It is really important for you to pay off your tax debt. So, it is also essential for you to keep a tab on the tax that you will have to pay to the IRS or the Internal Revenue System. However, if you are having problems with the IRS, you can try to get help with debt and become stress free. For that, you will have to negotiate with the IRS and make the payments as per the agreement. There are various kinds of payment agreements and the two main types are installment agreement and settlement agreement.
Different settlement agreements
In order to get help with debt with the IRS, you can either go for the settlement agreement or the installment agreement:
1. Tax debt settlement: You can get debt help from tax attorneys too. They will help you in analyzing your financial condition and then help you to determine on the affordable tax debt settlement method.
2. Penalty reprieve: If you can show some valid reasons to the IRS in regards to your bad financial condition, they may slash the penalty amount on tax debt due to non-payment of the taxes almost by one-third. So, it becomes easier for you to pay off the taxes.
3. IRS tax bankruptcy: If you think that you will have to file bankruptcy under chapter 7, you can get help with debt through this type of agreement. But you should also know that, bankruptcy isn’t a good option as it is going to have drastic effect on the credit and you can even have to liquidate almost all of the assets that you have.
4. Compromise offer: In case of the compromise offer, if the IRS gets the proof that you really don’t have the ability to make your tax payments, they may accept this offer. In case of compromise agreement, you will have to pay the tax amount that is much less than that what you were originally supposed to pay to the IRS. However, before you start to make payments as per the compromise offer, you will have to agree that you will make regular payments against your taxes for the next 5 years.
5. Release of wage garnishment: If you fail to pay your taxes, the IRS will garnish at least 25% of your wages. This will create more stress on you as your budget will shrink and then it will be a problem to support yourself and your family. So, if you are unable to make the payments better negotiate with the IRS and request them to release wage garnishment and also request them to offer you a settlement or installment agreement.
The different installment agreements are the streamlined installment agreement, partial payment installment agreement, guaranteed installment agreement. Irrespective of the type of payment agreement that you choose for, remember to plan your payments in advance through budgeting.
- Options For 2011 Taxpayers (goarticles.com)
- Tax debt: Ways in which you can pay off IRS debt (2011tax.org)