Steps to Resolve Tax Debt

Last updated on July 24, 2023

A tax debt is not difficult to resolve if you take the correct steps from the start. If you have the financial ability to pay the entire tax debt at once, then you certainly don’t need to hire expert help or apply for a payment plan. You simply pay the full amount of tax debt to the IRS, including penalties and interest, and get back into compliance. On the other hand, if you cannot pay the full amount in a lump sum, you might need to pursue a payment plan.

Payment plans are some of the various resolution options the IRS offers to taxpayers, according to their financial capacity to resolve their tax liability. There are others that do not necessarily involve paying the tax debt.

Should you have no way to pay any amount of your back taxes, the IRS may update your status to Currently Not Collectible (CNC). If you have some capability of paying your tax debt, the IRS may allow you to pay a reduced amount of the total due.

If you have the financial capability to pay the full tax debt amount, but not in a single payment, then you should consider applying for an Installment Agreement. This allows you to pay your tax debt in fixed monthly installments.

Whatever method you choose to resolve your tax debt, make sure that you apply for a payment plan that allows you to smoothly resolve your case and provides you with the most savings in money, time and effort.