Home Business How to Settle Your IRS Tax Debt: A Step-by-Step Guide

How to Settle Your IRS Tax Debt: A Step-by-Step Guide

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Having a lot of debt can be incredibly stressful. Having a lot of tax debt can be terrifying. The IRS could legally garnish your wages, take your property, and money from your bank accounts to pay off your debts.

As scary as it may seem, you do have a number of options to settle IRS tax debt. Do you want to settle your tax bill and have peace of mind?

Keep reading to learn how you can take care of your tax bill once and for all.

1. Installment Plan

You have a whopping tax bill that you know you can’t pay in full. You also don’t want to put it on a credit card because of high-interest rates. That would be a bad financial move in the long run.

You can contact the IRS and agree to pay your tax debt in monthly installments. Keep in mind that there’s a fee to set up an installment plan. If you miss a payment, the IRS can put your account in default and try to collect it for the full amount owed.

2. Offer in Compromise

An offer in compromise can be used to settle IRS tax debt. If you know that you are liable for the debt and you don’t have the means to pay, you can file your application under Doubt as to Collectability.

You have to fill out a few lengthy forms (more if you have a business) to prove that you don’t have the financial means to pay. What you do instead is to make an offer to pay what you can afford.

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This offer can be paid in full or in 6 monthly installments. The IRS has tough standards to approve these applications.

3. Currently Not Collectible

If you’re having a hard time financially, you could get a temporary reprieve from the IRS. They can put your account in “Not Collectible” status.

That would get all collections activities to stop for a temporary amount of time, usually between 6-12 months. This is a good option to use if you just lost a job and you’re unemployed for a few months.

Which Option is Right for You?

There is no way to be able to know what option is the best one for your situation. There are too many variables, such as your income, your assets, and your debts.

You’ll need to confer with tax debt relief specialists who can look at your situation and guide you in making the right decision for you.

Settle IRS Tax Debt Today

Tax debt isn’t going to go away. If you do nothing, it’s guaranteed to get much, much worse. It’s up to you to take some kind of action to relieve your tax debt.

You can contact the IRS and get on an installment plan or apply for an offer in compromise. Your first step should be to consult with a tax professional to find out which option is best for you.

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