Get the Facts: There's a lot of ludicrous ideas out there about Tax Debt. So you need to know the cold hard facts. Don't let unreliable people tell you that settling tax debt is “Easy” or that there's “tons” of ways to pay off the IRS. Because it's not true. Working with the IRS is hard. Filling out IRS paperwork is daunting. And there are only 5 real options for handling your IRS Debt.
1. Wait for Statues to Expire: Bad idea! The statue of limitations on your debt will not expire for 10 years. And sometimes, the statues are extended (like if you file for an “Offer in Compromise.”) And while your waiting for the time limit to expire the IRS can collect on your debt by force with Tax Liens, Levies, and seizures. Don't give them the opportunity to do this. It will not pay to ignore your debt.
2. Pay in Full: If there is any way you can actually pay in full, do it! Do not submit an “Offer in Compromise” if your have money in the bank to pay for your IRS Debt. Your IRS Hitman has access to your bank account. If they see you have the money to pay, they will tell you to pay in full.
3.Settle It: The IRS gives you the chance to submit an “Offer in Compromise.” You're are basically settling your debt for a lower amount. Very few people are actually accepted for this program. And barely anyone has their offer accepted for “Pennies on the Dollar.” But if you are in a truly desperate situation, you might want to see if an “Offer in Compromise” is an option for you.
4. Suspend Collections: If you are in a situation displaying true Financial Hardship, prove it. The IRS might stop the collections process for a limited amount of time so you can get your finances back in order. They will determine the amount of time based on your situation, and check up on you periodically to see if your situation has changed yet.
5. Pay Monthly: You can pay the IRS monthly. You have to enter into an “Installment Agreement” with the IRS to do this. The IRS will take a close look at all your finances and assets. If you're approved to pay monthly, they choose the amount you pay each month. Then you are locked into a binding contract, stating that you must pay a certain amount monthly. And defaulting can have harsh results.
Still Hope: Sorry if I'm making things seem hopeless. Yes, paying off your IRS Debt is hard. The IRS's system of ruthless Hitmen doesn't help the matter. But there are ways to get your debt taken care of. None of the options I have described are easy to do. But you have to do them if you don't want to remain in debt to the IRS forever.