If you’re stuck in a cycle of accumulating back tax debt, you don’t have to muddle through alone. Hire an accountant or tax attorney to discuss your payment options and help you move forward.
Back tax debt can sneak up on you. It starts when you miss one tax payment deadline. The resulting fines add to your bill. If you can’t pay the debt off all at once, the late fees keep piling up-as does the ballooning interest on your overall balance. Eventually, you may feel like you’ll never be able to dig yourself out of this hole. Whether you’re seeing tax debt looming on the horizon or you’re already struggling with back taxes, you can benefit from hiring a knowledgeable tax attorney or accountant. These financial pros can act as your advocate with the Internal Revenue Service, helping you arrange a repayment scenario that meets your needs. If you need professional tax help, make this the year you explore your back tax resolution options.
The IRS imposes a variety of penalties related to back taxes. You can be fined for filing your tax return after the April deadline, and for failing to pay the full tax balance by that date. Plus, you’ll be charged a certain percentage of interest on the unpaid amount. A tax attorney may be able to negotiate penalty abatement if you can prove that you have a reasonable excuse for the late payment. For instance, the IRS may grant penalty abatement if you’ve suffered a death in the family, experienced a disaster at home that wiped out your financial records, or were out of work for a prolonged time. With penalty abatement, in many cases, the IRS will lift any additional late payment penalties and interest. You will only need to pay the original balance due in order to become debt-free.
Offers in Compromise
If you currently owe more in back taxes than you can reasonably expect to pay back in a certain number of years, your tax attorney or accountant may be able to negotiate an offer in compromise with the IRS. With an offer in compromise, you propose a lesser amount than you currently owe. This amount would be one that you are actually able to pay. The IRS must then decide whether to compromise with you, as receiving a smaller amount of what you owe is better than receiving nothing at all. Because this tax resolution method involves a reduction in the debt itself, the IRS does not give away offers in compromise easily. Your tax attorney will need to present a strong case as to why you deserve this consideration.
Sometimes paying off tax debt is just a matter of being able to spread payments out over a period of time. That’s where installment agreements come into the picture. Even if you don’t qualify for penalty abatement or an offer in compromise, your tax attorney or accountant can negotiate with the IRS on your behalf to come up with a more feasible payment schedule. For instance, you might be responsible for $100 a month until the debt is paid off. This form of tax relief may be your best bet if you don’t have a strong case for why you failed to pay your taxes on time.
Your tax resolution specialist can help you in a variety of other ways, depending on your specific situation. If you’ve been hit with wage garnishment, wherein the IRS debits an amount from your paycheck to cover debt payments, a tax attorney can negotiate a wage garnishment cessation. If your spouse got into tax debt and you’re being hit with the penalties, a tax resolution pro can help with that, too. Perhaps most importantly, a tax attorney, accountant, or other expert can advise you on money management to help you avoid sinking into a similar debt situation in the future.