Solutions to Resolve Tax Debt
The Internal Revenue Service (IRS) offers multiple methods for taxpayers to settle their tax debt . Many find it easier to just ignore what they owe but this only makes things worse. The longer you put off paying your taxes the more you will owe penalties and interest.
If you can’t afford to pay what you owe in full, the following options may help you get in good standing with the IRS and avoid legal action:
- Installment agreement – This is the most common tax settlement option available that lets taxpayers make monthly payments meeting a minimum amount.
- Partial payment installment agreement – If you are unable to make the required payment under the installment plan, this option lets you make smaller monthly payments. It’s also possible to pay less than the original tax amount.
- Offer in compromise – This method lets you settle taxes for less than you owe by making an offer to the IRS on what you can pay.
- Declared currently uncollectible – The IRS may review your situation and temporary stop collection proceedings if you meet qualifications. Your financial situation will be reviewed at a future date to proceed with collections giving you time to improve your finances.
- Penalty abatement – This allows penalties to be waived from payment that accrued on the overall tax amount due. For many, this may give a big decrease in what is repaid.
- Financial hardship – If you have no way of making payments or have no cash or assets of value the IRS may cease collection efforts against you until your financial situation improves.
A tax attorney or tax expert can provide assistance in settling taxes. Working with a professional gives a better understanding of how certain options fit your situation and make sure procedures are followed accordingly when applying.