Do You Owe the IRS Money That You Can’t Pay?
Failure to Pay Taxes
Here are some of the options the IRS provides to taxpayers who owe money. Whether these are applicable to you depends on your circumstances.
- Installment plan
This is where you work out a payment plan or a partial payment plan – just like a loan – to pay the debt owed to the IRS.
- Offer in compromise
Not all tax professionals know the ins and outs of preparing an offer that has a good chance of getting accepted. It’s important to look for a professional who has an excellent track record of getting offers accepted by the IRS.
If this is your first “offense” with the IRS, you may be eligible for a First-Time Penalty Abatement, which waives your penalties.
- “Currently Not Collectible” status
This status allows you to defer your debt. The debt does not go away; you still owe the IRS money. But you’ll stop the process of getting your bank accounts levied or other collection efforts if you are granted this status. This often happens when you don’t have enough income to cover your current living expenses. Once your income rises, the IRS will re-evaluate your situation.
- Bankruptcy
IRS debt has “priority” when it comes to bankruptcy cases, and the debt may or may not get discharged if you file for bankruptcy. Since this is such a complex area, your best bet is to consult with several professionals – an accountant, a tax resolution professional, and an attorney that is expert at bankruptcy issues.
Getting Help
A tax resolution professional can help you:
- Respond professionally to any IRS correspondence you receive
- Contact the IRS on your behalf so that you don’t have to face them directly
- Represent your case before the IRS
- Get you caught up on filing back tax returns that are late
- Understand the IRS Collections process and your rights
- Negotiate penalties, interest, and taxes due to lower your debt
- Work out a payment plan on any money you owe to the IRS
- Fight for you on issues that come up, such as innocent spouse situations or positions taken on tax returns
- Help you get levies and liens removed from your assets.