Tax debt can quickly become unmanageable. What may start out as a few thousand dollars owed on back taxes can quickly escalate with penalties and interest. Taxpayers who find themselves facing this growing debt may question whether they will ever be able to settle their bill.
In some cases, taxpayers in this situation may want to consider negotiating with the Internal Revenue Service (IRS). It may sound like an intimidating process, and rightfully so. Afterall, you would be negotiating with one of the biggest federal agencies in the country. Once you get over the intimidation of the process, you could find yourself reviewing options that can help you deal with a more manageable tax bill. These options include:
- Offer in Compromise. As noted in a recent piece in The Wall Street Journal, there are times when the IRS will accept a smaller payment to cover the tax debt then what is actually owed and forgive the remaining balance. These situations generally entail an offer that represents the most the IRS could reasonable expect the taxpayer to pay. It leads to a win-win situation. The IRS gets something for the tax bill while the taxpayer can move on with their lives, tax-debt free.
- Installment agreements. Another option involves proposing an installment agreement. This basically involves the taxpayer asking the IRS to agree to a payment plan. The amount and time vary depending on the details of the individual’s tax debt.
These are just two options that can help taxpayers manage their tax debt. Other options may make more sense depending on your situation. Contact an attorney experienced in IRS collection matters to discuss the best option for your tax debt.