What are my options if I am unable to pay my tax debts?

Question

What are my options if I am unable to pay my tax debts?

Answer

Tax debt is given different treatment in bankruptcy than certain other types of consumer debt, like credit card debt. As such, tax debt relief may take different forms than standard debt settlement does. This does not mean you don't have options- you do. In fact, you need to explore your options if you cannot pay your taxes back, since the IRS collections process can involve the garnishment of your wages, or placing levies or liens on property you own. To avoid these consequences, there are a few things you want to consider once you discover you are unable to pay your taxes:

  • You may be able to work out an installment agreement or payment plan with the IRS. This would involve you paying back some or all of the total tax debt that you owe over a period of time that allows for you to make payments that work within your budget. 
  • You may be able to make an offer in compromise (OIC). This means you agree to pay the IRS a set amount of money in a lump sum. This lump sum amount of money is generally not equal to the full amount that you owed in taxes, penalties and fees. 

You may also have other options depending on how old the tax debt is, and whether it is federal or state and based on income or property tax. To determine what your options are based on your specific situation, you should strongly consider speaking with an experienced tax attorney for assistance and advice. 

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