3 Ways To Settle Your Debt To The IRS

The last entity that you want to owe money to is the IRS. The IRS has the power to put tax liens on your property and even garnish your wages in order to get the money that you owe them. If you find yourself in debt to the IRS, you need to take action right away.

Way #1: File for Bankruptcy

One way to deal with your taxes is by filing for bankruptcy. You can't get rid of all your tax debt this way, but you can get rid of a lot of it. If you have income tax debt, and you file for either Chapter 7 or Chapter 13 bankruptcy, you may be able to get your income tax debt discharged.

With Chapter 7 bankruptcy, you can get all of your income tax debt discharged. With Chapter 13 bankruptcy, you may have to get on a payment plan to pay back some of your debt that you carry, including your income tax debt, and have the remaining debt discharged. Either way, bankruptcy can allow you to get a handle on the money you owe the IRS.

Way #2: Apply for Currently Not Collectible Status

The IRS is not trying to hassle people who literally don't have the means to pay their taxes. If you don't have the ability to pay your tax debt, you can apply for Currently Not Collectible status. This will help stop any collection action the IRS is taking against you for up to a year. This will allow you more time to figure things out with the IRS, and if you are not in a position to pay your taxes at all.

Way #3: Apply for an Offer in Compromise

The next thing you can do is apply for an IRS program that allows you to pay your debts for less than you actually owe. With this, you are going to need to show that you can't pay the debt in full. Then, you can come up with what that is called an offer in compromise.

With this, you will be able to make either a few payments to pay off your debt, or you will be able to make a small lump payment to the IRS, and they will consider your debt settled. This can save you from paying the interest and penalties that have accumulated on your taxes.

If you owe taxes to the IRS, you need to talk to a tax debt relief services which can walk you through your options, and help you figure out how to settle your debt with the IRS while still being able to go forward with your life and have some money to survive with.