Dealing with tax debt can feel overwhelming. Whether you owe a small amount or a significant sum, finding the right resolution option is essential to avoiding penalties, interest, and enforcement actions from the IRS. Fortunately, there are various tax debt resolution options available to suit different financial situations. In this blog, we’ll explore these options in detail to help you determine which one might be right for you. And if after reading this you still have questions feel free to give us here at Ward's Accounting Service Inc a call at (718) 367-6111.
Unresolved tax debt doesn’t just go away—it grows. The IRS adds penalties and interest to unpaid taxes, which can quickly turn a manageable debt into a substantial financial burden. Beyond monetary consequences, the IRS can take enforcement actions such as wage garnishments, bank levies, or property liens.
By addressing your tax debt proactively, you can avoid these consequences and regain financial peace of mind. Here’s an overview of the most common resolution options available.
An Installment Agreement allows you to pay your tax debt over time in manageable monthly installments. This option is ideal for taxpayers who cannot pay their full balance upfront but can afford to make regular payments.
Key Benefits:
Considerations:
An Offer in Compromise allows eligible taxpayers to settle their tax debt for less than the full amount owed. The IRS considers factors such as income, expenses, and asset equity when evaluating OIC applications.
Key Benefits:
Considerations:
If you’re experiencing financial hardship and cannot pay your tax debt, you may qualify for Currently Not Collectible (CNC) status. This status temporarily halts IRS collection efforts, such as wage garnishments or levies.
Key Benefits:
Considerations:
CNC status can be a lifeline for those in financial distress.
The IRS may waive penalties for taxpayers who can demonstrate reasonable cause for failing to pay or file their taxes on time. Examples of reasonable cause include illness, natural disasters, or unavoidable financial setbacks.
Key Benefits:
Considerations:
If your tax debt is the result of a spouse’s or former spouse’s actions, you may qualify for Innocent Spouse Relief. This option removes your liability for taxes, penalties, and interest caused by your spouse’s errors or omissions.
Key Benefits:
Considerations:
In some cases, tax debt can be discharged through bankruptcy. However, this option is subject to strict eligibility criteria, and not all tax debts are dischargeable.
Key Benefits:
Considerations:
If you’re considering bankruptcy as a solution, consult with a tax resolution expert to understand how it may affect your tax debt.
Selecting the right tax debt resolution option depends on several factors, including:
When resolving tax debt, it’s important to avoid common pitfalls that can complicate your situation:
Dealing with tax debt can be stressful, but you don’t have to face it alone. Whether you’re considering an Installment Agreement, Offer in Compromise, or another resolution option, Ward's Accounting Service Inc. is here to guide you every step of the way.
Call us at (718) 367-6111 or visit https://wardsaccountingsvc.com/contact-us to schedule a consultation. Together, we ’ll create a plan to resolve your tax debt and help you achieve financial peace of mind.