If there’s one thing that will keep you up at night, it’s owing the IRS a huge back tax debt. Maybe you haven’t paid your taxes in a long time because you simply didn’t have the cash on hand, or perhaps you mistakenly misrepresented your true income on your tax return, the result is the same. You owe the IRS big money, and they will not stop coming after you for their money no matter how much you try to ignore their phone calls and their bills to settle your IRS tax debt.
According to the financial experts at Supermoney.com, if you owe the IRS for back taxes, you are certainly not alone. In the U.S. a significant tax gap exists, which means there can be a big difference in the actual taxes you owe and the amount of tax you end up paying. What this means is, you are exposing yourself to IRS collections if you haven’t paid enough taxes.
Do Not Ignores The Tax Collectors
If the IRS starts sending you notices about owing back taxes, you can try to hide under a big rock, but the IRS is eventually going to find you. So what’s you’re best course of immediate action? Do not ignore the tax collectors at the IRS. Any reputable tax consultant service that offers comprehensive IRS tax help will tell you that the IRS has far more resources at their disposal, not to mention power, than your everyday debt collection service. If you owe a significant amount in taxes and you don’t respond or take any action of their bills, they will add interest which will accrue over time, ballooning your debt. They will then begin aggressive collection actions in the form of penalties, tax liens, wage garnishments, and more.
That said, if you seek out tax help from a reputable tax collection service, the IRS will gladly assist you with resolving your debt. In other words, if you show cooperation, the IRS will more than likely be willing to come to a reasonable solution to your back taxes problem.
There is more than one method for settling your IRS tax debt depending upon your financial circumstances. But here are five sure-fire ways to settle your IRS tax debt :
1. Pay Whatever You Can Afford on Your IRS Tax Bill
Says Supermoney.com, when you get a dreaded bill in the mail from the IRS for back taxes, take some sort of action on it immediately. Even paying a little bit proves that you are showing good faith in attempting to resolve the debt situation. In other words, paying something is a heck of a lot better than paying nothing at all. Plus, every small amount paid, goes towards lowering the compounding interest and penalty charges. You can take advantage of the IRS Direct Pay portal on the web to make your payments.
2. Pay Your IRS Tax Bill with a Personal Loan
One of the more popular ways of settling at least a portion of your IRS tax bill is to take out a personal loan and/or tap into a line of credit. Owing alternative lending sources, such as the bank, is better than owing the IRS, and it will save you in penalty and interest costs. If you own your own home, you might want to consider applying for a low interest home equity loan to to settle your IRS tax debt.
3. Apply for an IRS Tax Bill Payment Extension
Should you be in the relatively fortunate position of knowing you will be able to settle your IRS tax debt back within 120 days or less, you can apply for a short-term extension. All you have to do is apply online at IRS.gov. Supermoney.com claims you will qualify if you owe less than $100K in back taxes.
4. Establish a Monthly Payment Plan to Pay your IRS Bill
If you’re earning a decent income, and you owe less than $50K in back IRS taxes, you have the option of calling and/or writing them to establish a monthly payment option. They will give you 120 days to pay off the debt without penalty. However, a small setup fee is required to activate this option.
5. Hire a Tax Settlement Service to Compromise on Paying Your IRS Bill
Hiring a tax settlement service to help pay your IRS bill is one of the best ways of getting out of IRS debt. The professionals at these companies are specially trained to compromise with IRS agents. More importantly, they will prove on your behalf that paying off the entire bill will cause you economic hardship. Here’s the dirty little secret about the IRS: they don’t expect you to pay the entire bill. They only expect you to pay what you can legitimately afford.
A tax settlement service will establish the maximum amount you can pay by allowing the IRS to audit your annual income, your monthly expenses, plus your existing assets. Being in debt to the IRS for back taxes is never a fortunate situation. It can cause you undo stress and hardship. If you can’t possibly pay back a massive IRS bill there is help in the form of a tax settlement company. These companies will not only fight on your behalf, they will help you get some precious sleep at night. They will also eliminate your fear of going to the mailbox.