Tax season elicits a collective groan from every citizen each year, but it’s always better to get it out of the way and pay what you owe than to ignore it. Failing to take action can result in accruing back taxes at the local, state and federal level – as well as an array of hefty penalties. You may be subjected to monthly penalties (with interest), tax liens, levies or even have your wages garnished. Everyone is at risk of these penalties, from regular 9 to 5 workers to independent contractors. In fact, according to estimates, Americans owed $527 billion to state and federal governments in the year 2019. On average, delinquent taxpayers typically owe around $52,000.
The IRS can and will notify you of back taxes in the form of a bill detailing your total debt plus any penalties, interest buildup and other fees. If you’ve received notice of back taxes, know that you have options to relieve your debt.
Setting up a payment plan (also known as an installment agreement) is often the first and most common back tax solution. It is also the first solution the IRS will offer to you, especially if you need extra time to pay off your tax debt. There are two kinds of installment agreements:
You may have access to further tax relief solutions in certain situations – such as being unable to pay without risking financial hardship, inability to pay whatsoever or even if you’ve agreed to a long-term installment agreement. An offer in compromise, for example, grants taxpayers the ability to settle a reduced amount of tax debt with the IRS.
Alternatively, you can also request that the IRS place your account status as “currently not collectible.” Doing this involves proving that paying for your living expenses and your taxes is not currently possible. The IRS will closely assess your yearly finances before changing your status.
Negotiating with the IRS is a complicated endeavor, whether you’re filing for a “currently not collectible” status or an offer in compromise, or even requesting an installment agreement. However, working with a tax relief company can make the process much simpler.
Our team at Rocket Tax Relief has the expertise and tools to help you. We can analyze how much you owe and from there find out what IRS tax debt programs you can apply for.
Give us a call at 800-505-6814 or complete our online form to learn more about your options for back tax solutions. We offer 15-minute tax consultations at no cost.