Ten Tips for Taxpayers Who Owe IRS Back Taxes

For those who owe the back taxes to the IRS, this summer is a great time to create a successful tax relief strategy. Here are ten taxpayer tips that can help to resolve tax debt and keep the Uncle Sam at bay:

Pay the IRS NOW – even if you have to secure a loan to do so. Why? Because IRS penalties and interest are often higher than a bank loan or family member. Another reason to pay quickly is because the IRS is a “special” creditor who has the authority to go after taxpayers with aggressive enforced collection tactics.
Make Credit Card Payments – 2011 taxes can be paid using a credit card. Most likely, the “cost of money” is lower than what the IRS charges (including penalties). Frankly, I’d rather owe my mother-in-law money than the IRS. Note: the credit card payment offer does not apply for tax years prior to 2011.
Ask for Additional Time to Pay – Depending on your circumstances, you may be eligible for additional time to pay your tax bill in full. You can apply on-line www.irs.gov or call 1-800-829-1040.
Request an Installment Agreement – Consider this option if you can’t pay the IRS in full. The installment agreement is between you and the IRS to pay the total amount due in equal monthly installment payments functioning much like a “car loan.” Requirements: you must have all legally required returns filed and be current with quarterly estimated income tax payments to apply.
File for Installment Agreement Using Form 9465 – the Installment Agreement Request. Generally, 30 days after mailing the form, you will receive notice whether your request is approved, denied or if they need additional information.
Apply using Online Payment Agreement – you can access the Online Payment Agreement application if you owe $50,000 or less in combined tax, IRS penalties and interest. However, you may still qualify if you owe more than $50,000, but will be required to complete form 433-Collection Information Statement before the IRS will consider an installment agreement. Word to the wise: in cases where the IRS is requests a “roadmap” of your financials, it is highly recommended you seek assistance from a Certified Tax Resolution Specialist who is a qualified CPA, tax attorney or enrolled agent specifically trained in tax problem resolution.
Understand IRS User Fees – the IRS charges a one-time user/set up fee of $105. Payments deducted directly from your bank account are reduced to $52. Qualified low income individuals pay $43.
Consider the Offer in Compromise Program – The IRS now offers more flexible terms, than ever before, with the OIC Offer in Compromise Program (OIC). An OIC is an agreement between the taxpayer and the IRS that settles the taxpayer’s tax obligation for less (sometimes, much less) than the full amount owed. An OIC is generally accepted only if the IRS believes, (after an exhaustive and intrusive assessment of the taxpayer’s current financial situation) that the tax debt can’t be paid off in full as a lump sum or over time through an installment agreement. Note: the Offer in Compromise Program is complicated and very difficult to obtain. If you think you may qualify, contact a Certified Tax Resolution Specialist who conducts a rigorous in-depth interview to find out if you are a good candidate for the program.
Revise Tax Withholdings – Taxpayers who owed the IRS in 2011 may want to change their W-4 form; Employee’s Withholding Allowance Certificate with their employer to not incur tax debt in the future.
Consider the Fresh Start Program – Struggling taxpayers may want to consider the Fresh Start Program. Designed to help both individuals and small businesses, this program allows them to pay their IRS debt without facing additional or unnecessary tax burden. Important Note: these are very narrowly focused programs that require a reading and understanding of the “fine print. “

As with everything else, the “devil is in the details” when it comes to paying IRS tax debt. Not all programs and services are available in all cases. Consult a Tax Resolution Specialist specifically trained in tax resolution to help you determine the IRS tax relief plan best suited to your situation.

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Tags: back tax debt, IRS debt, IRS installment agreement, IRS tax debt, irs tax relief, Offer in Compromise program, tax attorney, tax debt, tax relief