Problem of Tax: Ways to Deal with Tax Debt
Compared to being audited by the Internal Revenue Service (IRS) for past tax return, owing back taxes is actually a more nerve-racking situation. If you are in debt, the following are the ways to deal with this situation.
Take the initiative to deal with your problem of tax. This is the very first thing that you should do and probably the best advice given when dealing with back taxes. Many taxpayers make a mistake of turning blind and deaf when it comes to tax problems. The IRS unintentionally helps this happen because it takes the agency a while to figure out you owe money before they take action to collect the back taxes. But, once the agency found out, it can bring all kinds of nasty weapons to bear. They can vacuum-ize your bank account and embellish your wages. Ignore these accumulated penalties and interests on your tax debt and it can get dreadful quickly. Dealing with your tax debt as early as possible will be a far better off taking proactive action than just waiting for the IRS to do something.
Given that you are ready to act, here is a list of options available to you.
Owing past taxes to the IRS is an alarming problem. This problem of tax will haunt you even in your dreams. Be responsible enough and take the initiative to address your situation as early as possible. Doing so will give you the luxury of being able to sleep better at night with no uncertainties.
Compared to being audited by the Internal Revenue Service (IRS) for past tax return, owing back taxes is actually a more nerve-racking situation. If you are in debt, the following are the ways to deal with this situation.
Take the initiative to deal with your problem of tax. This is the very first thing that you should do and probably the best advice given when dealing with back taxes. Many taxpayers make a mistake of turning blind and deaf when it comes to tax problems. The IRS unintentionally helps this happen because it takes the agency a while to figure out you owe money before they take action to collect the back taxes. But, once the agency found out, it can bring all kinds of nasty weapons to bear. They can vacuum-ize your bank account and embellish your wages. Ignore these accumulated penalties and interests on your tax debt and it can get dreadful quickly. Dealing with your tax debt as early as possible will be a far better off taking proactive action than just waiting for the IRS to do something.
Given that you are ready to act, here is a list of options available to you.
- Ask for an instalment agreement. It is a fact that the IRS has a policy of trying to get delinquent tax payers back into the system. This means that the agency will approve instalment agreements in a vast majority of cases. With this agreement, you will be allowed to pay your debts monthly over a period of 5 years. You must also take note that you are required to file all your past tax returns before the IRS will grant your request.
- Ask for an offer in compromise. Though it is not as readily granted as suggested, this offer is basically telling the IRS that you have little or no assets and income to speak of so it should give you a consideration on whatever you owe in back taxes since you have no reasonable resources in paying the debt. The IRS will approve such requests only if it is proved that you have scarce resources to your name. If you are doing fine financially and intentionally disregard your duty of paying your taxes, any offer in compromise request will be rejected out of hand.
- Ask for a designation of "not currently collectible." To all intents and purposes, you use it when you are down and out and have nothing. If your request is agreed to by the IRS, they will stop trying to collect anything from you. However, you are still indebted. But the catch is that the IRS has a 10 year window to collect it. After 10 years, the IRS has to let it go. Practically, this means that you have to remain flat out broke to escape paying the back tax! All the while, penalties and interest will be accumulating on the amount you owe. In short, although this is a seriously misunderstood tactic, you can use this as a last resort.
Owing past taxes to the IRS is an alarming problem. This problem of tax will haunt you even in your dreams. Be responsible enough and take the initiative to address your situation as early as possible. Doing so will give you the luxury of being able to sleep better at night with no uncertainties.