Will a New Tax Bill Affect Your Debts to the IRS?
If you have unpaid debts to the Internal Revenue Service (IRS), you may wonder how a new tax bill may impact your existing debt. Tax problems can snowball over several years and before you know it, you find yourself in a situation where you have not filed your taxes for multiple years. Unfortunately, in addition to the actual debt owed, you will also accrue both interest and penalties on all unpaid debts to the IRS. If you have not yet been contacted by the IRS about your outstanding debt, you may still be able to resolve this situation before it escalates further.
Strategies for Paying Off Tax Debt
If you have any unpaid taxes to the IRS, new or old, your best bet is always to work to resolve it as soon as possible. The longer you wait, the more you will owe, the more stressful the situation becomes, and the more pervasive the impact will be on your day-to-day life.
Here are some of the most common and effective strategies for paying off your tax debt once and for all:
- Personal loan or credit card: If your debt is a manageable amount, you may want to consider getting a low interest personal loan from your bank or even using a low interest credit card to pay Uncle Sam and then make payments under the terms of the loan or credit card. Keep in mind that either of these options could have an impact on your credit if you stop paying back the debt.
- Negotiate with the IRS: If you are unable to pay the full amount you owe in a lump sum, you may qualify for an installment agreement, which allows you to pay your debt (along with penalties and interest) over time, rather than all at once. If you can prove that you are simply unable to pay the amount due, you can submit a request for an offer in compromise, which allows you to settle the debt for less than you owe. Finally, you can also apply for what is known as a 120 day short term agreement, that allows you to pay the balance off in 120 days.
- Consider bankruptcy: For an unfortunate few, bankruptcy is another option for those whose tax debts have interfered with their credit and ability to pay other bills. Keep in mind only the income taxes owed are eligible for discharge in bankruptcy, while interest, penalties and other types of taxes are not.
- Seek support from a tax professional: If you are unsure how a new tax bill might affect your current debt to the IRS, have questions about your returns or would like to investigate an option like an installment agreement or an Offer in Compromise to settle your tax debt, you may want to hire a tax professional for advice and guidance.
Take Control of Your Tax Debt Once and for All
Success Tax Relief specializes in helping people just like you find the best possible path out of tax debt, so that you can move forward with your life. Our team is ready and available to help you with any questions you may have about current tax debt, back taxes, a potential audit or communicating with the IRS. For more information, contact us online, or call us at 877-825-1179.