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Federal tax debt has a way of snowballing and quickly getting out of control. When the debt becomes too much, however, there are several options for mitigating both the amount of the debt and the impact paying it off has on a taxpayer’s life.
First and foremost, one must make an accurate assessment of one’s assets. To do this, you need not only current records, but all the records pertaining to the year or years in which the tax debt was generated. Your federal tax debt is much more stressful a thing when it’s something of a mystery to you. Getting your records together and having an accurate number will make the whole affair much more manageable.
Don’t try to represent yourself. As the old adage goes, those who represent themselves have a fool for a client. Get in touch with a tax law firm that can help you explore your options. Unless you happen to be a tax lawyer or an accountant yourself, there is likely no way you’ll ever figure out how to reduce your federal tax debt on your own. If you rely on the IRS for help, you’ll likely pay more than you need. Remember, the IRS is not there to help you: They’re there to collect.
Once your case is worked out, you may be facing several different options. In the best case scenario, your income level will be such that your debt will be eliminated. This will only apply, however, if you’re facing extreme financial hardship. In most cases, the IRS will settle for a lesser amount, if you can prove that you cannot pay the full amount. You’ll probably be able to set up an installment plan, as well. All of these best case scenarios, however, are unlikely to happen without competent tax counseling.
Your federal tax debt, if left unpaid, can result in the IRS taking some very unpleasant actions. Property and assets may be seized, up to and including your house. Don’t underestimate how far the IRS will go in trying to collect, especially if you can’t afford protection from their tactics. The first step toward eliminating any federal tax debt is seeking out a firm that can help you understand how much you actually owe and that can serve as your representation to the IRS. In the very best situation, you won’t have to speak to the IRS directly, won’t have to appear for an audit and your debt will be settled for less than you actually owe. Eliminating the debt altogether, while not likely, is also a possibility and yet another reason to seek out a qualified representative to work on your behalf.