By Sophie Kinsella, Contributor
Have you succeeded in paying down your tax debt on time? If yes, then well and good, but if the answer to this is a big ‘NO’, it is important for you to take the right initiatives to pay down your tax debts. Otherwise, your accounts and wages can be garnished, and worse – the IRS can put a lien against your assets. Therefore, it is important for you to try to find suitable options that can help you pay off your IRS tax debts, such as settlement agreements, installment agreements, and more.
You can also opt to get tax debt help from debt relief companies so that you can avoid losing your assets or money. If done in the right way, settlement agreements too can help you save money.
Options that can help you settle tax debts
You can apply to the IRS for them to forgive part of your tax debt . That can be done using the 5 options below:
- Tax debt settlement – You can take the help of a professional tax relief company, which can help you in analyzing your financial condition and then go on to help you in determining as to which of the tax settlement method is going to work best for you.
- Compromise offer – You are required to apply to the IRS for the settlement, along with the proof of your income. So, if the IRS finds out that you do not have the ability to pay more than what you are offering, even if some form of forced collection method is applied, they may accept the compromise offer made by you. In this form of payment, you can have the option to pay an amount which will be less than the original amount you owed. However, to be able to make the payment under this option, you will be required to give guarantee that you will be making regular payments on your taxes for the next 5 years.
- Penalty reprieve or abatement – If you can manage to show some valid reasons as to why you cannot pay down your taxes, and the details of your non-affordability with regards to the payments of the taxes, you may get penalty reprove. On an approx one-third of the penalty amount resulting from the non-payment of taxes will get abated at a later date.
- IRS tax bankruptcy – If you find out that you are eligible to qualify for chapter 7 bankruptcy, you can consider this option. However, this is not one of the best options because it will have a very negative effect on your credit report and you may have to liquidate your assets.
- Release of wage garnishment – If you don’t pay taxes to the IRS for a long time, wage garnishment of up to 25% of your disposable income can take place. If it happens, it will tighten your budget to such a degree that you will find it hard to support yourself and your family. So, you need to negotiate to release wage garnishment and settle for another way to pay your tax debt like, installment agreement.
Don’t waste any time if you can’t afford to pay taxes, rather take necessary action for getting tax debt help so that you can get out of this problem and avoid losing your assets, declaring yourself bankrupt or going to prison.
Author’s bio: Sophie Kinsella is associated with Oak View Law Group and has contributed to various other financial websites. Some of the topics she has written on are: Debts, debt pay off, debt relief options, divorce, SEO, taxes and so on.