Receiving a statement from the Internal Revenue Service for tax debt can be a surprising experience. Aside from the pressure of having to deal directly with the IRS, people might be caught off guard by the penalties and interest added to their tax debt. If left unmanaged, tax debt with the IRS could result in:
- Wage garnishments – an amount automatically withheld from a paycheck
- Frozen bank accounts
- Criminal charges for severe cases
Fortunately, it is possible to seek a tax debt negotiation with the IRS. A successful debt negotiation will prevent these penalties and could possibly reduce the tax debt owed.
Tax Debt Negotiation Tips
Negotiating tax debts with the IRS is a reasonable option for those who are struggling to pay back what they owe. First, strongly consider hiring a tax lawyer. While citizens can deal with credit card companies and similar institutions on their own, negotiating with the IRS is a completely different playing field. Without legal representation, it is very difficult to do. Various tax debt negotiation options include:
Setting up an IRS tax debt repayment plan. If you are having trouble paying your debt back, fill out Form 9465 to request the day of the month and the amount you would like to pay on a regular basis. The IRS will typically approve or deny the debt negotiation within 30 days.
Filing to Currently Not Collectible. Submit Form 433-F if you do not have the ability to pay back the tax debt at this time. Whether you are unemployed or are facing financial hardship, this is a good debt negotiation option for anyone struggling with his or her finances on a day-to-day basis.
File for Amnesty. Amnesty programs provide a short window of opportunity, but can greatly help alleviate tax debt if used immediately. While you still have to pay taxes in full, the penalties may be reduced, thereby saving you money.