Options for minimizing the pain of back taxes

On Behalf of | Nov 2, 2017 | Back Taxes or Tax Debt

If you are like many in Connecticut and across the country, you dread tax season. While it is still several weeks before the end of the year, you may already fear you will owe money to the IRS. In fact, you may still be dealing with letters and warnings from the government about overdue taxes from last year.

Your impulse may be to leave the unopened envelopes on the table and deal with the other bills in your life. However, there are options available to you when your tax bill is unmanageable, and the IRS is usually willing to work with people who qualify for their various installment plans.

Don’t let it go!

The IRS has the power to collect on debts that most other creditors do not. For example, the IRS can file a lien against your property or levy your wages and other assets without the need of a court order, not to mention the fines that continue to accrue as you delay payment. So, ignoring the warnings they send is not in your best interests.

Instead, you may find answers and reassurance by speaking with a tax attorney who can help you determine if you qualify for any of the IRS installment plans, such as:

  • Guaranteed installment: If you have filed all your taxes on time, owe less than $10,000 and have no other installment agreements in place, you may qualify for this plan. You will make a monthly payment that includes penalties and interest for the next 36 months.
  • Streamlined installment: This plan contains the same stipulations as above except that it is for those who owe $50,000 or less. You will agree to pay the debt within 72 months.
  • Partial payment installment: With this plan, the IRS bases your payments on what you can afford rather than on a set formula. The drawback to this plan is that it does not protect you from tax liens.
  • Non-streamlined installment: If you owe more than $50,000 or for other reasons do not qualify for any of the other options, you may have to negotiate with the IRS for a payment plan.

For this final payment option, the IRS may require you to sell assets or take out a loan to pay the debt, so having a professional assist you with negotiations may prevent you from agreeing to terms that are not helpful to your financial situation.

As with any tax issues, you are facing serious consequences that should not be ignored or taken lightly. Seeking legal counsel is one way to limit the possibilities of continued negative consequences for your overdue taxes.