IRS Tax Debt: How to Resolve It

Last updated on August 6, 2021

Resolving IRS debt needs to be the first priority of taxpayers who are under tax debt. In case of delay or refusal to pay the debt, the IRS may start aggressive collection actions such as lien or levy under which it seizes the asset(s) and/or property of taxpayers to fulfill unpaid taxes.

Negotiating IRS Tax Debt

Taxpayers who are looking to pay their back taxes by choosing an IRS debt payment program may need to negotiate the terms of the agreement with the IRS. The terms and conditions of IRS programs such as Installment Agreement, Currently Not Collectible, Offer in Compromise and Partial Payment Installment Agreement are open to negotiation especially the agreement regarding the amount of tax debt to be paid and the time duration in which the tax debt is to be paid.

IRS Tax Debt Payment Programs

• Installment Agreement: Under Installment Agreement, taxpayers can pay their tax debt in fixed monthly installments. The amount to be paid in monthly installments is decided by the IRS in consultation with the taxpayer. It largely depends on the financial condition of the taxpayer.
• Currently Not Collectible: Taxpayers who are unable to pay their tax debt at present may negotiate with the IRS for Currently Not Collectible where they can prove their inability to pay their tax debt due to financial restrictions. At the same time taxpayers need to remember that the IRS keeps a watch on their finances and any improvement in it may lead them to collect the taxes due.
• Offer in Compromise: Those taxpayers who cannot afford to pay their tax debt may ask the IRS to reduce their tax debt amount to a sum that they can pay. Only those taxpayers whose financial condition does not allow them to pay the tax debt may apply for Offer in Compromise.
• Partial Payment Installment Agreement: Under this IRS debt payment program, taxpayers may pay a reduced amount of tax debt in monthly installments. The IRS considers the financial situation of the taxpayer including assets before agreeing to place a taxpayer under this agreement.

IRS Tax Debt Penalties and Interest

On any amount of tax debt that remains to be paid by a taxpayer, the IRS charges penalties and interest. This is another reason, apart from aggressive collection actions by the IRS, which taxpayers must keep in mind before ignoring or refusing to pay their tax debt. The longer it takes taxpayers to pay their back taxes, the more interest will get piled on the amount to be paid.

Resolution of IRS debt is not complicated if taxpayers know how to resolve it. Most taxpayers take outside help in the successful resolution of their tax debt problem. Expert help ensures faster resolution and more beneficial results that make it comfortable for taxpayers to pay their back taxes.

To avoid further problems with the IRS, taxpayers are advised to resolve their IRS tax debt problem as soon as possible and reclaim their right to live in peace.