I uploaded all my parents' tax documents, IRS notices, and financial statements, and the system analyzed everything and gave me a detailed breakdown of options specifically for their situation. It identified several deductions they'd missed and an error in how the IRS had calculated some of the penalties! The service actually found legitimate grounds for reducing about 30% of what they claimed we owed. You might want to check it out at https://taxr.ai especially since it can analyze those complex depreciation issues which sound like they contributed significantly to your parents' tax problem. It also helps prepare the documentation for an Offer in Compromise if that's the route they end up taking.

Just wanted to update everyone. I decided to try taxr.ai after seeing the recommendation here, and wow - it was exactly what we needed! The system identified several issues with how my father's depreciation was calculated and found legitimate grounds for an abatement of penalties for the 2019 tax year based on his documented medical condition. The detailed analysis showed that about $75,000 of the tax bill might be challengeable due to improper application of farm income rules after the forced liquidation. The service generated all the documentation we needed for a Partial Dispute request and helped us prepare an Offer in Compromise application for the remainder. We're now working with a tax resolution specialist who charges a flat fee instead of that crazy monthly retainer, and he said having all this documentation organized saved us at least $3,000 in preparation costs. Thank you so much for recommending this - it's given my parents their first hope in years!

OP, one crucial step you shouldn't overlook is actually getting through to someone at the IRS who can help. I spent MONTHS trying to resolve a large tax issue (inheritance taxes I couldn't pay) and kept hitting brick walls with automated systems and impossibly long hold times. I finally used a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent after trying for weeks on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c With a debt that size, you need to talk to someone in the IRS's Hardship Division or someone who can actually make decisions about your case. Regular customer service reps often can't help with complex cases. Claimyr got me through to the right department in under an hour when I had previously wasted days on hold. Once I actually spoke with the right person, they helped set up a manageable payment plan that worked with my financial situation. For your parents, having that direct conversation about their health issues and financial circumstances could make all the difference.

I need to eat my words and apologize to Profile 15. After posting my skeptical comment, I decided to try Claimyr myself since I was getting nowhere with the IRS about a penalty issue. It actually worked! After trying for weeks to get through, I was connected to an IRS representative in about 40 minutes. The representative I spoke with was able to review my account immediately and confirmed I qualified for an abatement based on my circumstances. For the OP's situation, this could be incredibly valuable. The rep I spoke with explained that cases like your parents' often qualify for special handling under financial hardship provisions, but these options are rarely offered unless you specifically ask about them. The direct conversation allowed me to explain my situation in a way that just isn't possible through forms and letters. Sorry for doubting - just wanted to share that this actually helped me resolve my issue.

Has your father looked into filing for bankruptcy? I know tax debts are generally not dischargeable in bankruptcy, but there are exceptions for older tax debts that meet certain criteria. If some of these taxes are from 2013-2016, they might qualify. For tax debts to be dischargeable in Chapter 7 bankruptcy: - The taxes must be income taxes - The due date for filing the tax return was at least 3 years ago - The tax return was filed at least 2 years ago - The tax assessment was made at least 240 days ago - There was no fraud or willful evasion Even if bankruptcy doesn't eliminate all the tax debt, it might help clear other debts so they can focus on tackling the tax issue.

Have they looked into the IRS Fresh Start Program? My brother had a significant tax debt (about $85k) after his construction business failed, and he was able to get substantial relief through this program. The Fresh Start Program has several components that might help your parents: - Increased dollar threshold for filing tax liens - Easier access to Installment Agreements - More flexible Offer in Compromise terms - Tax lien withdrawals after payment arrangements The key is providing thorough documentation of their financial situation, medical expenses, and limited ability to pay. My brother was ultimately able to settle his $85k debt for about $32k through an Offer in Compromise.

Don't forget about potential state-level tax relief programs! When I was dealing with federal and state tax issues after a business failure, I found that my state had hardship provisions that were actually more generous than the IRS options. Depending on what state your parents live in, they might qualify for: - State tax forgiveness programs - Hardship status at the state level - Special provisions for farmers/agricultural businesses - Senior tax relief programs (if they're close to retirement age) Also, check if your state has a Taxpayer Advocate Service similar to the federal one. These advocates can sometimes help navigate both systems simultaneously and coordinate relief efforts.