You owe money to the IRS and have actually considered hiding where nobody can find you. You wish you could just blow this debt away and make it disappear but it’s always there. Since wishing it away has not worked so far, you should consider facing the IRS and getting the debt resolved.
What can you do?
If you owe money to the IRS, here is some advice:
Forget the credit cards
If you think that putting what you owe the IRS on a credit card is a good idea, the short answer is no. Why? Because the interest you will be charged by the credit card is higher than what you would pay the IRS. This means that you will end up struggling to pay those high-interest rates and the debt will not decrease.
Don’t dip into your savings
Do you have an IRA? 401k? Savings in another retirement account? You are most likely counting on that money to see you through your retirement years and your future. If you start taking money out of those accounts, you may not only incur a penalty but you may jeopardize your financial future as well.
Explore the options that the IRS offers you
Don’t think the IRS is your enemy. The IRS actually has several options available to allow you to put this debt behind you:
Installment plan
To begin with, if you owe the IRS money, and have not had an installment agreement with the IRS in the last five years, start by filing form 9465, the Installment Agreement Request. The IRS will let you settle your debt this way if you can prove you are unable to pay, owe less than $10,000, and commit to paying off your debt within three years.
Temporarily Postpone the Collection
Contact the IRS and request an evaluation of your case to determine whether you can temporarily delay any payments until your financial situation improves. You may have to provide proof that you are unable to pay at this time. Although you may be approved, you should know that penalties and interest charges will accumulate until you settle your debt.
Negotiate a settlement
This pathway, also called an offer in compromise, would allow you to settle your debt for less than the full amount you owe. It may be your only option if you truly are strapped and paying this debt would create a financial hardship for you.
How Does An Offer In Compromise Work?
The IRS will start by evaluating your situation, taking into account your ability to pay, your income and expenses and your asset equity. With this information, they will determine how much they can expect to collect from you in a reasonable amount of time.
To be considered a good candidate for an offer in compromise, you must have filed all your tax returns and have failed to make any estimated payments required. You will not be considered for this option if you have declared bankruptcy and are going through the procedures.
You may still find this entire process extremely daunting and not something you feel you can tackle on your own. However, you don’t have to face the IRS alone, call the experts at Premier Tax Service to help you with your debt settlement today.
