Tax Debt & IRS Taxes How Best To Address unpaid IRS Taxes.
Individuals as well as businesses that find themselves struggle with slowing production, slowing consumer spending, and a depressed market may also find they're facing more concerns. The unemployed and even those still counted as employed have often had to take a pay cut or step down to a lower paying job. Many of these people are struggling to make ends meet and are accruing debt. Credit-yogi understands that of all the debts that could be accrued, tax debt to the Internal Revenue Service is perhaps of the greatest concern. The IRS is a powerful and persistent collector of debts, and getting in trouble with them can result in a painful loss of real assets and damage to your credit rating.
The IRS holds a lot of the cards in this situation. All employers must report wages and compensations to the IRS, so it is difficult to hide real income from the IRS. This is also true of gains from investments. Sooner or later, the IRS will find you. It is definitely in your best interest to engage the situation proactively and get any IRS tax debt under control as soon as possible. If you cannot get IRS tax debt under control yourself, seek IRS tax help from a professional, such as a credit-yogi.com tax expert or tax lawyer, as soon as possible to hold down penalty and interest charges and to settle IRS tax debt.
If you can possibly avoid getting in to a debt situation with the IRS, carefully restructure your budget in an effort to prioritize the IRS amongst your creditors. If you have already gotten in to an IRS tax debt situation, there are five basic approaches that you can take to settle IRS tax debt.
- Negotiate an installment agreement payment plan with the IRS. This will establish a monthly payment plan over 36 months. The IRS must agree to this if you meet the requirements. Be aware that penalties and interest will continue to accrue during this time.
- Get the IRS to agree to a partial payment installment agreement. This will comprise a longer monthly payment plan that will be limited by your determined ability to pay given your current financial situation. Note that the level of your determined ability to pay will be re-evaluated as this agreement progresses.
- Make the IRS an Offer In Compromise. To accomplish this, you must convince the IRS that you can never fully service the amount of the debt. You must propose to them a lump sum payment or institute a short term payment plan to pay them back only a reduced part of the total debt accrued.
- Convince the IRS that you cannot pay anything on the debt at this time. Try to get the IRS to declare the tax debt as not currently collectible. This will not remove the debt, but will get the IRS to agree to suspend collection efforts for an agreed period.
- As a last resort, declare bankruptcy under Chapter 7 or Chapter 13. The IRS will still be first in line to collect and your credit rating will be impacted, but the debt will be removed.
None of these five options is easy. There are also differences depending on the amount of the IRS tax debt. Consulting a professional for IRS tax help is always an option through credit-yogi.com, of course. However, as a rule of thumb a debt of less than $10,000 could be handled without the help of a professional if great care and understanding of the process is used. Debts above $10,000 should lead you to seriously consider professional help. IRS tax debt of over $25,000 should definitely have you considering to the retention of a professional who works solely to settle IRS tax debt.