IRS Debt & Tax Issues

Do you have IRS and State tax debts? Many individuals owe back taxes and cannot afford to pay these debts.

There are a number of tax debt courses of action:

1. An Offer in Compromise: You can settle your tax debts for less than what you owe. One is usually required to make a lump sum or short-term payment plan which settles the debt for a reduced amount. It is not as simple as many advertisements portray, but works well for the right individuals. The IRS will usually suspend collection action while they consider the Offer.

2. An installment agreement: a monthly payment plan for paying the IRS. Interest and penalties continue to accrue, but the IRS will suspend collection action with an agreement in place.

3. Under certain criteria, the IRS will deem a debt not currently collectible, and suspends collection action for a limited amount off time.

4. Bankruptcy may allow you to discharge tax debts that are more than three years old. The criteria for discharging these debts are in the bankruptcy Code and the Internal Revenue Code, and must meet the rigid requirements set forth.

5. Certain tax debt is also a lien against your real property which can survive bankruptcy.

Tax debt issues are complex and often a tax professional is your best resource. If there is an issue with the amount owing, it may be best to have your returns and financial records reviewed by an accountant, preferably a CPA.