Advantages of Early Relief of Tax Debt

Last updated on February 8, 2022

It is a misconception that taxpayers who do not have the money to pay their tax debt in full cannot get out of the debt. Considering the various financial capabilities of taxpayers, the IRS has different tax debt resolution plans to resolve back taxes, namely an Installment Agreement, Currently Not Collectible, an Offer in Compromise and the Partial Payment Installment Agreement. One or more of the resolutions achieved under these plans are:

• A reduction of tax debt
• A reduction of IRS penalties
• The postponement in payment of the tax debt
• A monthly payment agreement

One advantage of getting tax debt relief is that the total amount paid on a tax debt may be less.  Since the IRS charges interest on any taxes that remain to be paid, taxpayers who resolve their debt early can avoid unnecessary penalties and fees.

Resolving tax debt also protects taxpayers from collection actions of the IRS. Taxpayers get should be aware that the IRS has taken notice of their tax debt when they receive an IRS notice requesting the payment of tax debt. Ignoring these notices can lead to seizure and/or sale of a taxpayer’s properties and assets, freezing of their bank accounts, even retirement funds. Also, the IRS does not need a court order to process a seizure or a sale.

Tax debt relief must be achieved because the IRS can be relentless in its collection of the debt if a taxpayer isn’t cooperative. In cases of tax debt, the earlier a taxpayer resolves their debt, the better.