Options For Settling Tax Debt
If you receive letters from the IRS that inform you that you owe past-due taxes, you will need to act. You cannot ignore these letters and demands, as they will not stop coming to you. The debt will not just disappear. You must deal with it. So, how do you do that? There are several options, but the best thing to do is talk to a tax lawyer. A tax lawyer can review the situation and suggest one of the following options.
Arrange a Repayment Plan with the IRS
One option you have is to create a repayment arrangement with the IRS. The IRS accepts installment plans with people who owe money for back taxes. An installment plan involves repaying the debt you owe over time. You pay equal payments for a specific time, and when you pay the last one, your balance is at zero. The IRS is not always willing to agree to installment plans, but it is worth a try. You will have a better chance of getting one approved if you work with a lawyer. Lawyers know what they are doing and know how to get plans approved.
Settle the Debt
The second option you have is settling the debt. When you settle debt, you agree to pay the debt off without paying the full amount. For example, if you owe $20,000, the IRS might agree to settle the account for $12,000. You pay the $12,000, and the IRS accepts this as the total balance. The IRS calls this an offer in compromise (OIC). You must meet specific conditions to use an OIC, and a tax lawyer can assist you with this method.
File for Bankruptcy
One other strategy that helps with IRS tax debt is declaring bankruptcy. Bankruptcy is a major event, though, and it is not something to rush into. It has long-term consequences, but it can also have a lot of benefits. Before you decide to use this strategy as a way out of your IRS trouble, make sure the debt qualifies. For tax debt to qualify, it must meet certain conditions. To understand these, you should talk to a tax lawyer.
If you want relief from the tax debt you owe, talk to a lawyer. If you ignore the balance, the IRS may seize your assets or garnish your wages. It would help if you acted before these things occur. To learn more, ask a tax attorney for advice.