Options for resolving your tax debt
Olive Branch Financial, LP does not employ tax professionals and does not offer assistance with tax debt. This information is solely for the purpose of providing individuals with resources to start resolving their tax debt.
You can avoid many things in life - cleaning dirty dishes, making your bed, getting an oil change - but the one thing you cannot avoid is paying taxes.
Inevitably, anytime there is money to be paid, there will be debt. According to the most recent data from the IRS, over 18 million Americans owed taxes in September 2014. Additionally, the IRS found that an estimated 10 million Americans face tax penalties each year.
So where do you go from here?
We know owing money to the government can be uncomfortable and even frightening. After all, the IRS has the power to garnish your wages, seize your assets, and more, in order to collect the money you owe them. The good news is that the IRS can be patient. As long as they know they are going to get paid someday, they are generally willing to wait until you're in a better financial position to pay. That being said, the longer you take to pay your tax debt, the more you will owe.
Before we go into methods for resolving tax debt, we want to suggest that you take some time to find a professional to advise you through this process. While some individuals can do it on their own, and we do not discourage against doing it on your own, many benefit from using a Certified Public Assistant (CPA) or an Enrolled Agent (EA). While there are companies that specialize in tax debt resolution, their fees can be high. Please take time to evaluate the resources that are available to you before rushing into an agreement with the IRS.
1. Installment Agreement - If you cannot afford to pay your tax bill all at once, you should consider an installment agreement. This is a monthly payment plan that allows you to pay what you owe over time. You must file all of your tax returns before you apply. If you owe $50,000 or less, you may be able to apply for an installment agreement online or by mail using the federal form 9465, Installment Agreement Request. If you owe more than $50,000 or your taxes are other than individual income taxes, the rules are a bit different. Check with the IRS or a qualified tax attorney or accountant in that event.
2. Partial Payment Installment Agreement - Somewhat similar to an installment agreement, this plan allows you to repay the IRS over time at a reduced dollar amount. A well-qualified tax attorney or tax professional will negotiate the lowest possible monthly payment for you.
3. Offer in Compromise - This is a program where you can settle your tax debts for less than what you owe. It will require you to make a lump sum payment or enter a short term payment plan to repay your debt at a reduced amount. If you owe the IRS more than you can expect to repay, this could be a great option to explore. If you qualify, you may be able to save thousands of dollars in taxes, penalties, and interest.
4. Currently Not Collectable - This means that the taxpayer, you, has no ability to pay his or her debts. The IRS can choose to declare an individual "currently not collectible" once they have received adequate evidence that the taxpayer has no ability to pay. This can be a very useful tool to stop levies, liens, seizures, or the termination of an installment agreement.
5. Innocent Spouse Relief - There are very few ways to get tax debt forgiveness, which makes innocent spouse relief unique. You can only get this status if you can truly prove that your spouse, or former spouse, incurred debt without your knowledge or consent. Other forms of tax relief for spouses include separation of liability relief and equitable relief.
6. Bankruptcy - Income tax debts may be eligible for discharge under a Chapter 7 or 13 bankruptcy. You should consult with a qualified bankruptcy attorney before filing for bankruptcy, as you will need to meet certain requirements and it has serious consequences for many individuals.
7. Expiration of The Statue of Limitations - The IRS has 10 years from the assessment date to collect all taxes, penalties and interest from you. Sometimes, it may be worth it to just wait out the expiration date so that your debt becomes uncollectable.
Olive Branch Financial LP does not employ tax professionals or offer tax-related services. We recommend you speak with a licensed tax professional before deciding the right strategy for resolving your debt. We hope you have found this information useful.
Save Source LLC is not a debt relief agency pursuant to the Bankruptcy Abuse Protection and Consumer Protection Act of 2005, 11 U.S.C. 101, et. seq., and does not provide bankruptcy assistance to consumers.
Olive Branch Financial is not a law firm and does not offer legal advice or credit repair services. This information is only intended to provide you with knowledge about your options. Please speak with an attorney or tax advisor about any options that may involve bankruptcy, legal or tax issues.