Recourse With IRS Problems
A phone call or notice in the mail from the Internal Revenue Service can be a nerve-wracking experience, particularly if the purpose is to inform you of a tax audit or to collect back taxes. However, depending upon your situation, the IRS may be willing to work with you to resolve your issue. You can also seek professional guidance from highly trained tax professionals.
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Short-Term Payment Plan
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If feel you can pay the amount of back taxes you owe within 60 to 120 days, the IRS may be willing to work with you to set up a short-term payment plan. With a short-term plan, you are generally required to pay the amount you owe in full by the end of the designated time period. Interest and penalties will continue to accrue during the period, although the relatively short time frame can minimize the impact.
Installment Agreement
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If your debt cannot be resolved within 120 days, consider entering into an installment agreement where you make regular monthly payments. Installment agreements are typically used for taxpayers who owe $25,000 or less. Individuals who owe more than $25,000 may still be eligible for an installment agreement, although they may need to complete IRS Form 433F. Penalties and interest continue to accrue for the duration of the agreement. If you default on a payment, the IRS may cancel the agreement and initiate collection proceedings.
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Offer in Compromise
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If your tax debt or income level is such that you may have difficulty repaying the obligation, the IRS may consider an Offer in Compromise. An OIC allows you to settle your tax debt for less than what you owe and make installment payments over a short period of time to satisfy your obligation. You will make a settlement offer which the IRS may accept, reject or modify depending upon your financial situation.
Seeking Professional Help
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You may not feel comfortable dealing with the IRS on your own, or your tax issues may be too complex to resolve easily. If you feel you need help, you can hire the services of a tax professional known as an enrolled agent. An EA is an individual who is authorized to represent her clients before the IRS. In addition to tax debt problems, an EA can provide assistance with issues such as tax audits and can perform tax return preparation tasks.
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