If You Know The IRS Money
So, owe money to the IRS. If you’re like many of the people I have come into contact with who find themselves in this situation over the years, maybe you are at a total loss as to what to do next. The situation can get scary fast. Rest assured there is a path that leads you out of the fear and arms you with the information you need to make the best decisions for YOUR specific situation. So, here are three things you should know at the beginning:
1. There are five ways to resolve an IRS tax liability. That’s right, five. If you owe the IRS money, and you choose to take the necessary steps to resolve the problem instead of ignoring the problem and worrying when they will hit your paycheck or your bank accounts, you will almost certainly travel down one of these paths. Your possible resolutions are as follows: 1)Pay in full-either immediately or within the next 120 days; 2)Installment agreement (streamlined/online or complex, potentially a “partial pay”); 3)Currently Uncollectible Status (CNC status); 4)Offer In Compromise-in which the IRS agrees to accept less than you owe for payment of the liability; 5)Bankruptcy-either chapter 7 or chapter 13, if you otherwise qualify and the type of tax your owe qualifies for bankruptcy discharge.
2. You may be asking yourself, how do I know which one of these avenues best resolves my situation? The short answer is you financial situation will determine which path is best for you. The IRS has financial forms to utilize for just this purpose, known as the 433f, 433a and in the event you own a mall business a 433b. Those forms may be found on the IRS website, www.irs.gov.
3. Not everyone is in a position to hire a tax attorney or enrolled tax agent (the types of tax professionals authorized to practice before the IRS). In many cases, unless you owe the IRS at least $10,000.00, those types of professionals will not even meet with you because it simply is not cost effective for you to hire them. If their typical fee is $2,500.00, for instance, and you only owe the IRS $3,500.00, that may not make financial sense for you. If you find yourself in a position that you need information on how to best solve your IRS liability, but you do not plan to hire a tax professional, you should take the necessary steps to find out as much as you can about the options available to you so that you can make the best choices possible given your specific set of unique circumstances.