How To Handle Tax Debt Issues To Avoid IRS Collection
Tax debt can be very stress-inducing, particularly if you can’t figure out any way to pay it off. Whether you pay your taxes or not, the truth is the IRS will still find a way to get their money back, respectively through IRS collection.
It’s a scenario you want to avoid, but in some cases, it feels too difficult and almost impossible to do it. So, how do you handle debt issues and avoid IRS collection? Here are some tips.
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Make Minimum Payments
If you can’t pay too much, you should make an agreement where you can pay a minimum amount equal to your tax debt divided by 72 months. It’ll still be better than paying nothing, and the IRS will see that you are at least doing your duty in one way or another.
The minimum payment will be agreed on with the IRS, and no matter what, you should always pay no less than this settled amount of money. You can always pay more if you’re able to do this, but don’t pay less than the agreed amount.
Set Up Another Payment Arrangement If You Cannot Afford the Minimum
Due to different difficulties in your life, you may be unable to afford even the minimum amount. What can be done when this happens? Well, you can still come to an arrangement with the IRS. Contact them to set something up.
Make sure to submit Form 9465 for this instead of applying online. You will be under some financial analysis. The IRS will want to see whether you have available credit and if you’re able to borrow money to pay the debt.
They will also be interested in whether you could make money by selling your assets, so they’ll measure the value of your assets. Another thing they will look into is how much you have left at the end of each month after paying expenses.
Use an Installment Agreement
Streamlined Installment agreements were expanded in 2017. People who owe sums from $50,000 up to $100,000 can use this method and pay their debt over 84 months or seven years. Streamlined agreements are great because the IRS will not look into your current financial situation for them. As a result, there will be fewer forms to fill out.
Ask for a Deferment
When you’re in a really bad financial situation and there is no way you will be able to pay your taxes soon, you can ask for a deferment. The IRS will agree that you will not make payments until you’re in a better financial situation.
The last thing you want to do is procrastinating with debt. If you already have a lot of debt, it will only get worse if you put it off. Interest and penalties will apply and make it even harder to handle the problem. If you don’t do something, the IRS will make use of IRS collection. So, take the right course of action and contact the IRS to come up with a solution to handling your debt.
Debt is difficult, but you can handle it if you have the right strategy. Use any of the tips above and deal with your debt accordingly to avoid IRS collection.