Unpaid taxes can be handled in two ways, one is do it yourself or the second is to hire a tax professional to help you out. Going DIY on unpaid tax issues is advisable if you owe the IRS less than $5,000 and if you know how to go about coordinating with the IRS about your unpaid taxes.
Because of the current economic crunch, the Internal Revenue Service seems kinder to taxpayers who are actively trying to resolve their unpaid tax debts. The agency is now more accommodating of individuals and businesses that coordinate with them regarding a more favorable payment plan according to their financial situation. To clear your unpaid taxes, you have five tax resolution strategies:
- Installments: you can establish a monthly payment plan with the IRS so you can pay off what you owe in unpaid taxes in small installments each month. This is the fastest arrangement that you can set up with the IRS. The good thing is that the IRS is required by law to agree to this payment method if your balance is no more than $10,000.
- Partial payment: This is a great way to settle your unpaid taxes for possibly less than you owe. This is actually less time-consuming and relatively easier than negotiating an offer in compromise. In this setup, you will need to make regular payments to the IRS on a monthly basis. What makes it different from the first strategy is that you don't really get to pay your whole unpaid tax debt. Once you've fulfilled the predetermined terms of the installment agreement, the IRS will forgive the remainder of your tax debts.
- Offer in compromise: This is one of the most common strategies that tax relief experts tap into to help their clients with unpaid taxes. In this setup, you settle with the IRS for less than the amount you owe. For this, you must qualify based on your lack of assets and inability to pay and other factors to effectuate the offer in compromise.
- Currently Non collectible: There are also cases when you can seek a sort of tax holiday because you are incapable of paying off your unpaid tax debts. After the IRS finds evidence that you do not have the capacity to resolve your tax debt, collection activities including garnishments and levies will be stopped for a year. Even when the order is in effect, the 10-year statute of limitations covering tax collections will still be applicable. This means that if the IRS is unable to collect your unpaid tax debt within a designated 10 year period, your tax debt will expire.
- Bankruptcy: You can also clear your unpaid tax obligations by filing for bankruptcy. However, understand that this should only be considered as a last resort. You shouldn't even consider this route if you think that you can settle your tax debt with other strategies. You need to consult with a bankruptcy attorney to see if you qualify to discharge your unpaid tax debt.
There is wisdom in hiring a tax professional especially if you're incapable of paying off your unpaid tax debt. With a tax expert like Mike Habib, EA, you can resolve your unpaid tax obligations through a strategy that is more attuned to your financial situation. Mike Habib will personally work on your case to settle with the IRS for the best resolution strategy. Call Mike today at 877-788-2937.