If you find yourself owing back taxes and it’s a scary amount of money, you should promptly contact a tax lawyer. We are here to help you navigate tax law effectively so you can get on with your life to the best of your ability.
Here are a few of the options that may be open to you should you face this stressful situation.
A Payment Plan
Payment plans are also known as installment agreements. They work more or less like most types of loans.
You can readily set this up yourself with the IRS. However, if a lot of money is at stake, you should speak with a professional first anyway.
On the upside, a payment plan is a means to break your obligation down into bite-sized amounts that are easier to swallow. If you can handle the payments involved, this can solve the matter.
On the downside, you will have to pay the full amount plus interest. The IRS will charge interest on the outstanding balance until it is resolved, which means you will pay more than the full amount owed.
The single best reason to speak with a professional first is to determine what is in your best interest before you agree to anything. That can help you best exercise your options and protect your rights going forward.
Offer in Compromise
You may see this abbreviated as OIC. It is a means to negotiate down how much you must pay and this one definitely calls for professional assistance. If you qualify, you can settle for less than the full amount owed and that can be a huge relief, both financially and psychologically.
It is designed to help small businesses and people who are self employed. The IRS does have a FAQ page. Like a lot of legalese, it is fairly hard to navigate, but it is there if you want to poke around for yourself before giving us a call. We can explain it in plain language and help you sort out if this is right for you.
IRS Hardship Program
If you simply cannot afford to pay your back taxes, this may be the program for you. You can file for hardship status and try to get your case declared currently not collectible. This is also known as status 53.
Hardship status may be declared in cases where making the payments would interfere with you ability to pay your rent, afford to feed yourself, afford transportation to get to work and similar essentials. It is recommended that you always speak with a lawyer before trying to negotiate something like this.
You could think of it like the tax equivalent of declaring bankruptcy. It’s something many people find confusing and intimidating. A professional can make it clear.
If you owe back taxes, it’s often because there are larger problems. Getting help can prevent you from making mistakes that would only compound your problems.
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