Outstanding tax debts can bring financial ruin. Before the Internal Revenue Service begins the collection process, it is imperative to communicate with them. Begin with filing for an extension of the deadline to give you time to research a solution. An extension can allow 45 – 120 days to settle your tax debt. However, if your debt is in the thousands, it may not be possible for you to pay in full by the deadline.
The following are three courses of action you may consider to stop IRS debt collection:
- Question the accuracy of your tax debt. Ask for an explanation as to how the Internal Revenue Service arrived at the conclusion you owed additional taxes, late taxes, or penalties and fines. Request proof of the mistake they claim you made on your return. The IRS has no right to deny your request for review and must examine your tax debt step by step. This procedure delays the IRS debt collection process, giving you time to make financial arrangements and find tax debt help. If the IRS originally denies your request for review, ask to speak to a supervisor or manager. It is your right as a taxpayer to question IRS methods and reasons. You may be able to get the IRS to waive any penalties and interest assessed for an error you did not know about.
- Negotiate with the IRS for one of their many tax-debt relief programs. Some of your choices are:
- Offer in Compromise
- Penalty Agreement Plan
- Penalty Abatement
- Currently not Collectible Status
The IRS will temporarily suspend the collection process while they consider your tax relief options. You need a tax expert to assist you in obtaining the most affordable tax debt help for you. Once you have qualified for a tax relief plan, and abide by the terms of the repayment agreement, the IRS stops all collection activity.
- If all attempts to resolve your tax debt fail, your last step could be to file bankruptcy. Filing bankruptcy will automatically stop the IRS debt collection process. Be certain this is your last option left. It has a direct effect on your credit for at least seven years. To qualify for this action, your tax debt must be over thirty-six months old