While just about every American with a job owes taxes to the IRS annually, not every taxpayer follows through. Each year, thousands and thousands of people fail to either file or pay their taxes and end up with back tax problems. Are you one of those people looking for tax relief help wherever you can get it? The good news is there are options for satisfying a tax debt efficiently and effectively. It simply takes some effort on your part and a determination to live debt-free.
When You Can’t Pay using tax Strategies
While there is nothing good about owing taxes to the IRS, it is helpful to know you’re not alone. Between 8 and 20 million people are reportedly behind on their taxes at any given moment. So, what do you do – especially when you really can’t pay?
For those who absolutely can’t pay what they owe, there are generally two options to consider. While every tax debt situation is unique to the circumstances surrounding it, these two options have helped plenty of people find IRS tax relief over the years:
- Monthly installment plan. When you are able to see down the road and believe you’ll eventually have the financial capability to pay off your tax debt, a monthly installment plan is effective and efficient. These installment plans allow you to set up neat monthly payments over a predetermined period. According to the IRS, those who owe $50,000 or less and can satisfy the full debt within six years are ideal for installment plans.
- However, it may not be as easy as it sounds for everyone. Former IRS senior trail attorney Scott Estill says, “Interest continues to accrue on the tax debt until paid in full.” It’s also worth noting the IRS can still file a federal tax lien while you’re making payments. Estill also warns taxpayers interested in filing for a monthly installment plan, “The IRS may require full financial disclosure of assets and liabilities,” which gives them a clear path to your assets if your installment agreement doesn’t work out.
- Offer in compromise. When paying what you owe is simply not an option, the IRS may allow you to pursue an offer in compromise – which “allows you to settle your tax debt for less than the full amount you owe, if you meet strict requirements.” The positives of an offer in compromise are straightforward: you don’t have to pay the full amount and the problem isn’t there forever.
On the other hand, it can be quite problematic because you are once again providing the IRS with a roadmap to your financial assets. Additionally, it extends the IRS statute of limitations an additional year. One thing is clear: something must be done. As Benson Goldstein of the American Institute of CPAs says, “It doesn’t get better by hiding your head in the sand just because you don’t have the money.”
The Other Options for Delinquent Taxes
When you owe back taxes but have the means to satisfy some or all of the debt, you are open to a number of other options. Here are some additional tips and tricks for resolving taxes before they become an even bigger problem:
- File your returns – Before you do anything else, make sure all un-filed tax returns are filed in a prompt manner. Otherwise, the IRS will not negotiate with you.
- Request more time – If the amount you owe is small, it is possible to receive an extension from the IRS. To request additional time, fill out an Online Payment Agreement application on www.irs.gov.
- Get a loan – For those that qualify for a loan, it’s best to go ahead and get a loan and pay your bill in full. Repaying your loan will be a much friendlier process than trying to satisfy a massive tax debt in the future.
Finding Tax Relief Help
When struggling through tax debt problems, you always have the option of handling things yourself. The IRS offers plenty of opportunities to fill out forms and educate yourself on its website. For tax debts under $10,000, handling it on your own is a practical option. When the tax debt becomes greater – $15,000, $20,000, $25,000, or more – it can be very hard to solve the problem on your own. Instead, it’s wise to consider using the services of a tax professional.
When it comes to back taxes, it’s important to satisfy your debt as soon as possible. Certified tax professionals and debt relief specialists understand how the IRS operates and can help you choose the best strategy for your situation.