IRS Tax Debt Relief & Tax Debt Settlement
What do Leona Helmsley, Willie Nelson and Richard Pryor have in common? They all had an aversion to paying taxes. Fame may get you out of some things, but it won't get you out of trouble with the IRS! The fate of these celebrities proves that back tax debt is best handled with care.
Decide whether you want to handle the tax debt solution yourself or hire someone to help you. If the debt exceeds $10,000, it's advisable to retain a tax professional. The more you owe, the more crucial it becomes to have someone help you compile the right documentation and complete the proper forms.
If you haven't already filed your back tax returns, do so as soon as possible, because the IRS interest meter keeps running. Make sure that you take advantage of all possible deductions. If you have already filed returns, have a tax advisor review them carefully. It might be appropriate to amend the returns to correct errors or claim additional deductions.
Tax debt help
Although some advertisements imply that tax debt relief can wipe your liability clean, this usually isn't the case. The most common solution is a payment plan, which you can request by way of Form 9465, Installment Agreement Request. The IRS must agree to your proposed plan as long as you owe less than $10,000 and the plan amounts to a full pay-off within three years.
Less common solutions, which the IRS can accept or reject at its discretion, include
- Partial Installment Plan. If you're financially unable to pay off the debt in full in three years, you can request an installment plan that adds up to less than the full amount owed.
- Offer in Compromise. The IRS will sometimes accept a lump sum or short-term payment plan that is less than the full amount owed. This method isn't widely successful; only a minority percentage of these requests are approved.
Leona, Willie and Richard would probably advise you to pay your taxes on time. But if it's too late for that, consider yourself informed about how to get back on the IRS' good side.