If you discover that you owe back taxes to the IRS, you should
resolve it as soon as you can to avoid paying costly penalties and interest. If
you have not yet filed your tax return, it’s smart to pay as much as you can before
the filing deadline, and satisfy the balance using a payment plan after filing
season.
If you have filed your return and you owe back taxes, then
you must choose the appropriate payment plan to resolve your debt. The IRS has various
resolution plans depending upon taxpayers’ financial circumstances. Even if you
can only afford to pay a partial amount of your tax debt, you may be able to achieve
a permanent resolution.
Those who owe $50,000 or less in tax debt (including
penalties and interest) can set up a payment agreement with the IRS. Taxpayers
can pay their tax debt in installments for up to 72 months.
If you need to attempt to reduce your total balance, then
you may request an Offer in Compromise plan or a Partial Payment Installment
Agreement. Both these plans allow tax debt reduction and will bring you back
into compliance.
If you cannot pay any amount of tax debt, then you may stop
IRS collection actions by achieving the status of Currently Not Collectible. Even
though penalties and interest continue to be charged on your tax debt, you
escape harsh collection efforts such as a wage or bank levy.
Regardless of how much you can pay, you can avoid IRS
collection actions and comfortably resolve your tax debt case by using the
appropriate IRS payment plan. Resolving your tax issue is always preferable to
ignoring it and inviting more cost and aggravation.