Settling Tax Debt: The Facts

You might be among the many Americans who have are unable to settle taxes, and with the added burden of interest and penalties, you have a tax bill and IRS problems.

There are 5 strategies that may help you pay your tax liability, relying on your financial situation.

• Partial-pay installment agreement: A long-term payment plan with reduced amount
• A monthly settlement plan, or installment agreement

  *Any of these 2 installment agreements may require you to fill out Form 9465 (Installment Agreement Request) and Form 433-A (Collection Information Statement). You’ll need to assess the sum you can afford to offer for your monthly payment. Three months’ worth of documents of income and expenses are needed to accomplish Form 433-A. A letter is written requesting for an installment agreement. Send it along with the forms and three months’ worth of documentation to the IRS. You should receive a response in 90 days.

• Filing for bankruptcy: Tax liabilities are discharged under Chapter seven or Chapter eleven, twelve, or thirteen bankruptcy. Chapter 7 bankruptcy gives you the option to liquidate your debts and Chapter 11, twelve, or thirteen bankruptcy allows you to negotiate a payment plan.
• File Form 656 (Offer in Compromise) to lessen your tax debt, either with lump sum payment or short-term payment plan, by showing Doubt as to liability, Doubt as to collectibility, or Hardship.
• Be on presently not collectible status, meaning you are unable to settle, so the IRS cannot collect for a specific period , typically a year.

You can determine how to solve your tax liability with the help of a tax professional. This and other IRS issues can put a strain on you and your family’s lifestyle. You can start enjoying life again when you get this circumstance under wraps.

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