What Are Your Options When You Owe the IRS?

When you owe the IRS and can afford to pay your tax debt, then you must pay your tax debt. However, when you cannot afford to pay the tax debt you have other options available. These options include:

-Submitting an Offer in Compromise- offer to settle the debt with the IRS, usually for much less than you owe. This offer is based on your current assets and disposable income

-Request an Installment Agreement- based on your income and expenses, work out a monthly payment plan with the IRS

-Request being put on Hardship Deferment/Currently Not Collectible- you show the IRS that you currently have no money to pay them and they do not collect from you for a temporary amount of time, sometimes up to 36 months

-Request an Abatement/Removal of penalties and interest- show the IRS that there is a legitimate reason for your tax debt and sometimes they will remove penalties and interest that were assessed on your tax debt

-File for bankruptcy- your tax debt must be 3 years old, have been assessed within 240 days of filing, and the tax return for the debt was filed 2 years prior to the filing

-File Innocent Spouse Relief- if you are married or recently divorced, you can request IRS relief by showing that your spouse or ex-spouse failed to file/report income and you should not be resonsible for the the tax debt

-Wait for the Statute of Limitations to expire- the IRS has 10 years to collect on the debt. This is risky, as the IRS can pursue levies and garnishments of your property.

Categories: Chapter 13, Chapter 7