When you owe money to the IRS, penalties and interest can add up, and eventually, the IRS can collect the money you owe with forced collection actions such as liens, levies, wage garnishments and asset seizures. It’s best to pay the IRS as soon as possible or work out a payment arrangement with the IRS. Several collection alternatives are available if you qualify.
Extension of Time to Pay. You can request more time to pay your taxes with a short-term extension (up to 120 days), or a financial hardship extension (up to 18 months).
Installment Agreements. You can set up a monthly payment plan with the IRS with payment terms up to 120 months.
Currently Not Collectible Status. If you can prove to the IRS that you can’t pay anything toward your tax liability, the IRS can place your account in temporary “currently not collectible” status. CNC status works much like a loan forbearance.
Offer in Compromise. In some situations, you may be able to settle your tax debt for less than the total amount that you owe to the IRS. Whether you qualify to submit an OIC depends on the facts and circumstances of your case. No two are alike, and not all taxpayers will qualify.
Before we can determine which payment option is appropriate for you, we will need to determine 1) exactly how much you owe, 2) how old your tax liabilities are, 3) whether you have ever filed for bankruptcy, 4) whether you are in compliance with you current filing and payment obligations and 5) what your personal financial situation looks like. At the end of this fact-finding process, we will be in a position to let you know which payment alternatives for which you may qualify, and how long you can expect resolution to take.
Regardless of which option is appropriate for you, most important is finding counsel qualified to assist you with choosing your collection alternative and completing the appropriate paperwork with the IRS. For assistance with resolving your outstanding IRS tax debt, please give me a call at (757) 687-8888.
Written By Nathan R. Olansen
Nathan R. Olansen is a Shareholder in the law firm of Midgett Preti Olansen. His practice is focused on estate planning, probate and trust administration, IRS and state and local tax audit and tax collection cases, as well as individual and entity tax planning, asset protection and a variety of related transactional matters.
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