The most common ways to resolve tax debt.
When owing back taxes to the IRS, emotions of fear can be overwhelming. Mixing that fear with solicitations can cause confusion on what to do about the debt. Here at Tax Debt Services, we believe there are four ways to resolve your tax debt. Every situation is unique, be confident that your solution is in one of these four options.
Pay the IRS in Full.
While this may not seem like a viable solution, sometimes it is the best one, and it for sure is the IRS’ favorite solution. If you have the ability to fully pay the IRS in a lump sum payment, you should do so. This method of resolution erases all future interest and penalties from accruing and prevents any unnecessary collection actions. Also, if you can fully pay the IRS, you would not qualify to reduce the liability.
Go on a Payment Plan.
This is often the most popular method in resolving tax debt. Payment plans, or installment agreements, are by default the IRS’ choice for debtors to get out of collections. Most people do not have the ability to fully pay, but could manage 72-120 monthly payments. Sadly, the interest and penalties continue to accrue even though you’re paying them, and therefore often enough the monthly payments barely touch the principal balance.
Apply for Temporary Hardship.
This is known as a Currently Not Collectible status. The IRS will agree that you cannot afford to pay monthly payments and therefore will agree not to pursue collection actions against you. Again, to be on this status, you must be able to prove to the IRS you cannot afford to pay monthly payments.
Apply for a Settlement.
The IRS’ Fresh Start Offer in Compromise is available to debtors that have little to know equity in assets and little to no disposable income after their monthly expenses are paid for. If you meet this certain financial criteria, and are compliant, the IRS will agree to significantly reduce your tax debt. This is the gold standard that is the best resolution for the consumer as it saves the most money, but it is not available to everyone.
Give us a call 800-822-4122 to see which of these options are best for you, we can help. www.taxdebtservices.com