Settling Your Tax Debt With The IRS

Paying back taxes is unavoidable. Just look at the statistics. According to reports from the IRS, more than 18 million Americans owed taxes in September 2014. Also, an estimated 10 million taxpayers face tax penalties each year. Don’t become one of the 10 million Americans who face tax penalties. You can settle your back tax debts with the IRS. You need to know how. Fortunately, the IRS provides a variety of methods for paying off back taxes. Read on for tips to help you handle your tax debt and lesser penalties. 

File your taxes

Even if you can’t afford to pay back tax debts, still file your taxes. Ignoring your taxes will only make your situation worse. Additionally, if you don’t file by the deadline, you could face a monthly penalty of 5 percent. The maximum amount of penalties you could be liable for is 25 percent of your balance. Owing penalties and interest on your taxes make your tax debt a whole lot worse. You can file an extension if you need more time to file. However, you should still pay as much of your tax as possible by the deadline to avoid interest and penalties. Platinum Tax Defenders works with an experienced team of CPAs who can help you file your taxes.

Set up a payment plan, delay payment or settle back taxes

For those who cannot pay their taxes in full within 120 days, the IRS offers options to manage your balance.

Apply for a payment plan

An Installment Agreement is best if you need more than 120 days to resolve your back taxes. Installment Agreements can still add penalties and interest to your debt. You can only be eligible for an Installment Agreement if you owe less than $50,000, including penalties and interest.

Delay your payment

You can also temporarily delay payment on your tax debt if you can prove financial hardship. If paying your tax debt would prevent you from affording necessary living expenses, you can apply for Currently Not Collectible. However, the IRS will eventually come knocking on your door for payment. Additionally, if you can delay your payment, you will still accrue interest and penalties.

Apply to settle for less than you owe

If you can prove you will never have the means to pay off back taxes, you can apply for an Offer in Compromise. An Offer in Compromise helps you resolve tax debt with the IRS for less than you owe. You will have to prove that paying the debt would cause financial hardship to qualify.

Get help from a tax relief expert

Navigating tax debt can be difficult. It’s a good idea to consult a certified public accountant or tax attorney. Working with a tax expert will ensure you’re handling your tax situation in the best way possible. 

Apply for Innocent Spouse Relief

Do you owe back taxes because of your spouse? If so, you could be eligible for Innocent Spouse Relief. If you inherit your spouse’s IRS tax problems, you could have an escape route. If you get Innocent Spouse Relief, you won’t be subject to taxes caused by your spouse or ex-spouse.

Wait out the statute of limitations

The IRS typically has ten years to collect on a back tax debt, including penalties and interest. A tax relief specialist can help you resolve your back taxes. One of your options is to wait out the statute of limitations. Waiting out the statute of limitations can be a useful tool because you can file for a collection appeal to stop IRS collection actions. The collection appeal provides you with the opportunity to explain how you think you could resolve the situation.

File for bankruptcy

Sometimes you can file for bankruptcy to remove tax debts. Filing for bankruptcy is one way to obtain tax debt relief. However, you could consider bankruptcy only if you meet the requirements for discharging your taxes. 

There is no secret way to pay off tax debts. Instead, there are ways to get out from under the IRS’ aggressive debt collection tactics. Don’t believe a tax relief professional who says they can save you “pennies on the dollar.” That person is probably more interested in selling you something you don’t need. Platinum Tax Defenders will focus on your specific situation. 

Credit Card Debt Consolidation

You have two ways of credit card debt consolidation. You can consolidate debt through a credit card debt settlement company or on your own. It’s important to avoid credit card debt settlement companies. These companies will typically collect your payments for months before making a settlement offer.

Additionally, sometimes, these companies won’t make a settlement offer at all. During this time, you can continue to receive collection calls and negative payment marks on your credit report. You will get faster results by settling debts on your own. Additionally, credit card debt settlements should be in writing. You can either draft an agreement on your own or have your credit card company send you a deal. However, make sure you and someone from your credit card company have both signed the agreement. You will want to make sure the deal is signed before you send payment.

Get Help From A Tax Relief Professional

Hiring a tax relief specialist can get you a better deal when attempting to pay off back taxes. A tax attorney can help you determine which repayment method is right for you. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. Owing back tax debt can leave you in bad financial shape. The IRS only wants to get what money you owe them in back taxes. Often, they are willing to help you settle back taxes, but you have to know how to try. That’s where a tax relief services company can come in handy. When you hire a tax resolution professional, there are other methods you can use to avoid expensive back tax debt. Call Platinum Tax Defenders for a free consultation today.