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7 simple ways to settle your IRS tax debt

7 simple ways to settle your IRS tax debt

Resolving your Internal Revenue Service (IRS) debt can be tricky and often financially challenging. There may have been times when what you owe more than what you can pay back to the government. Note that the IRS has authority over the assets you own and that can also be seized and used for full repayment of the debt which is why these amounts must not be left unchecked. But you need not worry as there are many easy ways to settle IRS tax debt minus the negative financial implications.

The Internal Revenue Service has multiple resources available at your disposal to help simplify the process of settling the accumulated tax debt. Alternatively, here are a few easy ways to ensure your tax obligation towards the government is fulfilled in a timely manner.

Special program
The IRS may defer your debt for a year or two in case you qualify for the special relief program. Your present financial condition is taken into consideration before the IRS qualifies you for the program allowing a special exemption from the repayment of any tax debt in the current fiscal year.

Offer in compromise
An offer in compromise will be allowed to settle the IRS tax debt in case the revenue services is unable to recover the amount through traditional means of forced collection. There are strict qualification requirements to be met and be eligible for a significant reduction in the amount of tax debt.

Installment agreement
An installment agreement is one of the easy ways to settle IRS tax debt. In case you are unable to pay the full amount of tax due for the current year, the revenue service will allow for payments to be made in smaller and more manageable installments.

Innocent spouse relief
A joint income account with your spouse will help you to settle IRS tax debt as an alternative to the preferred modes of repayment. There are multiple qualification criteria that have to be met to secure an innocent spouse relief. The IRS will not impose any tax implications of your spouse or even your ex-spouse once the application is processed.

Statute of limitations
The statute of limitations is another means of escape from paying taxes in the current year. Note that the Internal Revenue Service has a 10-year window to collect the total of taxes owed by you whichever way the service deems the collection prudent. However, it is a complicated situation as only a good tax attorney or financial expert will be able to tip the case in your favor and convince the IRS to wait for a favorable financial year to collect the remainder of the debt.

Penalty abatement
The type of debt will determine the primary mode of recovery and payment of taxes. It also influences the amount of penalty imposed for the delay in settlement. However, an abatement is possible for the penalty only if you qualify the required criteria. You must consult with a tax attorney to figure out the best possible manner to apply for a penalty abatement, given your present financial condition.

Filing for bankruptcy
In most cases, filing for bankruptcy should be the last option as it can have a significant impact on your financial condition. Complete bankruptcy states that you are no longer in a favorable financial position to meet your current obligations, let alone manage debt requirements. Chapter 7 of the income tax code provides for a full discharge of any legal obligation to settle IRS tax debt. Chapter 13, on the other hand, allows for a payment plan to partially settle the debt. Both options can be explored only after your tax attorney files a petition for bankruptcy. The Internal Revenue Service will further conduct an audit to determine the financial viability of your application.

 

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