Taxes are an issue that almost everyone has to deal with at some point. If you cannot afford to pay your taxes and you let them become late, the Internal Revenue Service can take drastic measures to collect the money that you owe. If you find yourself in a situation where you owe back taxes, it does not mean that you have to lose your property or go to jail. There are some solutions that you can turn to in order to handle the issue.
IRS Collection Efforts
If you owe back taxes, the IRS can try to collect them anytime within 10 years. The statute of limitations for IRS tax debt is a decade, which gives them plenty of time to try to get the money out of you. If you do not pay the taxes that you owe, the Internal Revenue Service can seize your assets, take money out of your bank account or set up a wage garnishment on your earnings. The IRS can also place a lien on your property so that you cannot sell it without paying back the debt you owe. Tax debt is traditionally not something that will just go away and you’ll have to face it head on if you want to handle it.
If you do not have the money that you need to pay the taxes that you owe, one option to consider is an installment agreement. The IRS offers several installment agreements or payment plans to allow you to pay off your debt over time. Most of them give you at least three years of monthly payments to pay back what you owe. In some cases, the installment agreement can be extended to an even longer term. Most taxpayers can automatically qualify for an installment agreement simply by filling out an IRS form.
Another option that you may want to consider in this situation is an offer in compromise. With an offer in compromise, you agree to pay an amount that is less than what you owe in the form of a lump sum. With this approach, you can pay off your debt quickly and the IRS will simply forgive the rest of the amount you owe. The IRS does not always accept these proposals and will only do so if they feel that they will not be able to collect the rest of the money that you owe for some reason.
If you do not want to set up an installment agreement or you can qualify for an offer in compromise, another option to consider is a loan. With this approach, you borrow the money that you need to pay off your taxes from an outside source and then use that money to handle your debt with the IRS. Then you start making payments to your lender until the debt is gone.
If you owe back taxes, do not try to hide from the IRS and hope the problem disappears. Look for a legitimate solution and get rid of the debt that you owe.
Do you need help with back taxes? Call Tax Resolution Centre today and consult with one of our many experienced tax accountant Toronto to help you with your tax issues.