If you are like many Americans who dread the arrival of Tax Day, it is better to be prepared and take action on income tax debt payment options, if needed. Stop worrying about paying the owed amount by the filing deadline– especially if you are already in considerable debt. There are options for managing your owed income tax, so don’t avoid dealing with the issue in the hopes it will just go away.
Income Tax Debt Payment Options
Every year, a large number of Americas send money to the IRS, resulting in those citizens experiencing financial hardship. It’s the government, so the expectation is there is no room for negotiation when it comes to staying up-to-date with taxes. However, there are income tax debt payment options which you may be able to take advantage of if you are struggling financially.
If you are having a hard time coming up with the money to pay the IRS, a payment plan is one of the most common income tax payment options available. You can repay debt at a lower amount each month so you can get up-to-date with what you owe. Payments are fixed for a period of time until the debt has been satisfied.
One of the biggest drawbacks with a payment plan is that penalties and interest still accrues on any unpaid amount, resulting in the debt taking longer to pay off completely. Payment plans are subject to your ability to repay the debt within a set period, based on what you can afford. You can find out more about current payment plan conditions by contacting the IRS.
Currently Not Collectible
You may be considered as experiencing financial hardship if your monthly necessary living expenses are greater than your monthly income. These expenses may include things like transportation, healthcare, food, utilities, and housing. If this is the case, the IRS may agree to place a hold on the debt you owe. Under the “currently not collectable” status, you do not have to make payments to the IRS. You will have to provide information to the IRS concerning your household income and expenses and all assets you own. It may be difficult to obtain “currently not collectible” status.
Currently not collectible status does not prevent penalties and interest from accruing, and due to the status being temporary, the IRS may determine you are able to once again honor payments and lift the hold if your situation improves. This is based on the IRS monitoring the debtor’s income in order to evaluate whether the currently not collectible status still applies.
Offer in Compromise
There is also a program known as the “offer in compromise,” which is tasked with helping taxpayers renegotiate tax debt. This involves examining cash and noncash assets, disposable income, and future income. The purpose of looking at assets and income is to help determine how much is reasonably collectible. A value is then agreed upon and the debtor has the option of agreeing to pay that amount within 24 months.
There are compliance requirements when you agree to an offer in compromise, which covers a five-year period after acceptance. For instance, the debtor is required to file returns and pay taxes before the filing deadline in each year the agreement is in place. It is important to consider whether these conditions are worth it, compared to the level of relief you will achieve through an offer in compromise.
Filing Bankruptcy may be an option to discharge some of your tax debt or provide a way to pay non-dischargeable taxes without fear of collection action against you. Determination of what portion of taxes are dischargeable and what would be paid in a bankruptcy case can be complicated. You should contact an experienced bankruptcy attorney to discuss your possible bankruptcy options. For impartial and expert advice on your income tax debt payment options, reach out to the offices of H. Lehman Franklin P.C. at 912-764-9616 or email us at firstname.lastname@example.org today.