Tax Debts

It can happen to anyone. Your employer didn’t withhold enough tax from your paycheck. Or you were out of work and collected unemployment. Or you took money from a retirement account to pay an unexpected bill. Or you started collecting Social Security. There’s hundreds of reasons you might have an unexpected tax bill, and you’re not alone.

If you owe the IRS (or a state) a significant amount, it be stressful. You might feel trapped, or frozen, not knowing how to get out of the situation. The worst choice is to do nothing, as penalties and interest keep adding up, but what should you do?

The IRS takes their money seriously and will use every legal route they have to collect. They can seize your assets, freeze your bank account, garnish your paycheck, and even revoke your passport. New York can take similar actions, including suspending your driver’s license. Liens can be filed on your property. Levies can be made on your future income. We hope this hasn’t happened to you yet, but it can if you don’t act fast enough.

If you can’t pay what you owe the IRS or state, there are several options that may be available, depending on your circumstances. A key element of any resolution is to make sure your taxes are paid for the current year and any missing returns are filed. The IRS is not interested in working with you if your next filed return will put you back in the hole.

Here are some of the options the IRS provides if you owe them money. (States tend to have similar programs but details vary widely.) The specific options available to you depends on your unique circumstances.

Installment Plan: You can arrange to pay in monthly installments. Interest continues to be added, similar to carrying a balance on a credit card, but no other collection activity will happen as long as you fulfill the plan requirements. There are different types of agreements, depending on your finances and amount you owe.

Offer in Compromise: You can offer to settle your debt for less than the full amount you owe. The IRS does not have to accept, but if it’s structured to meet IRS guidelines there is a better chance of success. Not all tax professionals know the ins and outs of preparing a reasonable offer, so it’s important to look for a professional who understands the program and requirements.

"Uncollectable" Status: If your situation is such that you don’t have enough income to cover your living expenses, you may be able to defer your debt. Collection activity will be put on hold until the situation changes, giving you time to breath.

Bankruptcy: Although it may seem drastic, bankruptcy can be a useful tool to stop IRS collection efforts, structure an affordable repayment plan, and possibly even wipe out tax debt if it’s old enough. This is a complex area and you will likely need an expert bankruptcy attorney as well as a tax resolution professional.

How can an experienced tax resolution professional help you? We can:

  • Respond professionally and appropriately to IRS and state correspondence

  • Contact the IRS or state on your behalf so that you don’t have to face them directly

  • Represent your case before the IRS or state

  • Get your past-due back tax returns filed and up to date

  • Negotiate the IRS collections process and preserve your rights

  • Negotiate penalties, interest, and tax amounts to lower your debt

  • Work out a payment plan for what you owe

  • Fight for you on related issues that may arise, come up, such as innocent spouse situations or positions taken on tax returns

  • Help you get levies and liens removed from your assets

Solutions for Resolving Your IRS Debt: Schedule a complementary consultation to discuss your specific tax situation and provide advice on the options available to you. Your confidential tax situation will be handled with the utmost discretion and privacy.