5 Things You Need to Know about Settling Tax Debt


Photo by Green Chameleon via Unsplash

I have seen it over and over again.  My clients walk in the door and are totally overwhelmed by back taxes – some of them have even had their bank accounts depleted due to these types of issues! Talk about tears.  Sure it can be easier to hide your head in the sand and just ignore the mail, but it will come back to bite you and you simply HAVE to resolve this.

1)  The IRS and state taxing authorities can be brutal and have much more resources and latitude to collect their debts than normal debt collectors.  In most cases these are not debts that will disappear in time without aggressive collection activity, and they will knock on your door if need be to resolve the situation.  If you cooperate, many times they are willing to help you find a reasonable solution.  But you have to be proactive!  Too often, I have seen people ignore their mail or hide from phone calls and that only makes things much worse.

2)  There are many creative ways to settle these debts that people may not know about including installment plans, penalty abatement’s, amendments, audits, appeals hearings,  Offers In Compromise, Hardship holds and more. 

3)  It is possible to negotiate with the IRS, but they will not accept less than they could collect on their own and they don’t care if you are paying for college, private school, more than one vehicle, etc. Their debt takes precedence over these things.

4)  It’s probably better to get professional help to work things out unless you are knowledgeable about the tax code, It really is like speaking another language. You can do it by yourself, but you may miss a better solution that will save you time, stress and/or money.  I would shy away from national tax resolution firms and go small because you want to work with a firm with people who are available to answer your questions and to stay on top of the crucial deadlines imposed by the taxing authorities.  It’s especially nice to be able to work with a professional face-to-face because some of these things can be very stressful and or scary, so it’s nice to have your hand held through the process. The IRS is slow but when they move they tend to move quickly.

5)  Finally, tax problems don’t go away and can come back to haunt you even if you’ve forgotten all about them.  Do keep in mind that the IRS will not be calling you requesting you pay them over the phone, that is a very common scam that is going around and is exploiting many who do owe back taxes so don’t get fooled!  There is no “one size fits all” solution but there are definitely hard and fast boundaries to work within. It is best to get these matters resolved than to hide and wait for them.  You will lose money in the process as well as sleep and peace of mind which is invaluable.  

There you have it – 5 tips to help you on the road to resolving your federal and state tax issues and please keep in mind every person’s situation is different so it’s best to consult a professional to resolve yours!  If you want to work with me and my team – please email us here!

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