Have Tax Debt? 4 Things You Can Do To Address The Issue

If you have tax debt, you can't just ignore it. Your tax debt will not disappear, and the last person you want to owe money to is the IRS. However, there are essential steps you need to take to address that debt when it comes to tax debts.

#1: Don't Ignore It

First, you don't want to ignore the issue. Not paying your tax debt can have serious consequences, as the IRS has the ability to add lots of penalties to what you owe, greatly increasing your debt. If you don't make any payments on the money that you owe or try to avoid filing your return to avoid paying taxes, that will catch up with you. Your debt is just going to keep growing if you ignore it.

What this means is that you shouldn't ignore your IRS debt, as ignoring it will just increase what you owe.

#2: Don't Expect Forgiveness

Second, you should not expect to have the IRS forgive your debt. That is not something that commonly happens unless you can demonstrate that you are experiencing true and extreme financial hardship. You need to be in a poor financial situation caused by something such as losing a job or a catastrophic health experience and don't have any prospect for making money in the future. This doesn't happen that often and isn't something that you should count on. If you make money and have any assets, the IRS will expect you to pay them back.

#3: Installment Plans Are Available

Third, if you owe money to the IRS, you can set up an installment plan. With an installment plan, you have a few months to pay back the IRS. After that, you can get the form online and file it online as well, giving a few years to pay the IRS back using smaller, affordable payments.

With the installment plan, you will need to pay off your balance and any interest and penalties incurred during that time on your balance. Therefore, with an installment plan, your debt cannot be too large.

#4: Work With an Attorney

Fourth, if your debt is larger, you will want to work with an attorney or a tax resolution service to use their legal team to negotiate with the IRS. Finally, you will want to work on a payment plan with significant tax debt that provides you with reasonable terms. But, again, this is not something you can do online; it is necessary to avoid a tax lien, which can be seriously harmful to your credit score for years.

If you have tax debt, you can't ignore it. Ignoring it will increase what you owe. If you own a small amount, you can set up a payment arrangement with the IRS. If you owe a lot of money, you will want to work with a tax resolution service that can negotiate a reasonable payment plan for you. You need to find a way to pay off your debt.