How to Handle Past Due Taxes

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Owing the IRS is probably on everyone’s list of things to never do, but many people still fall into this situation. However, if you don’t have the money and don’t see a way out of your financial hole, there are ways to handle your past due taxes without getting the IRS mad at you. You are not alone and there are plenty of resources out there to help you in your time of need.

See if your taxes are dischargeable. If you have past due IRS Income taxes that are three years or older you may not have to pay them back at all, if you want to file for bankruptcy. According to IRS laws, there are four requirements you must meet to completely discharge your past due taxes. Those requirements include: the due date for filing your tax return was at least three years ago, the tax return was not fraudulent, the assessment is at least 240 days old and the taxpayer is not guilty of tax evasion. Completely discharging your past due taxes is for those who cannot financially make payments and do not have the means to do so.

Set up a payment plan. This is usually the best way to handle past due tax accounts. Usually the IRS will work with you if you show that you are willing to make payments faithfully and on time. Payments are set up contingent on what you are currently making and what you can afford. If you cannot afford the payments, then taking further action may be required.

Hire a lawyer. Sometimes we get ourselves in such a mess that we need help. If you’ve decided that filing for bankruptcy is right for you or you meet the requirements to discharge your past due taxes, you should seek the help from a professional tax attorney. Tax attorneys specialize in tax problems and can help you get out of trouble quick.

File for bankruptcy. While this should be one of your last alternatives, filing for bankruptcy will stop tax garnishments or make it so you do not have to make past due tax payments. Once you have filed for bankruptcy, by law the IRS is to stop collecting payments or trying to collect payments immediately. No matter what type of past due taxes you owe, filling for bankruptcy will stop the garnishments. You may still owe past due taxes, but once the garnishment stops you may be in a better position to make payments that you can afford to deal with, unless of course the bankruptcy completely voids the past taxes you owe.

Tips & Warnings

  • Don't just let your past due taxes go. Contact the IRS and see if they will work with you. They will go much easier on you than if you just ignore the problem.
  • Remember that if you are dealing with past due taxes the IRS can seize your bank accounts, execute on your wages and put a levy on your other assets.

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