Category Archives: Finance

Strategies for Getting Out of IRS Tax Debt

If you are stuck in debt with the IRS, you may feel like the problem will last forever. Dealing with the IRS can be very overwhelming and even scary, which is why many people like to put it off as long as possible instead of facing their problems. However, when you have back tax debt with the IRS, the last thing you want to do is avoid dealing with this issue. Here are some things you can do to address the problems you are having, depending on who you are and what type of financial issues you are struggling with.

 

Set up an installment agreement.

For most people, this is the easiest way to pay off back taxes. You can set up an agreement with the IRS where you can pay off your tax debt in monthly installments, instead of having to pay the whole sum up front. The IRS is actually fairly understanding when it comes to setting up these agreements as long as you are willing to work with them. If you have been avoiding tax debt for a while, contact the IRS to set up an installment agreement so you can start paying it off. In some cases, you can also set up a partial payment agreement, where the IRS will lower the sum owed if you agree to the payment plan.

 

Ask for an offer in compromise.

This is another tax solution that will allow you to settle your debts with the IRS easily. The benefit of this is that you can get rid of the debt all at once without having to continue to worry about it over a long period of time. With an

offer in compromise, the IRS will settle your tax debts for less than what you owe, but you must pay it off in a lump sum right away. If you have enough extra cash to be able to do this, it is usually the best option.

File for bankruptcy.

When you file for Chapter 7 or Chapter 13 bankruptcy, you may be able to get rid of your income tax debt. If you are having other financial issues and bankrupcty is already an option on the table, talk to your accountant to see if you qualify to settle your taxes this way. You do have to meet certain requirements for this to be an option, so you’ll need to review the guidelines carefully before filing.

 

Apply for the currently not collectible program.

If you can prove that you have no ability to pay your tax debts at the current moment, then you can apply for your taxes to be labeled Currently Not Collectible. This means that the IRS will not attempt to collect taxes from you for approximately one year, allowing you time to get your affairs in order and figure out a strategy for your debts. It is adviseable to have a tax professional help you with contacting the IRS in this case.

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