Owing the IRS tax money you can’t pay is a frightening experience. Uncle Sam has long arms and can reach you and the money you do have quite easily. Fortunately, the IRS spent the last few years working to make themselves more helpful and taxpayer friendly. They’ll still pursue you if you ignore their collection attempts, but they will give you time to settle your debt first. These tricks can help you do so while paying less than what you owe – or nothing at all.
Offer in Compromise
If you simply owe more than you can possibly pay, the IRS may agree to an offer in compromise. In this arrangement, the IRS examines your income, expenses and assets to determine your ability to pay. If they agree that paying your debt simply isn’t possible or would cause you undue hardship, they may accept an offer of compromise.
In an offer of compromise, the IRS will determine how much of your debt they would realistically get if they pursued collection actions against you. They will then require you to pay that amount as either a lump sum or through an installment plan. The rest of your tax debt is then forgiven. A tax attorney such as those at IE Tax Relief can help you request and negotiate an offer of compromise with the IRS.
File Bankruptcy
Although you shouldn’t take the decision to do so lightly, filing bankruptcy can reduce or eliminate your tax debt. Under Chapter 7 bankruptcy, you can ask the court to discharge your debt to the IRS. If you succeed, you won’t have to pay any of your tax debt. If you file Chater 13 bankruptcy, the court will work with the IRS and your creditors to devise a debt repayment plan. During the process, the IRS and others may agree to accept less than what you owe. Your creditors can go to court and fight your bankruptcy petition, however, so bankruptcy isn’t a guarantee that you can settle your debt for less.
Drag Your Feet
The IRS is subject to a statute of limitations on tax debt collection. They have 10 years to collect the money you owe them or file liens against your property. If you’ve already carried your debt to the IRS for a few years, IE Tax Relief may be able to help you delay the IRS. The US court system is notoriously slow, and an attorney can use that fact to your advantage. He can file a collection appeal to slow the IRS collection process and can possibly tie your case up in court until the statute of limitations passes.
If you owe the IRS, don’t let them scare or intimidate you. Take a deep breath and contact a tax attorney who can help you. The IRS settles tax debs for less every day, and there is no reason your debt can’t be one of them.
