If you have IRS debt, you may not know how the IRS differs from other debt collectors. The IRS is not like other debt collectors!
What You Need to Know About the IRS
They have the power to file lawsuits, garnish your wages, levy your bank accounts, or even put a lien on your home. More importantly, this can all be done without a judgment from the court. However, the IRS will not do those things without giving plenty of notice before taking anything from you. But, you may still feel that the time given may is not enough.
So, what can you do to get rid of your tax debt?
Set up an installment plan:
Owe less than $50,000 in tax debt? Have you been consistently filing your tax returns? If so, you can get set up an installment plan with the IRS to get caught up on your debt. The IRS website has a form available for you to apply for an installment agreement. Click here to get the form. This agreement will give you 72 months to pay off what you owe. Do you owe more than $50,000, but less than $100,000 in tax debt? You may still be able to set up an installment agreement.
It is important that you research this further! As interest will continue to accrue on your debt while you are repaying. There are also penalties to consider. Do not miss a payment! If you miss a payment on an installment plan with the IRS, your settlement agreement can be revoked.
Offer in compromise:
Do you owe tax debt, but cannot afford the monthly payments in an installment plan? Then, there is another option for you. The IRS also has a process available that is known as an “offer in compromise.” In an offer in compromise, the IRS to takes less than what is owed. This is done only if they believe that they will not be able to collect the tax debt.
There are two important requirements to qualify:
- You must offer an amount equal to your disposable earnings over the next one to two years.
- You must offer as much as the liquidation of your assets.
Your excess income or disposable earnings is determined from the information that you provide on Form 433 on your taxes. To determine the liquidation value of your assets, the IRS will look at a quick sale value. This is around 80% of the amount made from the sale of your assets. Once you know your excess income and the liquidation value of your assets, you can submit your offer to the IRS.
File for Bankruptcy:
Filing for bankruptcy is actually a good way to deal with your tax debt. You have the option of filing for a Chapter 13 or a Chapter 7. What you qualify for will depend on your financial situation and your state’s requirements.
A Chapter 7 takes less time. This will stop the IRS collections process for a short amount of time. However, once the bankruptcy if over, they will resume. A Chapter 13 will enable you to set up a payment plan, while eliminating a fair amount of interest and penalties.
Need More Information?
Before you take any action, be sure that you are informed. Call us for a free consultation to find out the options that will work best to help eliminate your IRS tax debt.
At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like to get to know you and we would like you to get to know us. We want you to be sure you are the right fit for us and that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case, so we can offer you representation to the fullest extent of the law. Call us today to set up a free consultation.