Owing the IRS money is not an easy position to be in. Unlike other creditors, the IRS is vigilant about collecting their money and are easily granted the ability to collect through garnishments or liens on your property. If you are experiencing financial hardship you can still resolve your tax debts. Here is how:
Contact the IRS — it is never a good idea to ignore debt collection letters, especially from the IRS. You may be avoiding them because you can’t afford to pay, but that strategy is only going to lead to worse consequences. Instead, contact the IRS and begin a discussion about your financial situation. You may be surprised to learn that the IRS is actually quite flexible in debt negotiations. However, it takes effort on your part to start the process.
Be open and honest — even if your financial problems are brought on through your own negligence, the IRS is still likely to work with you. Be flexible and willing to discuss your financial situation in detail. Were you laid off? Mismanaged your money? Have you suffered an illness or condition that has become costly? Did you recently go through a divorce? All of these are valid reasons for requesting help with your tax debts.
Work out a deal — the IRS has several programs available to help you repay your debts. You may be able to space out your payments over a period of two or more years through an installment plan. If you don’t anticipate being able to repay the full amount of your debt, you may be able to settle for less than is owed in an Offer in Compromise.