If you are having trouble paying tax debt, the Internal Revenue Service (IRS) wants to hear from you. Rather than avoiding your money woes, it is important to seek out help with debt.
Consider the following tips when trying to resolve issues with tax debt:
Paying part: The IRS would rather receive a partial payment than no payment at all. Paying part of your tax bill would reduce the amount of penalties and interest owed.
Payment arrangements: You could qualify for a short-term payment agreement to get help with debt. This would allow you to pay off your tax debt in full within 60 to 120 days. Getting such an agreement depends upon your situation but could allow you to reduce the amount of penalties and interest paid.
Installment agreements: An installment agreement stretches out the payments for a longer period of time. If less than $25,000 is owed, there is an online form that can be filled out to request a plan. If you owe over $25,000 there may be additional information that needs to be processed.
Delaying payment: If you are experiencing extreme financial hardship, you may be eligible for a temporary delay in paying the tax bill until things improve. During that time interest and penalties would still accrue and the government could file a tax lien.
Settling tax debt: An Offer in Compromise (OIC) would allow you to settle tax debt for less than what is owed. You won’t be allowed to set up a debt settlement if the IRS believes you have the ability to repay the full amount as a lump sum or through an installment plan. Usually an OIC is set up if there is doubt that a taxpayer could pay the full amount, doubt that the amount of tax assessed is correct or there is some extreme circumstance that needs to be considered even if the tax payer has the ability to repay their debt.
Most people are afraid the IRS will come after them if they don’t pay taxes. But if you come out of hiding and work to address any tax woes, the IRS may work with you to come up with a solution.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.