If you owe the IRS a tax debt and are struggling to pay it off, then you’ve probably come to dread hearing the mailman pull up to your house. But, contrary to popular belief, dealing with the IRS doesn’t have to be so difficult or scary. At the end of the day, the IRS just wants to see that you are making an effort to work with them to figure out how to pay off your debt. That’s why if you’ve received notices or warnings from the IRS, it’s important to remember that you have options. So what are they? What choices do you have to pay off your tax debt? Let’s discuss.
1. Installment Agreements
Installment agreements are payment plans that enable you to pay off your taxes over time. One of the biggest things people struggle with when paying off their debts is that they are unable to presently pay it off in full. That’s why payment plans can be a great option. However, it’s important to note that not everyone is eligible. To qualify, you must have filed all required tax returns and be current on your estimated tax payments. The IRS has streamlined installment agreements if you owe a relatively small amount of taxes. But if you owe over $100,000 you also must disclose all of your assets and cash to the IRS. This is because if you have enough cash or equity in your assets, and you owe over $100,000, then you’ll be ineligible for a payment plan. For more on installment agreements, check out our blog on the topic here: https://boeshaarlaw.com/pros-cons-irs-installment-plans/
2. Offer in Compromise
An Offer in Compromise is another option when you can’t pay off your debts. In general, its when you enter into an agreement with IRS to settle your debt for less than the full amount owed. However, just like installment plans, OICs aren’t available to everyone. There are three foundations upon which a person can seek an OIC:
- Doubt as to Collectibility – occurs when the IRS believes you are unable to pay back your debt even with an installment plan
- Doubt as to Liability – occurs when the amount of the tax debt as assessed by the IRS is wrong or the bill doesn’t belong to you
- Effective Tax Administration – occurs when paying your tax debt would lead to extreme financial hardship
3. Request a delay or extension
Sometimes, you’ll have the option to request a delay in collection or an extension for the time to pay. Again, these options are not always available and often depend on the size of the debt that you owe. Further, it isn’t a permanent solution if you still won’t be able to pay off your debt in full with the extra time allotted.
4. Borrow the money
If you owe a debt and don’t qualify for any other options, then your only other choice to get the IRS off your back might be to take out a loan. Although not ideal, it’s one way to control the situation a bit better and set up a plan to make payments back over time while alleviating the stress of dealing with a government agency. You also may be able to arrange for a lower interest rate than that charged by the IRS.
Consult with an experienced tax law attorney today.
Ignoring a notice from the IRS is never a good idea, because failing to respond only leads to further penalties that can impact your property and your credit. That’s why it’s essential to work with an experienced tax law attorney who can help figure out the best options that are available to you. At Boeshaar Law, we help individuals and small businesses resolve their disputes with the IRS. We understand that navigating the complexities of the federal tax law system is never easy, particularly when you are stressed about how much debt you’re accumulating. If you are struggling to pay off your tax debts and want to learn about your options, please don’t hesitate to contact us today at (206) 899-4860 .
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