Tax Debt Relief Strategies
Tax season can be a stressful time for us all. Between keeping track of all the paperwork, remembering to file on time and crossing your fingers that everything is correct, it’s something we often want to get done with quickly. Unfortunately, there are cases where we may find ourselves owing quite a bit of money to the IRS. But there are multiple options for tax debt relief and if you know how to go about dealing with the IRS, you’ll come out of it with your debt paid off.
First, you should assess how much money you owe before looking into tax debt relief options. You can certainly contact the IRS yourself and it’s much easier done if you owe less than $10,000. If you owe between $10,000 to $25,000 you may want to seek the advice of a tax attorney. If it’s over $25,000, you most certainly want to have a professional on your side, helping you figure out what the best options are.
After you’ve either decided to go it alone or have a professional help, you can look at what your options are. The most common is a payment arrangement. This can go one of two ways. If you owe less than $10,000 the IRS is required to agree to an installment payment arrangement if you meet a few criteria. You need to have all your tax returns filed, you have to have not made laid payments in the past 5 years, your debt must be paid in full in 36 months or less and you haven’t had any payment arrangements in the last 5 years.
A partial payment agreement is similar in that you pay installments, but do not pay the full debt owed. Once you pay off the agreed to amount, the rest of your debt is forgiven. This is similar to the offer in compromise, though it’s general less time-consuming to request and get approved. In an offer in compromise, you can pay off your agreed to amount in one lump sum, if you so choose.
Being declared not currently collectible means you currently have no way to pay your debt and the IRS must stop collections activities. They will, however, send you an annual statement of what is owed. Another tax debt relief strategy is filing for bankruptcy, which discharges your tax debts, but is probably the last option you want to consider.
Make sure that you speak to someone with tax knowledge before making any decision. This isn’t something to go into lightly, so getting advice is always a good idea.