Monday, June 1, 2015

What Happens If You Cannot Afford to Pay the IRS?

When the IRS contacts you regarding money you owe them, it’s best to pay that sum as soon as possible. If you delay your payments, you can easily find yourself facing IRS-sanctioned wage garnishment or possibly even bank levies—but what happens if you cannot afford to pay what you owe?

Although people have horror stories involving the IRS, the government body isn’t as heartless as most people perceive them to be. If paying the IRS what you owe results in significant “economic hardship”, the IRS is willing to negotiate with you.

Offer in Compromise

An OIC is an acknowledgement from the IRS stating that you cannot pay your tax debt completely, and that the IRS will significantly reduce your debt. In exchange, the IRS will expect you to pay the lowered amount in full.

Monthly Payment Plans

Sometimes, you have the capability to pay your tax debt in full, but do not have the means to do so in one payment. In such cases, the IRS and your tax attorney will help you draft a manageable monthly payment plan.

Partial Pay Installment Agreements

In extraordinary cases, you may find yourself with a monthly payment plan, but unable to repay what you owe. When this happens, you and your tax attorney can try to negotiate a Partial Pay Installment Agreement (PPIA). The IRS will agree to a monthly payment plan for set number of months. After that timeframe has passed, the IRS will wipe whatever debt you have left clean.

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