Owe Taxes to the IRS? Here Are Some Options

Owing back taxes to the IRS is a very difficult situation to find yourself in. The IRS has extraordinary powers to obtain back taxes and can seize your property, garnish your wages and even take money out of your bank account. Naturally, you want to avoid having the IRS take any of these collection actions. Fortunately, you have several other options for resolving this issue.

120 Days

If you are able to pay your back taxes in full but need more time to pay, the IRS has a program that allows you more time, giving up to 120 days to make your payment. You are not subject to an extra fee for entering into this program. A key point to remember regarding the 120-day extension is that interest and penalties related to paying your taxes late will still apply. You can apply for this program through the IRS website or by calling the agency and asking for the extension.  

Long-Term

The IRS also allows you to enter into a long-term agreement for paying your back taxes in full under certain conditions. An installment agreement allows you to make monthly payments to resolve your tax situations rather than having to pay a lump sum. Typically, you must be able to fully pay the amount owned in 72 months to be eligible for this program. The IRS can request certain financial information from you, such as your monthly income and living expenses, depending on the amount you owe. If you a large amount of money, such as over $50,000, the financial information you will be required to turn over could be quite extensive. Also, a minimum monthly payment will be required in many circumstances.

Offer in Compromise

You also have the right to offer the IRS a partial payment if you have no way to make full payment within a reasonable amount of time. This is known as an offer in compromise. Generally, the IRS accepts these offers only when they cannot resolve the debt with a collection action and the offer is the most they can expect to receive due to the debtor's financial circumstances.

Determining the best way to resolve a tax debt issue with the IRS is rarely easy. In many instances, you will need expert assistance to decide what is the best course of action. To learn more about this subject or to get advice from a qualified professional, contact companies such as Kitch Law Firm.