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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