With family, work, bills and other obligations, there is no convenient time for learning that you owe tax debt – let alone paying the large amount back to the IRS or state. While it can be a scary situation, tax debt resolution is possible with the right approach.
The IRS will always send you communication via mail to update you on your tax status. A notice for tax debt will list:
• The amount that you owe
• For which tax years
• When your payment needs to be made
• Any IRS action that may be pending
• A phone number to call with questions
After reviewing your records and ensuring the information is correct, it’s time to explore your options.
IRS tax programs are designed to resolve your liability in a formal, legal way without presenting you with an unfair financial hardship. Not sure what the best tax debt resolution program is to pursue? Don’t worry – our tax professionals do. Here are the most common your tax debt professional may explore for your situation.
Installment Agreements: The IRS allows qualified taxpayers to take advantage of Installment Agreements, which allow a tax debt to be paid over an extended period. If you qualify for an Installment Agreement, you will be permitted to pay an agreed upon amount every month until your tax debt is paid in full.
Offer in Compromise: The IRS will allow you to resolve your tax liability for a reduced amount if you qualify for an Offer in Compromise. This settlement agreement is hard to qualify for and can take up to two years to get approval.
Currently Not Collectible Status: If the IRS recognizes that you are unable to make any payment toward your tax debt and that doing so would put you in serious financial hardship, you may qualify for Currently Not Collectable status. This enables you to pay nothing on your tax debt until your financial status improves, and prevents the IRS from taking collection action against you during this time.
IRS Tax Debt Forgiveness: While the IRS expects you to pay any balance immediately, you may find yourself in a financial position that makes this impossible. The IRS doesn’t have a 100% “tax forgiveness” policy, but you may qualify to get a portion of your balance reduced through the IRS Fresh Start program.
Consider consulting with a professional tax debt resolution company before dealing with the IRS or state yourself. A company with licensed tax professionals such as CPAs and enrolled agents Tax Defense Network can help you carefully weigh your resolution options so you can finally take care of that tax debt.