Being in debt to the Internal Revenue Service (IRS) often feels defeating. You are left feeling helpless with no options to resolve your debt or get back in good financial standing. We’re here to assure you there are always options and opportunities to resolve your debt in a manner that allows you to move forward with integrity and confidence.
Consulting an experienced tax attorney allows you to equip yourself with an effective tax-resolution strategy that brings peace of mind back into your life. We have five strategies in particular that we want to explore briefly today.
- Offer in Compromise
An Offer in Compromise allows you to settle your tax debt for less than the full amount owed if paying your full tax liability would cause significant financial hardship. This program requires a detailed disclosure of financial information to prove that paying the full amount would be burdensome to you, your family, and your overall financial circumstances. It’s a valuable option for those who qualify, providing a fresh start and significant relief from overwhelming tax debts.
- Let the Collection Statute Expire
One option is, ironically, to do nothing. The IRS has a limited time, typically ten years, to collect outstanding tax debts. After this period expires, so does the debt. So, if you’re nearing the ten-year mark (especially if there is less than one year left) then it may make sense to simply make no moves and allow the collection statute to expire, allowing you to avoid the debt. Strategic timing and understanding of IRS collection measures are crucial in this context, so be sure to consult with an attorney before going this route.
- Installment Agreements or Partial Payment Installment Agreements
Installment agreements are plans that allow you to pay your tax debt over time in monthly increments rather than resolving the debt in a single payment. If full payments are too challenging, a Partial Payment Installment Agreement may be available, allowing smaller monthly payments. Both plans require compliance with all future tax obligations but provide a more manageable approach to your tax debt.
- Penalty Abatement
If you face penalties for late payment or filing, you may qualify for First-Time Penalty Abatement. This relief is generally granted if you have no penalties for the prior three years. If you cannot qualify for First-Time Penalty Abatement, you may be able to qualify for reasonable cause penalty abatement if you can show reasonable cause for the delay, such as personal hardship, illness, or unforeseen life events. Successful penalty abatement reduces the total amount owed, easing the path to settling your tax debts.
- Consider Bankruptcy
Bankruptcy often gets a bad reputation, but it’s actually a fantastic tool for people who are in insurmountable financial debt. Certain tax obligations are able to be discharged through Chapter 7 or 13 bankruptcy, depending on your circumstances. However, some tax debts are not able to be wiped out. Getting other financial debts relieved could free up more money to be spent on resolving your debt to the IRS. This is a topic we’re going to be exploring in more depth in an upcoming blog post.
Get Out of Trouble With the IRS
Facing IRS debt does not mean you are without support, options, or resources. We understand each individual situation is unique, and the right strategy depends on your specific circumstances. At Robert V. Boeshaar, Attorney at Law, in Seattle, we guide clients through these choices to help them resolve their debt to the IRS. Don’t let the burden of tax debt get in the way of your future. Contact us today for a free phone consultation and start your journey toward tax relief.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
Latest posts by Robert V. Boeshaar Attorney at Law, LL.M.,PLLC (see all)
- How Can I Tell if My Business is in Tax Trouble? - September 5, 2024
