How Can I Settle Tax Debt?
Every tax attorney has his or her own strategies for dealing with tax debt, but there are some tried and true methods for working with the IRS. The taxman is tenacious, so never think that ignoring your tax debt will make it fade away.
Options For Settling Tax Debt
Here are some of the methods you may consider. We recommend that you consult a tax attorney as well – but these can help you familiarize yourself with the terrain.
Offer In Compromise
If you are able to make a lump sum payment, the IRS may be willing to accept a smaller dollar amount. The Offer In Compromise agreement allows you to pay a reduced amount as a full and final payment. It is a smart way to go, as it can save you a great deal in penalties and interest.
Innocent Spouse Relief
If you have inherited debts from your spouse, there is a way out. The IRS has specific guidelines you must meet, but you can apply for the Innocent Spouse tax relief program, to protect yourself from taking on those bills.
Statute of Limitations
Ten years! A decade. That is how long the IRS has after they assess your debt to collect. If you are close to the 10-year mark after the initial assessment – this assessment is usually close to the original tax filing date – then you may be able to wait it out.
Currently Not Collectible
If you can provide evidence that you have no ability to pay your tax debt, then you can apply for this temporary status. The IRS can mark you as “currently not collectible,” and that designation lasts for approximately one year, however the IRS will still charge interest and penalties to your account. It is not a permanent solution, but may give you some more time to save up.
You can establish an agreement with the IRS under which you can pay your unpaid taxes in installments over a lengthy period of time. The installments appear similar to a credit card payment schedule, and you can automate the payments to make it easier.
Whether you need a tax attorney or another type of legal assistance, Donnellon, Donnellon, & Miller is here for you. 513-891-7087 is our number, and our team has dealt with similar situations to yours.