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Having back taxes hanging over your head can cause extreme stress. The tough economy and the huge unemployment rates are causing the numbers of Americans with back tax debt to increase substantially. Unfortunately most of these people do not know that they have options with the IRS. The government does want to help taxpayers get out of debt with the IRS and have made some changes recently.
Some of the changes include new options to assist people in paying their back taxes. The IRS has even gone so far as to allow back taxes to be discharged in bankruptcy cases! This is a major change as taxes were never before allowed to be included in bankruptcy court.
If you are considering bankruptcy, or already in the process, you need to talk to your attorney about this new law. It applies to both chapters 7 and chapter 13 bankruptcies. There are specific rules and qualifications that must be met as well as required documentation. Your attorney should be able to assist you with gathering the required documents and verifying your eligibility to take advantage of the back tax discharge. If you do qualify, your back taxes could literally be erased saving you thousands of dollars!
If bankruptcy is not an option you want to consider, there are others.
There are Installment Agreements that can be arranged with the IRS. This basically means that you and the IRS will decide upon a monthly payment plan. The amount would be decided based upon your current income. This could allow you to get out of debt with the IRS over time instead of having to pay a lump sum immediately.
Another option that you may qualify for is the Offer in Compromise. This option allows you to prove that you are unable to pay the balance of your back taxes now and in the future. Once you have proven this using financial documentation, a new, much lower amount can be decided upon. This could also save you thousands of dollars!
You should consult a tax professional to assist you whenever you are pursuing an agreement with the IRS. The tax professional will ensure that you are using the correct option for your specific situation and help you with all of the required documentation. Often times the tax professional will even contact the IRS on your behalf.
Take steps today to avoid huge penalties and interest that continues increase the balance of your tax bill.
by: Tiffany Nelson
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