If you owe money on a past tax return to the Internal Revenue Service (the IRS), you have probably found that they are very persistent in hunting you down in an attempt to get their money. The initial contact from the IRS may simply come in the form of letters and phone calls under the guise of being sure you are aware that you owe them back taxes related to your tax return. However, as time passes and the IRS continues to either not hear from you at all or not receive the money you owe them, they will realize that the non-payment of the back taxes is not simply an oversight on your part.
As the IRS can in general seek to collect back taxes for up to 10 years from the date when you filed the tax return related to that money, it is very difficult to outlast the IRS. Before the 10-year statute of limitations runs out, the IRS will generally file a levy against you to take your property, forcing collection of the back tax owed.
However, you do have options to keep the IRS from continuing to harass you. Here are some solutions you should consider.
Pay the federal income tax you owe. If you are looking for help with your tax return and back taxes you owe, then odds are that you simply cannot afford to pay the back tax that you owe on your tax return. Regardless, this point is worth mentioning and evaluating fully to ensure this solution is not an option.
If you do not have the cash available to pay the tax you owe on your tax return, do you have any other assets or property—cars, boats, homes, jewelry, real estate—you could sell for enough money to cover the back tax? If you do and you have not been willing to sell the property because it has sentimental or other important value to you, remember that selling other property you have may be a viable solution to get the IRS off your back.
Negotiate a settlement with the IRS. The IRS has options available to help people pay back federal income tax they owe. One of these options is a payment plan or settlement agreement, which means that you will pay all the tax you owe not as a single lump-sum payment but as a series of payments over time. This means that you may be able to work out with the IRS a monthly payment you can afford to address the back taxes you owe.
A second option is an offer in compromise. An offer in compromise is when the IRS agrees to accept less than the full amount of federal income tax you owe. But before you assume this is the best option for you, simply because it means you will have to pay less money than you thought you would, keep in mind that the IRS does not enter into an offer in compromise with a taxpayer without a good reason. For the IRS to accept an offer in compromise, they must believe that they are unlikely to ever receive the full payment, because you have no assets or income. In addition, you must file every past due tax return you have not filed previously.
Declare bankruptcy. Bankruptcy is an option for addressing money you owe on a past tax return in certain cases. Specifically, if the back tax is related to the previous three tax years, an amount assessed by the Internal Revenue Service in the past 240 days, or an amount related to an income tax return you never filed, bankruptcy cannot be used to get rid of the back taxes. This is true whether you use Chapter 7 or Chapter 13 bankruptcy, the two most common types of bankruptcies used by individuals.
Whatever your situation, before you decide one of the above options may be for you in addressing your federal income tax situation, it would be wise to speak with a tax attorney.
Can a tax attorney help me figure out what I should do?
Yes, a tax attorney will be able to help evaluate your back taxes and determine what options is best for your situation. The tax attorney will have experience working with cases related to past due federal income tax–situations like yours–and will know what to do.
The initial conversation you have with a tax attorney will be free of charge, completely confidential, and not obligate you to anything further. Therefore, please take this opportunity today to learn what options you have to address your back taxes and get the IRS off your back.
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