Need Help With Tax Debt?
Tax can be somewhat simple or very complex depending on your financial situation. Understanding how tax is calculated and which deductions can be used to offset tax is important in reducing what you pay. If you find yourself owing money but don't have the funds to clear the debt, there are a handful of things you can do.
Below are the main options available to you:
1. Installment Plan: Present your offer and supporting documents to the IRS and, if they agree, you will be allowed to pay off the debt in monthly installments. As mentioned above, as long as the offer is a reasonable one, they will, usually, agree to it. This is a low cost option.
2. Paying off a Partial Amount over Time: This is a newer option and involves the IRS agreeing to reduce the amount of the debt and to allow you to pay this off over a longer period. This is not going to be an easy one to set up.
3. Offer in Compromise: This is a more difficult one to get into but what happens is that you offer to pay less than what is owed either in a lump sum or over a very short period. This is not an option that is attractive to the IRS so it must be proven that you only can afford this method. It is advisable to hire a tax expert to assist with this.
4. Not Currently Collectible: In terms of this agreement, the IRS will leave off the collection the debt for a period. The period in question will depend on your circumstances and can be years at times. This is meant for those people who are not able to afford tax debt at all. You will have to prove your case here, and the debt will remain.
5. Filing for Bankruptcy: This is not something that you want to do, but it may be an option if you qualify in terms of all the debts that you have. If you do file, your tax bills and other debts are written off. This does have serious implications so this should only be done if there is no other way out.
The Taxpayer Advocate Service (TAS)
When it comes to all of these issues, you do have the option of dealing with the TAS – a division within the IRS. They can assist you with understanding how things work and help with dealing with tax problems that you are not able to get through on your own. Their mandate is to ensure fair treatment for all.