Dealing with your tax debts
Owing money to the IRS is not a position anyone wants to be in. The IRS is not like most creditors that you owe money to; they are protected by the government and have many more collection routes. Not only do you have to worry about the collection letter, but you may also face legal action, wage garnishment, or a lien on your home. Although dealing with the IRS can be intimidating, the worst thing you can do with your tax debts is nothing.
get to talk
If you owe the IRS money, you should contact them immediately. Regardless of whether your tax debts are from the most recent tax season or from many years, it is important to contact you as soon as possible. Don’t make the mistake of thinking that just because they haven’t contacted you about your tax debts, they won’t. You can bet that your file is sitting on the desk of someone at the IRS and when they contact you, you may face additional charges such as fines and fines.
negotiate a deal
What many people don’t know about unpaid taxes is that they are very difficult to settle through traditional avenues, such as debt settlement companies or bankruptcy. However, the IRS offers taxpayers the opportunity to directly negotiate their tax debt payments. The IRS offers two programs to help you pay off your tax debts in a way that you can afford.
If you (1) owe less than $25,000 and (b) have any income that could be used to pay your tax debts, you may qualify for an IRS installment payment plan. The installment plan can arrange for you to pay a portion of your tax debt in small payments over a period of several years. The IRS will determine your eligibility for the installment plan and how much your payments will be based on your income level. Therefore, it is extremely important that you have organized financial records on hand to prove your income.
The second program offered by the IRS is an offer in compromise program, in which the IRS agrees to settle less than what is owed on the debt. To qualify for an OIC, you must be able to demonstrate extreme financial hardship. You should submit an offer to the IRS for an amount that you believe you can realistically pay toward your tax debts. If the IRS agrees that your offer is equal to or greater than the amount they could reasonably charge you, they may accept your offer.
pay your dues
Once you get a payment agreement with the IRS, it is extremely important that you make your payments on time. In fact, many people have found a higher success rate when dealing with the IRS if they offer to use an automatic debit system for their payments. This ensures that the IRS receives your payment on time and gives the homeowner the peace of mind that their payment has been made.