Whether it’s through oversight or mathematical error, sometimes we learn that we owe money to the IRS that we didn’t realize we owed. Upon discovering that a tax payer owes unpaid taxes, the IRS will send notification that includes details about the error, the amount owed, a due date for payment, and details about how to contest the amount if the tax payer believes a mistake has been made.
Options for Repayment
Before repaying tax debt, tax payers should carefully review the IRS’s claim of amount owed. Sometimes the IRS does make errors. If an error is discovered, then one should follow the procedures provided on the notice for contesting the payment. If the debt appears to be legitimate, then one can do one of a few things.
First, you can simply pay it. This is usually advisable when the amount owed is nominal as attempting to settle the debt can be time consuming and more costly than the debt itself.
If the amount owed is large or one cannot raise the funds to pay the debt by the due date provided, one may want to consult the assistance of an accountant or tax professional. These individuals may be able to help you negotiate a lower amount with the IRS or a payment plan.
When the amount of unpaid taxes is very large and debt negotiations fall through, bankruptcy is an option as unpaid taxes can be included in bankruptcy filings. Bankruptcy should only be considered, though, when the amount owed is so large that it threatens one’s overall financial well-being.