You may have heard that fighting back can buy time or reduce your IRS debt. But battling the IRS instead of formulating a realistic plan to address your tax debt will unfortunately never result in your desired outcome. The longer you wait to address your tax debt, the more penalties you will accrue, so being proactive in your approach to the issue is critical. With the help of a qualified tax professional, you can determine the best plan to resolve your debt. Below are a few payment plan options to discuss with your tax professional.
Currently Not Collectible Status
Currently, not collectible status, or CNC, is a temporary solution where you take ownership of your debt but ask the IRS to provide additional time to develop a payment plan and begin making payments. You will not make payments when you are on CNC status, but that doesn’t mean you’re off the hook. While CNC status can last years, during this time, you will need to assess your finances, examine your budget, and make a viable long-term payback plan.
Short- and Long-term Payment Plans
The IRS offers both short-term and long-term payment plans. Short-term payment plans require taxpayers to repay their debt in full, including penalties and interest, within 180 days. The long-term plan allows taxpayers to repay in monthly installments, including penalties and interest, until the full balance is paid.
Offer in Compromise
An Offer in Compromise (OIC) is an option that allows some taxpayers to settle with the IRS to pay less than the full amount owed. While obviously, an OIC is a best-case scenario, the IRS isn’t known for offering in-debt taxpayers favors. There are many factors the IRS looks at when considering approving an OIC and many requirements the taxpayer must meet. It is far from the norm for taxpayers to meet the stringent requirements.
Figuring out how to tackle your tax debt should never involve a fight to the death with the IRS. This hostile approach is both ineffective and stressful. Start dealing with your debt with the representation of an enrolled tax agent from the Highland Tax Group. We will look for any savings opportunities, and you can move forward with your life knowing someone else is professionally managing your IRS tax situation.