The Internal Revenue Service is a powerful creditor and owing money to the IRS can have consequences such as seized assets, garnished wages, and liens on property. However, there are various ways to deal with the situation, from communicating directly with the agency to receiving tax debt help from a legal professional.
Here are several options to settle your debt with the IRS if your financial situation prevents you from paying in full.
Set Up a Monthly Installment Plan
An installment agreement lets you pay off the IRS over time. Pay a portion of your tax debt and you can be eligible to set up a plan that works for your budget. A partial payment installment agreement is a relatively new option that reduces owed taxes, and allows you to pay off the remainder over time. You can also pay off unpaid back taxes using this method. Rather than all at once, pay off your tax debt as you would monthly credit card payments.
However, if you’ve lost investments due to fraud, the United States Tax Code can enable you to recoup up to 40% of these losses.
Settle Your Tax Debts for Less
If you owe more than you can afford to pay, the Offer in Compromise program lets you pay off the IRS at a reduced dollar amount. Although it requires a lump sum or short-term payment plan, this program may let you save thousands of dollars. You’ll also avoid interest and penalty fees.
Provide the IRS with evidence to declare you “Currently Not Collectible”, and it may voluntarily agree to suspend collections of tax debt for a certain period of time. This may also enable you to file for a collection appeal and stop any possible levy, lien, or seizure, if you can propose a way to resolve the situation.
File for Bankruptcy
This option requires the help of an Orange County bankruptcy attorney. Chapter 7 or Chapter 13 bankruptcy can enable you to have income tax debts discharged. With Chapter 7, all allowable debts are discharged; with Chapter 13, a payment plan for some debts is created, while the remainder is discharged.
Seek Legal Help
An attorney can help you in many ways. But if you attempt to settle your outstanding tax debt, the IRS may be patient. Remember, interest will be applied to any amounts owed, so you’ll have to pay more the longer it takes to pay off your tax debt. There are other options as well. If necessary, a release from wage garnishments may be possible if the levy doesn’t leave you with enough money to get by with.
The IRS can also levy your bank account. If so, the bank will remove whatever is available in your account to pay the IRS within 21 days. Stopping the process requires obtaining a release of the levy from the IRS. There is also an option for innocent spouse relief, if tax problems have been inherited from your spouse or ex-spouse.
Contact OakTree Law for Tax Debt Help
Our Los Angeles bankruptcy attorney can assist you with any of the options above. Familiar with the ins and outs of the IRS, and important factors such as its 10-year statute of limitations (it has 10 years to collect all taxes, penalties, and interest), our attorney can provide debt and bankruptcy services best suited for you. If you have tax debt you can’t afford to pay, contact OakTree Law today at 562-219-2979 or request a free evaluation online.