Many people do not realize that tax debts can be changed or compromised over. The truth is that if you deal with the IRS in good faith and accept your responsibility, they will be more than willing to work with you to reduce your tax burden. The important thing to do is stay on top of your tax debt so that it does not accumulate. The following tips will help you deal with your debt so it doesn’t grow into a devouring monster.
Most times, the IRS will work with you to assist you in paying off your tax debt. After all, when you can pay your dues, it is to their benefit. They will carry out an assessment based on how much you earn per year and how much your total debt is. This allows the IRS to calculate the reasonable amount you can pay within the year. If your total debt far exceeds your earnings, you can expect the IRS to be more than willing to compromise. This is only one of a few ways you can reduce or eliminate your tax debts.
A different type of compromise can be received when you can show that paying off your tax debt will result in financial hardship to you and your family. In most cases, an undue hardship is defined as something like the lack of ability to pay medical bills or the danger of losing your home. On the other hand, other financial difficulties, such as losing your second home, not being able to pay your credit card bills or your children’s tuition fees do not warrant any compromise. As damaging as a bad credit report is, the IRS will not spare you for that reason alone.
The final means to reduce or eliminate your tax debt is to show that the tax debt charged to you is not your liability either partially or entirely. There could be an accounting oversight or a simple typo on one of your forms that resulted in the error. Although proving such a thing can be difficult, such a move should be taken if there is legitimacy to it. If you succeed, however, you can wipe out most of all that you owe or at the very least get a compromise from the government.
These are the several things you can do about your tax debt. But it is imperative that you act without delay. As soon as you start to receive notices from the IRS, respond and inform them that you are doing something about it. Otherwise, you may run into problems dealing with your tax debt.