Dealing with your tax problem is usually a big issue as there is a big difference between owing debt to the IRS and to the other financial institutions. The conventional lenders will take steps to sell off your accounts to the debt collection agencies or even harass you but the IRS will straightaway repossess your property or even garnish your wages. If you don’t want to be under the gun of the IRS, you have to ensure taking the best debt relief steps through which you can put an end to your soaring tax debts. While there are DIY steps, there are steps that you can take with the help of a tax professional too. Which one you will choose will entirely depend on your present financial situation and the way you can manage things. Here are some steps that you can take when you want to get out of IRS tax debt.
- Guaranteed installment agreements: How much do you owe on your IRS accounts? If the amount is $10,000 or less than that, the IRS might allow you to repay your debts through an installment plan, known as the guaranteed installment agreement. However, you shouldn’t have filed late or paid late for the last 5 years, all your tax returns should be filed and your monthly installment payments should pay off the balance in 36 months or less. The grand total of your total outstanding balance divided by 30 will be the minimum monthly balance that the IRS will accept when you pay off your debts through the guaranteed installment agreement.
- Streamlined installment agreements: If your balance is $25,000 or less than that, you can repay your IRS tax debts easily through the streamlined installment agreements. You have to agree to repay the balance in 60 months or less. If the balance expires within the 5-year period due to the statute of limitations on collections, then the IRS will require full payment. As with guaranteed agreements, all the tax returns should be filed and you agree to file your tax returns and pay your taxes in the right time in the near future.
- Partial payment installment agreements: If the minimum amounts of the guaranteed and the streamlined installment agreements don’t follow your budget, you can even opt for partial payment installment agreement. The monthly payment will be based on what you can actually afford after taking consideration of your living expenses that you need. You can set up a longer repayment term and the IRS will file a federal tax lien to safeguard the interests on the debts.
- Offer in Compromise: Just as you settle your credit card debts, you can also settle your IRS tax debt through OIC. The IRS will take into account your present financial condition before accepting this offer. A portion of your amount will be waived off by the IRS and you’ll be left with an amount that is much less than what you owed. However, the IRS will also take into account your everyday financial changes in order to check whether your situation has uplifted to be able to repay the debts.
So, when it comes to saving money and repaying your debts, you have to ensure taking the above mentioned steps so that you don’t become a victim of harassment by the IRS.