Do you owe back IRS taxes? You are not alone, but unfortunately owing money to the IRS gives them the right to seize your property. This does not mean they can only take your house, as they can also levy upon your wages, social security payments, or bank accounts. The IRS may also seize assets that are possessed by a third party or bank as well. In order to help you, here are a list of options to choose from for help with owing money to the IRS. Finding one that will work best in your situation can help you proceed with your normal life again.
1. If you find yourself owing the irs money, try one of the installment agreements that they offer. They offer a few to choose from, but sorting through them with the eight billion pages of forms and instructions they send out every year can be a hassle. The Traditional Installment Agreement allows you to pay back taxes owed to the IRS at a rate that is determined by your income, while the Conditional Expenses Installment Agreement allows you to pay back taxes owed to the IRS over a 60 month period as long as you are simultaneously paying other mandatory expenses like a credit card bill or personal loan payment as well. There is also the Stair Step Installment Agreement which allows for 60 month payment. You are able to pay a certain amount for the first 12 months and then make larger payments for the next 48 months until the balance is paid off.
2. Penalty Abatement, or PA. Owing back taxes to the IRS is never pleasant, but sometimes the IRS may relieve you from some of the taxes you owe. They will only do this if they see any reasonable cause for you falling behind on your payments. They will also need to see a way for you to resolve the debt somehow on your part.
3. Currently Non Collectible, or CNC. In this case you must provide the IRS with expense and income information. If your expenses outweigh your income, the IRS may temporarily halt their collection. When you owe back taxes while trying to make other payments, this may be great short term relief.
4. Offer in Compromise, or OIC. In this plan, you may pay the IRS as much money as you can in a five to 24 month period. Even though this is a rigorous and time consuming process, the IRS may write off the remaining balance.
Owing money to the IRS can be a nightmare, especially when the federal tax rate ranges anywhere from 10 to 39.6 percent. It almost makes people want to live before 1776 when Americans were supposed to pay taxes to the United Kingdom. While this is not a list of every option to choose from, these are some of the more common ones. It is important to obtain all paperwork from the IRS before deciding on a plan, though, in order to determine which one would be most beneficial to you. While owing money to the IRS is scary, it is possible to get through it with your head held high.