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Little Known Ways to Eliminate Tax Debt

March 15th

Tax debt is no different from any other kind of debt – it can lead to a host of financial complications that can ruin your credit score, such as bankruptcy. Even worse is that you have to deal directly with the IRS! Fortunately, eliminating tax debt doesn’t need to be as stressful as it often is. In fact, several tax debt elimination strategies can even help taxpayers in the long run. By working with a tax debt lawyer, taxpayers can regain their financial footing.

If You’re in Tax Debt, You Can Escape

First and foremost, when facing financial difficulties, taxpayers should still continue to pay as much of their tax debt as possible. By paying what they can now, they can avoid higher penalties and interest rates. Once a financial hardship makes itself apparent, taxpayers should take a pro-active approach and visit their closest IRS office to explain their predicament. Typically, the IRS is willing to work with these taxpayers and can set up a short-term agreement ranging from 60 to 120 days to allow the taxpayer to regain the ability to pay.

Other options include:

Paying back tax debt with an installment agreement. These payment plans allow taxpayers to pay back debts according to what they afford. Both the taxpayer and IRS agree upon the amount per month.
Qualifying for a temporary delay. If facing a significant hardship, the taxpayer could ask for a temporary delay where they won’t be penalized for late payments. This time period allows the taxpayer to recover financially.
Offering a compromise. By settling for a tax debt amount that is less than they owe, taxpayers can save money. However, you must be able to document your ability to pay, income, and asset equity to be considered for this option.

By pursuing these options, taxpayers can avoid defaulting on their tax debt, thereby protecting their credit scores from significant damage. Seeking the advice of a tax debt lawyer can help you negotiate with the IRS as well as determine what strategy is best for you.

 
 
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