How to Handle Your Tax Debt
Face the Problem Head on
The first thing you need to accept is that you can’t keep running from your tax debt. You have to face it head on and get he situation under control. So don’t try to run from it, or hide from the IRS. You can’t trick the IRS either, but if you’re willing to work with them you might be able to pay less than you owe. Here are several ways that you can manage your tax debt situation.
- Offer in compromise – if you owe the IRS more than you are able to pay – and many taxpayers that have tax debt are in this position – you might be able to get an offer in compromise from the IRS. You have to prove that you don’t have sufficient funds to pay off your debt and the IRS will certainly verify your claims. Here’s how it works. You can either offer one lump sum payment to pay off as much as you can, or offer a short-term payment plan at a total reduced amount. If the IRS deems your offer as its best chance to collect money and realizes that it will likely take you much longer to pay off the entire debt they might accept your offer. If they do agree, you could end up saving thousands of dollars.
- Installment agreement – this method is much like it sounds. If the IRS feels that you do have the necessary funds to pay off your entire debt, they will most likely not accept an offer in compromise. However, they might accept an installment agreement. In this situation you can offer to pay off your entire debt over time with monthly payments. The good thing about this method is that it’s intended to help taxpayers with debt make manageable payments so they don’t get further into debt.
- Not currently collectible – if you’re really in dire straights and you can’t pay off any of your debt, you could qualify for the not currently collectible program. Through this program, the IRS essentially agrees to leave you alone for a period of time – a year or so – until you are in a position to start paying off your debt. Thus, if you really can’t pay back your debt, this is a great option. It not only gives you some breathing room, but it also allows you to file for a collection appeal, which can stop or prevent an IRS levy, a seizure, a lien or the termination of an installment agreement.
- Partial payment installment agreement – another option available to some taxpayers is a partial payment installment agreement. This allows certain taxpayers to only partially pay back their taxes over an extended period of time. You will be required to share all your financial information with the IRS in order to prove you can’t pay your debt in full. You will also have to show that you cannot pay your debt following a normal installment agreement plan. If accepted, the IRS will continually review the agreement to ensure you are paying as much as you are able.
Get Professional Help
The bottom line if you owe back taxes is to face it head on. You can contact an experienced tax resolution firm to help ensure you get the best deal possible.