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Many Americans are struggling with back tax debt, the numbers grow every year. The tough economy is making it even more common for people to be unable to meet their tax burdens. Fortunately there are options available today that can help you get control over your debt to the IRS.
The first and most commonly used option is the Installment Agreement. This option allows you to pay the IRS monthly. The amount is determined based upon your current income and financial situation. You will need to prove your income and the IRS must agree to the amount you will pay each month.
The next option is the less known Offer in Compromise (OIC). This is a much more complex agreement. It allows you to prove to the IRS that your financial situation will make it impossible for them to collect the full balance due. You can then offer a lesser amount and prove that you can in fact afford to pay the new balance.
Both of these options have specific rules and criteria that must be met. You should contact a tax professional to assist you and handle the communication on your behalf. Be sure to check out whomever you decide to hire! You want to make sure they are knowledgeable in the most recent changes to the tax laws and are reputable in their field. If handled correctly you could save thousands of dollars using either of these options!
Another major change is in the ability to discharge back taxes in a bankruptcy. Whether you are filing chapter 7 or chapter 13, if you qualify your tax debt could be discharged! Historically tax debt was never allowed to be considered in a bankruptcy. This change is just another indication that the government truly is trying to help the American taxpayer!
There are very specific rules and qualifying criteria that must be met in order to discharge tax debt in a bankruptcy. You will need to talk to your bankruptcy attorney in order to be sure you meet all of the requirements.
If you are living with back tax debt you now have options! There are other options available that I have not listed here. Talk to your tax professional to find out which option is right for you! Time is of the essence as interest and penalties continue to increase your balance until it is paid in full! Your tax debt could double or worse if you wait!
