What Happens When You Have a Tax Debt You Can’t Pay?

So, you have just completed your taxes and you owe a debt you can’t pay…What do you do?

Payment Plans

Well, the short answer is it depends, for most people it’s going to be getting on a Payment Plan with the IRS. These can be quick and easy to do either on the IRS website or by hiring a professional to help you establish a payment plan that is correct for you and your situation. For most people you can get a plan for anywhere under 72 months to pay off the debt and then you can be in good standings with the government once the plan is started.

A few key points on Payment Plans, one you MUST PAY ON TIME! EVERYTIME! If you miss the payment by a day or a dollar your plan will lapse and then the IRS will come asking for the full amount to be paid within the next 30 days.

This also includes your next years’ taxes. If you are on a payment plan for 2023 and then you file your 2024 taxes and owe, you must pay before the deadline to ensure that your payment plan is kept.

Does it sound complicated? It can be if you're not aware of all the rules, but if you understand the rules and follow them, then your next step is prevention. Which most people in tax debt fail to do. Once we have identified your tax issue we must develop your new tax road map for you to follow to help make sure you don't turn down the wrong road.

Offer in Compromise

In the most severe cases, the IRS Offer in Compromise is your final option available to get rid of your tax debt. This is an extreme option but it has its purpose, the OIC is intended as an option for cases where hypotheticality a business owner has a large tax debt from owning their business and has been diagnosed with extreme medical conditions and they must use their money to pay for treatment instead of their tax bill. While this would likely fit the situation it would still be a long battle with the IRS.

If you find yourself fitting one of theses categorize please feel free to reach out to discuss options to get you out of tax debt.