For those who find themselves owing the Uncle Sam more money than they can pay, the IRS offers options to help make tax debt more manageable. Some of these programs entail spreading payments out over a period of time; extensions to give tax payers more time to pay the money; utilizing the average of a tax payer’s income to determine payments.
Choosing an Option
Although a professional is often best in debt management negotiations with the IRS, the IRS’s tax relief option programs are fairly straightforward enough for one to understand.
Payment programs simply give tax payers the opportunity to spread either taxes owed or past due taxes over a period of time rather than pay in one lump sum. In some circumstances of extreme financial hardship, the IRS will even consider suspending payments altogether.
Taxpayers may file for an extension to pay their taxes. If an extension is granted, then a taxpayer is given a period of time in which to raise the money to satisfy a tax debt.
Sometimes, when a taxpayer is experiencing financial hardship, the IRS will use the average of the tax payer’s income in order to determine a payment amount. This is particularly helpful for tax payers who made less money in the past than they are now and will lower the tax payments.
Increasingly, the IRS is developing programs to help tax payers manage tax debt in order to be able to avoid extreme measures such as bankruptcy.