If you find yourself facing a tax debt to the IRS, it is important that you deal with it sooner rather than later. Just as with any other debt, the longer you wait the more it will pile up and the more difficult it will be to manage.
There are a number of options at your disposal when it comes to dealing with IRS tax debt. In general though, the first choice you’re going to have to make is whether you’re going to handle this by yourself or whether you’d like to have a professional help you out.
Regardless of which path you choose, the options that you have to deal with IRS tax debt are:
There are several different types of installment agreements that will allow you to pay off your IRS tax debt month by month instead of having to pay it off immediately and all at once (which is something that you probably can’t afford).
Depending on your situation, you’ll find that there are various installment agreements that you may qualify for.
For example, if your balance is $10,000 or less you could qualify for a Guaranteed Installment Agreement where you’ll have 36 months to completely pay off your IRS tax debt in monthly installments – and there’ll be no negative effect on your credit rating if you do so.
In all general installment agreements you’ll have to pay off your debt in its entirety – and sometimes may even have to pay slightly more than the initial debt.
Partial Payment Installment Agreements
If you can’t afford to pay off your debt even in installments, you may qualify for a partial payment installment agreement. This is an agreement where you’ll only need to pay off a portion of your debt in monthly installments over the long term. More details here!
To qualify for this type of installment agreement, the IRS will audit your finances and determine just how much you can afford to pay. Subsequently every two years your finances will be audited again to determine whether or not you can pay more.
Offer in Compromise
Another way that you can get away with only paying off part of your IRS tax debt is through an offer in compromise, though for this option you’ll need to be able to pay it off immediately in one lump sum, or over an extremely short duration in installments.
Not Currently Collectible
In some special circumstances, your IRS tax debt may be allowed to slide for a year or so – but this requires that the IRS agree to not collect for that duration.
Of course, the final and most dire option to deal with your IRS tax debt is to file for bankruptcy, and this is normally only a last resort when you can’t afford to pay off your debt even through partial payment installment agreements.
See how many different options there are when it comes to settling your IRS tax debt? Now all that you have to do is figure out which one applies to your situation and is best suited for your finances!