Owing debt to the IRS is different from owing debt to any other company or bank. What happens when you default making payments to a bank or a credit card issuing company? All they would do is make some calls to remind you about the payments. Then they turn over your accounts to debt collection companies. But such peace is not the situation when you owe debt to the IRS. They will not leave you easily.
Therefore you need to make sure that you take essential steps in order to get rid of your IRS debt woes. IRS debt is not a simple kind of debt which can be repaid through debt consolidation or any other debt relief option. Neither can you discharge such debts through bankruptcy nor can you easily get rid of them. Check out the concerns of this article to know the options that you can resort to.
IRS tax liabilities – Get help with installment agreements
There are few installment agreements that you canÂ resort to when youâ€™re wondering about the ways in which you can repay your IRS tax debt. Check them out.
- Guaranteed installment agreements: The IRS will only agree to this installment plan when the total outstanding balance is $10,000 or less. Apart from that, there are some other criteria that you should take into account. For the last 5 years, you shouldnâ€™t have filed late. All your tax returns should have been filed. You shouldnâ€™t have had any installment agreement in the last 5 years. Always agree to file on time for all the future tax years. The minimum payment the IRS will accept will be the total outstanding balance which will be divided by thirty.
- Streamlined Installment agreements: When your entire balance which is due is $25,000 or less than that and you agreed to pay off the balance within 60 months. What happens if the total balance will expire within this 5 year period? The IRS will need the entire payment within the remaining SOL. The biggest benefit of a streamlined installment agreement is that there will be no federal tax lien
- Partial payment installment agreement: What is the option when the minimum payments canâ€™t be afforded through the guaranteed or the streamlined agreements. You may opt for the partial installment agreement. Here you can make payments according to your affordability. However, you must qualify for this installment option.
Offer in Compromise – Is this tax debt settlement?
Just as you can settle your credit card debts, you can also settle your IRS tax debt through Offer in Compromise. Depending on your present financial situation, you will be given the option of repaying an amount which is much less than what you actually owe. The IRS may waive off a certain portion of your debts. This will therefore facilitate the entire debt repayment schedule.
So, when it comes to repaying your IRS debts, you may find a solution inÂ the above mentioned options. The sooner you repay them, the sooner you can understand the impact on your credit score.