The Internal Revenue Service (IRS) is notoriously aggressive when it comes to collecting on debt. They have many different legal tools they can use to help gather what is owed, from taking money right out of your paycheck to seizing your assets. Taxpayers who find themselves in this situation have options. The following will discuss common mistakes people make when trying to manage their tax debt and provide three alternatives that are more likely to set you up for future financial success.
Avoid these common mistakes
It is important to avoid making mistakes that only complicate the situation. Common examples include:
- Ignoring the issue. One of the biggest mistakes is not taking growing tax debt seriously. There are options to help get control over the situation.
- Failing to file a return. The IRS has more tools now than ever before. It is extremely unlikely that you can simply fly under the radar. The agency will notice if you are not filing tax returns.
- Choosing the wrong debt management option. It is important to review the pros and cons of each and tailor a plan to your specific situation.
These are just a few of the more common mistakes.
Put together a plan to get tax debt under control
Whether one of the mistakes noted above led to your current debt or you found yourself facing unmanageable tax debt for a different reason, there are options that can help you address the situation. One of the most common is an installment agreement (IA). This option is essentially a payment plan between the taxpayer and the IRS. Taxpayers can choose a short or long-term repayment plan depending on their situation.
Another option is an offer in compromise. As the name suggests, this option involves a compromise between the IRS and the taxpayer. In certain situations, taxpayers who are unable to pay the outstanding tax balance can convince the IRS to accept a lesser amount.
Taxpayers can tailor one of these debt management options to best suit their needs. Determining the best course of action will depend on the details of your situation. As such, it is wise to seek legal counsel from those with experience in this area of law. The attorneys at Goldburd McCone can discuss these and other options to help you regain control of your finances when dealing with the IRS.