Tax Debt Relief

When you owe money to the IRS, you won't get much peace of mind until you deal with your tax debt. The IRS is an aggressive creditor. First you'll receive a letter or a phone call explaining what you owe, and offering you a chance to settle the debt. If you can, that's great, but if you are unable or unwilling to pay your tax debt, the IRS will start the process of collecting. Unlike collection agencies, the IRS doesn't have to file a lawsuit against you to start trying to collect. Once they've alerted you that you owe money, they can begin trying to get it from you- and they're the most powerful collection agency in the world! They can put liens on your home, which means that if you ever sell the property, the IRS gets their cut first. They can even seize your assets, including garnishing your wages, seizing your property outright, and taking money from your bank account or trust fund. If you owe the IRS, it's worth it to work with them, or they'll take whatever they can get from you.

The easiest way to settle your tax debt is to set up a payment plan. The only guidelines that you must meet are that you owe less than $10,000, and you will be able to pay off the debt in full within three years. As long as you meet these criteria, the IRS will let you choose your monthly payment amount, and even the day of the month that you pay. Another path to getting out of tax debt is an offer in compromise (OIC). The IRS likes to get lump sum payments- after all if you are paying over the course of two years, that gives you plenty of chances to default- so if you can afford to make a one-time large payment that represents a portion of your debt, you can pursue an OIC. However, you must be able to show that it is unlikely that you could pay in full and that paying in full would cause you financial hardship. A tax professional can help you prepare your case for the IRS, and help you choose an amount that is likely to be accepted.

If you literally can't afford any extra money to chip away at your tax debt, you could be eligible for currently not collectible (CNC) status. You will need a tax professional, and you will need to be able to prove beyond a shadow of a doubt that you can't pay. This can be a lifesaver for those who have lost their jobs, gone through a painful divorce, or been seriously injured. If you qualify for CNC status, the good news is that the IRS has to stop attempting to collect. However, the IRS will review your case each year, and if your circumstances change for the better, you will be expected to start paying.

Make sure to sit down with a tax professional and go over all of your options carefully. You don't want to end up in trouble with the IRS, so make sure you do things the right way.

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