No taxpayer wants to get into the IRS tax debts. Still, every year thousands of taxpayers get into it due to different reasons. And once they get into it, their tax debts keep increasing day-by-day with the addition of penalties and interests. At some point, if the IRS tax debts are not paid, they get double and become an unwanted burden for the taxpayers. They have to pay this at any cost.
Now, the question is “is there any provision to settle the IRS tax debts?” The one-word answer is “Yes.” Not one, rather many ways are there to settle the IRS tax debts. In this guide, we will comprehensively discuss four different tax debts settlement ways. As a taxpayer, if you approach any of these ways, you can minimize your tax debts and maximize your benefits. Let’s start with the first and the best way to settle your tax debts with the Internal Revenue Service.
Pay it Off
Clearly, this is not a way of tax debt settlement, but this is the best way to deal with your tax debts. If you choose this way, you can avoid heavy interest and penalties on your tax debts. We know there can be many different reasons a taxpayer chooses not to file his/her tax returns before the deadline. Those reasons could be financial inability, family crisis, long-term illnesses, etc. Well, whatever the reasons are, you have to try your best to pay your tax debts as soon as possible otherwise it will start increasing in amount. And you will never want that. You should choose other ways of tax debt settlement ways only when the problems are worse and cannot be controlled in the near future. Most times, you should look for paying your tax debts as soon as possible.
It is one of the most common tax debt settlement ways. If you approach an Installment Agreement, you have to set up a monthly payment plan with the Internal Revenue Service. You will be given 72 months to pay it off to the IRS. This is best for those taxpayers who need some extra time to pay off their tax debts. However, the downside of the Installment Agreement is that the interest payments will continue to accrue until the debts are not fully paid.
On the other hand, one advantage is that if you are able to pay your tax debts within 120 days, you can save the amount of the Installment Agreement set-up fee.
Offer In Compromise
It is an ideal tax debt settlement provision for the IRS taxpayers offered by the Internal Revenue Service. It is a program that allows tax debtors to settle their tax on less amount than they owe to the IRS. However, to apply for this program, you have to explain the reasons for the failure of filing tax returns before the deadline. The reasons should be genuine and valid proofs. If the IRS officers consider the given reasons genuine and as per the guidelines, they will accept your request and you will be able to save hundreds or thousands of dollars. You will also get rid of heavy interest, penalties, and criminal charges.
This is the ideal for those tax debtors who owe the IRS more than they can afford. If you are one of those, you should apply for Offer In Compromise. You should take assistance from the professional and experienced tax attorneys to apply for this tax debt settlement program. They will surely help you in minimizing your tax debts.
Currently Not Collectible
This is a status that declares that the particular taxpayer is currently not able to pay his/her back taxes or tax debts due to financial crisis or insolvency. In this case, the IRS voluntarily takes action and frees the taxpayer from all the IRS debts including penalties and interest. The IRS put “currently not collectible” status on taxpayers when they find proper evidence to prove it. This is only for those taxpayers who are actually insolvent and unable to pay the IRS taxes. It does not apply to any other taxpayers.
The above-mentioned four tax debt settlement ways are the best ways to settle your tax debts with the Internal Revenue Service. You can choose any of the above-mentioned ways as per your requirements. The best way to avoid tax debts is to pay it off before the deadline and the best way to settle your tax debts is to apply for Offer In Compromise. If you meet the requirements of OIC, then only you should choose this option otherwise look for other options. You should also take assistance from the professional and best tax attorneys NYC. They have expertise and experience in this field. They will surely help you the best way and ensure you get what you want.