What To Do With IRS Debt

With the downturn in the economy, some people are having difficulty paying their income taxes. With all that is going on in their lives and with other debt obligations, sometimes it’s easy just to put the IRS debt on the back burner and forget about it while dealing with more pressing issues such as food, clothing, and housing.

Additionally, many are struggling due to unemployment because of layoffs or even mounting medical bills due to a newly diagnosed condition. All of these circumstances can cause stress and when you add in the IRS debt, it seems insurmountable.

Then, out of the blue, you get contacted by an IRS agent or a letter arrives in the mail stating you owe quite an IRS debt. That initial contact can be quite shocking and scary to deal with. When you have an outstanding IRS debt, there are some things you should be doing about it.

IRS Debt
The IRS has this to say if you owe more than you can pay: “Even if a taxpayer doesn't have enough money to pay, returns should be filed to avoid further penalties for failure to file. The IRS will assist in finding a solution to the problem. The IRS has streamlined its policies to offer alternative account resolutions if a taxpayer cannot pay in full with the return:

•  The IRS will help to set up an installment agreement when the situation warrants. Installment payments allow taxpayers to pay the tax debt over time.
• The IRS will consider whether an offer in compromise is an appropriate solution.”

Bills.com suggests that you should “hire a tax professional to help you prepare your IRS documentation and to negotiate directly with the IRS. IRS attorneys can charge anywhere from $1,500 to $6,000 or more. In order to represent and help you, the tax professional must be admitted to appear before the IRS. Qualified professionals include IRS attorneys, Enrolled Agents (EA), or Certified Public Accountants (CPA).”

IRS Debt Defense
If you hire an experienced tax and/or financial attorney, ask some key questions; such as how long have you been working with the IRS, how successful are you? And, do you have any clients that would provide references? Whocanisue.com can help you find an experienced IRS attorney to assist you in the nuances of tax law.

According to MSN Money, “The final word on what to do when you can't pay your taxes is communication. The IRS is a vast bureaucracy filled with people asked to do an impossible job. Talk to them; don't hide. The sooner you approach them, and the more often you respond with changes in your situation, the more comfortable they will be in working with you.”

So basically, the most important thing to remember when dealing with IRS debt is to communicate with the IRS, whether it is directly or through an experienced IRS attorney. Tax lawyers have an advantage since they have experience with defending clients against IRS debt, wage garnishment, and other tax liens.

Your tax liability can impact your financial life for some time, so hiring the best tax lawyer to represent you is imperative. In addition to the tax attorney, you may wish to consider hiring a Certified Public Accountant to assist the attorney in your situation.

Your attorney can work with the IRS to establish settlement options and payment plans in order to successfully complete your case. There are many different options available depending on your particular situation. Plus, if you have other debts, your tax attorney may be able to assist you with all the options available for your financial situation, which may or may not include bankruptcy.