Sweeping tax reform can be a good thing — or not. Many Americans throughout the country have found themselves facing a surprising and even unmanageable tax bill. What to do? In most cases, you should still file your tax returns. A failure to file can result in additional penalties and fees.
But what if you cannot pay your bill? There are options. Some examples include:
- Offer in compromise. The Internal Revenue Service (IRS) may approve an agreement to accept a lower tax payment and settle the debt. Taxpayers must meet certain qualifications for the agency to approve the request. These criteria generally include a history of filing tax returns as required and making tax payments throughout the year through withholdings if an individual or quarterly payments if a business. The taxpayer must then establish an exceptional circumstance which has resulted in the inability to pay.
- Short-term payment plan. The agency may agree to extend the payment period by up to 120 days if you can make the payment through direct withdrawals from a checking account or credit card.
- Installment agreement. An installment agreement provides repayment over a longer period compared to the short-term payment plan. This agreement generally results in repayment for a period of time that extends beyond 120 days but also requires automatic payments.
Determining the right course of action for your situation depends on the details of your case. An attorney experienced in tax collection issues can review your case and discuss the pros and cons of each. The lawyers at Goldburd McCone can discuss the above and other alternatives to resolve your tax matter.