If you owe the IRS more than you can pay, it can be a stressful situation. The good news is that you don’t have to face it alone. There are options available to help you resolve your tax debt, and working with a tax professional can help you find the best path forward. A lawyer, like an IRS tax lawyer, can assist individuals facing this challenge by offering guidance on the most effective solutions. Here are some steps you can take if you find yourself in this situation.
Don’t Ignore The Problem
One of the biggest mistakes you can make when dealing with tax debt is ignoring the issue. The IRS has significant authority to collect unpaid taxes, and avoiding the situation won’t make it go away. The IRS can place liens on your property, garnish your wages, or even seize assets if your debt goes unpaid for too long. Ignoring the issue only allows penalties and interest to add up, making the debt even harder to pay off in the future.
Instead of avoiding the IRS, it’s important to address the situation as soon as possible. Contacting the IRS or seeking professional help can prevent further complications.
Explore Payment Plan Options
If you owe more than you can pay right away, one option is to set up a payment plan with the IRS. You may think of payment plans for smaller things, like items you purchase online, hair treatments, or cars, but the IRS offers several installment agreements that allow you to pay your debt over time, making it more manageable. Depending on the amount you owe and your financial situation, you may qualify for a long-term payment plan that can stretch over several years.
While these plans come with interest and penalties, they give you the ability to make manageable monthly payments. An IRS tax lawyer can assist you in negotiating a payment plan that works best for your financial situation, ensuring that it’s realistic and affordable.
Offer In Compromise And Settling For Less
If paying your full tax debt is impossible, you might be eligible for an Offer in Compromise (OIC). An OIC is an agreement between you and the IRS to settle your tax debt for less than what you owe. However, this option is not available to everyone. The IRS only approves an OIC if they believe that the full amount of the debt cannot be collected, and you meet certain eligibility requirements based on your income, expenses, and asset value.
If you think an Offer in Compromise might be a viable option for you, it’s essential to have a tax lawyer on your side. The process can be complicated, and a lawyer can help you present the best possible case to the IRS.
Request A Delay In Collection
In some cases, the IRS may temporarily delay collection efforts if you can prove that paying your tax debt would cause significant financial hardship. This is known as Currently Not Collectible (CNC) status. If the IRS determines that you are unable to pay due to financial hardship, they may suspend collection actions, including wage garnishments or property liens, until your financial situation improves.
Consider Bankruptcy As A Last Resort
In some cases, bankruptcy may offer a solution to your tax debt. However, not all tax debts are dischargeable through bankruptcy. In general, only income taxes that are more than three years old, that have been filed correctly, and for which you haven’t committed fraud may be eligible for discharge. Bankruptcy can provide a fresh start, but it should only be considered after careful evaluation of your situation.
Seek Professional Help
If you owe the IRS more than you can pay, it’s a good idea to consult with a tax lawyer. Attorneys like those at Crepeau Mourges can help you understand your options, negotiate with the IRS, and protect your rights. They can also help you avoid costly mistakes, such as setting up an unmanageable payment plan or making a false claim for an Offer in Compromise. By seeking professional assistance, you’ll be able to make informed decisions that can resolve your tax debt in a way that minimizes your financial burden and protects your long-term interests. For help, reach out to a law firm that specializes in taxes today.