How Simple Can Resolving Tax Debt Be?

Relief from tax debt is commonly expected to be difficult because we hear about tax lien, levy and the mammoth IRS penalties and interest. But not all taxpayers need to face difficulties in tax debt resolution. Everything depends on the particulars of your case. If you haven’t tried to delay paying the tax debt for years, you will find it much simpler to resolve your debt. 

Tax debt resolution becomes difficult when the tax debt and the IRS is ignored or avoided. If the IRS sends you a notice about the tax debt and you do not reply, they will begin a process in which they send a few more notices before placing a lien. Whether the IRS has noticed that you owe taxes or not, it doesn’t pay to delay resolution. If they don't notice, the interest and the penalties on the tax debt amount owed will still keep adding up.

The IRS has ten years to collect tax debt, but even after the expiry of the ten year statute of limitation, the IRS can make efforts to recover the debt if the case allows. Waiting for the collection deadline to expire is never a good option because if the IRS begins collection action after seven years, the IRS penalties and interest over the years would have significantly increased the debt amount. Delay in payment does no good, only harm.

The most comfortable way of paying tax debt is to pay the entire amount in a single payment, but for those that cannot afford to pay their entire debt at once, there are various tax debt payment plans available. It is best if the tax debt amount is small and can be paid in a single payment. If you can pay the entire amount, usually the procedure is not complicated. Those that seek tax debt reduction or want to be granted the Currently Not Collectible status will need to provide financial details to the IRS. The process might also include negotiation.

The simplest way to resolve tax debt is to resolve it early, irrespective of the debt amount or whether you can pay or not. That will save much money in penalties and interest, and protect you from collection actions.

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