There are millions of Americans who at some point in their life find themselves dealing with unpaid debts that threaten to destroy any hope of financial stability in the future. Falling behind on day-to-day bills is stressful enough, however when you find yourself owing the Internal Revenue Service back taxes, the situation becomes even more grave. Creditors and lenders have resources to collect unpaid debt but when dealing with the IRS, the collection methods become even more impressive. People owing the IRS a tax liability may find themselves dealing with liens on their property or even the seizure of assets to satisfy their debt.
Fortunately there are options available to individuals that owe a tax liability that they are unable to pay in full. Here we look at a few of these options and what steps you should take to handle taxes owed to the IRS.
Request an installment agreement- While the IRS has great collection capabilities, they also know that it is better to work with a person trying to pay off back taxes than to immediately begin seizing property or garnishing wages. If you are willing and able to meet the requirements set forth in an installment agreement, you may be able to pay your tax liability in monthly installments, similar to that of other debt repayment plans. Keep in mind that the IRS will determine the minimum monthly payment and fees and penalties will continue to accrue while you are making payments.
Tax settlement- If your financial situation does not allow for regular, routine payments that would satisfy an installment agreement, the IRS might consider a settlement for less than the total amount owed. To request this, you would be required to submit an Offer in Compromise to the IRS. This process is neither simple nor without risks, therefore it is recommended anyone considering this option consult with a tax professional before moving forward.
Currently Not Collectible- This may be an option for individuals who truly have no resources to pay past due tax liabilities. Reserved for individuals who have little or no assets and minimum income, the IRS hardship rule may apply meaning collection activity is stopped. This does not however absolve you of the taxes owed, and despite the fact that collection activity is ceased, penalties and fees will continue to pile up, adding to the amount owed. The IRS will pay close attention to your earning over time to determine if and when collection activities should resume.
If you owe the IRS back taxes, the first step you may want to consider is consulting a tax professional that can help you understand the many laws and options available to you. Do not convince yourself that the situation will simply "go away" as this is one of the worst mistakes you can make. Consider what resources you have at your disposal and determine the best course of action to resolve back taxes owed to the IRS.
This article is provided for Backtaxeshelp.com, a site designed to help you pay back taxes. Owing back taxes to the IRS is stressful, and negligence will only worsen the situation. Learn how to get back tax relief.
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