IRS debt can be intimidating and overwhelming. I know personally how this feels because it took me almost 15 years just to finally deal with my own personal tax problems.
If the IRS has contacted you, and you’re struggling to overcome your tax debt, you may feel scared and helpless. But don’t lose hope! There are several options that can assist you in effectively managing your debt and finding a way forward. Let’s explore the alternatives available to those who need help with their IRS debt.
Payment Plan or Installment Agreement If the amount of taxes is too high for you to pay in full, consider setting up a payment plan or installment agreement with the IRS. This option enables you to pay back the debt over time, typically through monthly payments. To be eligible for an installment agreement, you must meet specific conditions, such as filing all past-due returns, paying current-year taxes on time, not owing any estimated taxes for the current year, and providing financial information, such as income and expenses. It’s crucial to note that while an installment agreement will halt collection actions against you by the IRS, interest will still accumulate during this period.
Offer in Compromise (OIC) Another possible solution is an Offer in Compromise (OIC). An OIC is an agreement between a taxpayer and the IRS that requires less than full payment of the outstanding taxes. The IRS will consider factors such as ability to pay, income, expenses, and asset equity when deciding if a taxpayer is eligible for an OIC. A qualified tax professional can assist in determining if this option is suitable for your situation. If this is option you need to get professional help because the IRS denies the fast marjority of OIC because of incorrect filing or not even qualified to submit in the first place.
Currently Not Collectible In some cases, taxpayers who cannot afford to make payments towards their tax debt due to financial hardship or other exceptional circumstances may be eligible for Currently Not Collectible status from the IRS. This means that no collection action will be taken against them; however, the underlying debt continues to accumulate interest until it is paid in full or settled through another arrangement with the IRS. For more information on what makes someone eligible for Currently Not Collectible status, please contact a qualified tax professional.
IRS debt can appear like an insurmountable challenge, but don’t let it consume you – there are options! Payment plans and installment agreements provide taxpayers with manageable ways of paying off their tax debt over time, while an Offer in Compromise allows them to settle their debt for less than what they owe in specific situations.
Finally, those facing financial difficulties may even qualify for Currently Not Collectible status from the IRS, where no collection action will be taken against them until they can afford to make payments towards their outstanding balance, plus interest that accrues during this period.
If you have any questions about these solutions or other issues regarding your tax debt, please contact a our offices at 909-570-1103 or book an appointment at TalktoCarlos.com