Options if I Cannot Pay Taxes
By Matt Robinson
Not being able to pay the taxes you owe is probably a more common situation than you realize. Ever year there are literally thousands upon thousands of people that are in similar shoes as you. Although this is a bad spot to be in, it is not the end of the world. There are many ways that you can better your situation. The IRS actually is willing to work with you to find a solution. The IRS has been dealing with situations like this for years and have made various types of resolutions to try to match every taxpayer in any type of financial situation. It is important to understand your various options so you can resolve your taxes in a way that benefits you financially.
Here are four options to consider if you cannot pay taxes:
1. Installment agreement. You may not have enough money to pay your taxes in one lump sum – this is common. The IRS knows this, so they offer the ability to pay your debt over an extended period of time. In most cases, the longest period of time that you will be granted is 60 months or five years. This is a good option for taxpayers that have stable jobs or income, but just don't have enough to pay off the taxes in full on the due date. This is the most common method for taxpayers to pay back taxes if they can't pay in full and it is one of the easiest methods to get accepted.
2. Partial payment installment agreement. With this option you are still paying your debt every month in small increments. The main difference between this plan and the one detailed above is that you may end up paying less than your total liability when all is said and done. Not everybody will qualify for a partial payment installment agreement. You need to be able to prove that you are in a bad financial position and you cannot make the required monthly payments with a normal installment agreement.
3. IRS hardship. Can you prove that you are facing a hardship? If so, the IRS may put your account into uncollectible status for the time being. This means that they will not come after you for the money that you owe. Receiving this status only happens when you can prove that you will not be able to pay now or in the near future. This does not mean you will not be required to pay back your taxes, the IRS will check back after a period of time has passed and check to see if your financial situation has improved enough to allow them to collect.
4. Offer in compromise. Do you want to settle your debt for pennies on the dollar? This is when an offer in compromise comes into play. This allows you to settle your tax debt for less than what is actually owed. The offer in compromise settlement method is not for everyone, only about 10-15% of all offers are accepted. You must prove to the IRS that the amount you offer them in the settlement is equal to or greater than the amount they would ever expect to collect from you. The IRS did just announce (February 2010) that they are going to make it easier to for taxpayers to settle their taxes through this method and
It is important to keep in mind that if you cannot pay your taxes, it is important to work with the IRS to find a resolution. Ignoring your problem will only make it worst by adding on additional penalties and interest that could have been avoided. The IRS will work with you and there is a solution to your problem.
About the Author: Cannot Pay Taxes? Find out more information about your various options. Need help finding the best solution? We can match you with an expert to find the best resolution.
All information, content, and data in this article are sole opinions and/or findings of the individual user or
organization that registered and submitted this article at Isnare.com without any fee. The article is strictly for
educational or entertainment purposes only and should not be used in any way, implemented or applied without
consultation from a professional. We at Isnare.com do not, in anyway, contribute or include our own findings, facts and
opinions in any articles presented in this site. Publishing this article does not constitute Isnare.com's support or
sponsorship for this article. Isnare.com is an article publishing service. Please read our Terms
of Service for more information.