Ignoring your tax debt can result in heavy penalties and higher taxes. Interest and penalties add up quickly, and you can end up in a situation where your tax debt becomes so large that you cannot make payments. If you keep delaying your payments, the government can garnish your wages and file liens on your property. Not only does this cost you money, it also makes it harder to meet other bills. Thankfully, there are some steps you can take to avoid a huge financial headache.
You can delay the collection of your tax debt by requesting an “offer in compromise” from the IRS. To do so, fill out a Collection Information Statement and explain your income and expenses for the previous year. Depending on your financial situation, the IRS will determine if this option is right for you. If you qualify, the IRS may grant you temporary “currently not-collectible” status. However, you must still make payments on the full balance within three years in order to receive this status.
If you are in dire financial straits, you can approach the IRS with an “offer in compromise,” which essentially means a plea for a reduced amount. The IRS will consider an offer in compromise only if the circumstances are so severe that it can’t be paid in full. Examples of qualifying circumstances include catastrophic medical costs, job loss, or the unemployed family member. Taxpayers with good income have the best chance of negotiating with the IRS.
In addition to offering an Offer in Compromise, you can try to work with your IRS to reduce the total balance owed. But it’s important to keep in mind that this method is the most difficult. Other methods allow you to make installment payments, but they do not reduce the debt’s overall burden. Ultimately, it’s up to you to decide which solution will best fit your needs and circumstances. If you’re in a financial bind, you should seek legal advice. Defense Tax Partners in Oregon has many skilled tax lawyers to help you.
The IRS will review your application package and make an offer based on the financial details. If your offer is accepted, you’ll be given a period of two years during which you can repay the debt. In the meantime, you’ll have to file your taxes each year and apply any refunds. If you don’t make those monthly payments, the IRS may reject your offer, and you’ll have to start the process all over again.
In the event that you fall behind on your taxes, it’s best to work with a tax expert. Tax matters can be complex and require extensive documentation. Working with a tax expert will save you time, frustration, and money. Using the services of a tax expert will help you avoid the accumulation of interest. So, if you’re in debt and need to get out of it, consider using tax resolution services. You’ll be glad you did!
If you can’t afford to pay the entire amount of your tax debt, consider filing for bankruptcy. Bankruptcy will discharge your debt, but you must consult a tax specialist about filing for bankruptcy. If you’re married or have joint income, you may be eligible for an innocent spouse relief. A tax professional can also help you file a bankruptcy case, and set up a payment plan to pay the debt. If your debt is more than one person, you should contact a tax expert to find out whether a bankruptcy filing is possible for you.
If you’re unable to pay your tax debt, the IRS has the right to levie your wages to satisfy your debt. Each paycheck you receive will contain a chunk of the government’s demand. If you can’t pay, the IRS will levy your other financial assets. These assets include bank accounts, investments, life insurance, and retirement funds. If you cannot pay, the IRS can seize them all. These are just a few of the many ways you can avoid tax debt.
If you can’t pay the entire amount of your tax debt, you may consider opting for an OIC Periodic Payment plan. By settling your tax debt in one lump sum, you can eliminate any penalties you owe, while cutting the total amount of money you owe the IRS. However, this method isn’t for everyone. If you have a large amount of money to pay, you may want to consider this option instead. A good tax attorney can help you figure out the best option for you.