How Tax Debt Accumulates:
Tax debt accumulates very quickly but is hard to pay back. That happens because of the interest and penalty fees the IRS charges on tax debt. The equation of tax debt and interest is simple. The more time you take to pay your back taxes, the more amount you will need to pay.
Many taxpayers postpone paying off their tax debt, thinking the IRS will forget the debt or they will pay when they have enough money. When it comes to collecting taxes, the IRS seldom forgets, and if you do not have money to pay, you can get your tax debt reduced or postponed.
Get Tax Debt Reduced:
The important thing to consider while filing for the tax debt reduction plan "Offer in Compromise," is that you must not have the ability to pay the entire amount of tax debt. The IRS charges penalty fees on filing for an IRS debt payment plan that you do not qualify for. File for an Offer in Compromise if you can prove to the IRS that you do not have money to pay your tax debt. The IRS takes into account your assets and liabilities before qualifying you for an Offer in Compromise.
If you qualify for an Offer in Compromise, the IRS will reduce your tax debt so that you can pay it.
You can postpone the collection of your tax debt if your financial condition does not allow you to pay your tax debt. The IRS will qualify you for "Currently Not Collectible," a hardship status that gives you more time to pay your tax debt, if you cannot pay any amount of tax debt at present. File for it only if you do not have the resources to pay any amount of tax debt.
Instead of postponing the payment of taxes, you need a resolution that will get tax debt off your back. After you have qualified for an IRS debt payment plan, the IRS cannot initiate any collection actions.
Do not let your tax debt get big; get it reduced or postponed. Waiting can allow the IRS to place a lien or levy. Before the IRS gets aggressive, use their plans to your advantage. Get your back taxes resolved to your advantage.
Labels: Back Taxes, IRS, Offer in Compromise, Taxpayers