January 24, 2008

I Owe the IRS large amounts of Tax Debt, How Can I Pay?

Your tax return has been prepared and you owe taxes.� Before you can mail your return, you need to decide how you are going to make your payment so you avoid having IRS Problems.� Lucky for you, there are many available options
Payment in Full
The simplest solution is to make payment in full.� This option is fine if you have the funds available.� Paying your taxes with a credit card can actually save you money, as the interest rate charged will probably be less than the penalties and interest the IRS is assessing on your debt.� If you are having IRS Problems such as liens or levys, they will be removed with full payment and all collection activity will cease.
Installment Agreement
Another consideration is requesting an installment agreement.� This is essentially a loan you receive from the IRS.� You will be able to pay off your tax debt with monthly payments.� Your tax debt will continue to accrue penalties and interest until the balance is paid in full.� You will need to fill out Form 9465 (Installment Agreement Request) and include it along with your tax return.� If possible, send a partial payment.� You should hear from the IRS within 30 days.
Offer in Compromise
Obtaining an Offer in Compromise (OIC) actually allows the IRS to accept less than what you owe.� This agreement between you and the IRS will resolve your tax debt.� Specific criteria must be met to qualify for an OIC.� You will need to meet one of these:
�� Doubt as to collectibility � You cannot now or in the future pay your back taxes as determined by the IRS
�� Doubt as to liability � You may not owe the back taxes
�� Hardship on your family � Full payment will present economic hardships on your family
You will need to fill out Form 656 (Offer in Compromise).� If your status is Doubt as to collectibility, you will also need to include Form 443-A (Collection Information Statement).
Currently-not-Collectible
The IRS gives this status to a taxpayer who does not have the ability to pay off their tax debts at present.� To qualify you must show that your allowable expenses exceed or come close to exceeding your income.� Be aware that the IRS will also check out your assets.� All collection activity will stop at this time.� You will receive an annual statement showing the amount you owe.� Your situation will be evaluated periodically to see if you continue to qualify for this status.� Your tax debt will still accrue both interest and penalties.� To remain eligible you will have to file a tax return every year.
Bankruptcy
Filing for bankruptcy is another option.� You will need to evaluate your situation to determine which type of bankruptcy to file.� Careful consideration needs to be made when choosing bankruptcy because it will affect you and your family for many years to come.� You will probably want to seek professional advice because of the complex nature of this option.
If you have questions regarding any of these payment options or any other IRS Problems you are experiencing, contact our office.� Our knowledgeable staff will help you investigate the possibilities.� Call us today at (888) 43-6474.