What to Do If You Owe the IRS

Discovering that you owe the IRS can be overwhelming, but it's important to remember that you have options. The worst thing you can do is ignore the problem – tax debt doesn't go away on its own, and the penalties and interest will continue to accumulate.

Step 1: Don't Panic, But Don't Ignore It

When you receive an IRS notice or realize you owe back taxes, your first instinct might be to panic or ignore the problem entirely. Neither response will help your situation. Instead, take a deep breath and understand that millions of Americans face tax debt, and there are legitimate solutions available.

The IRS is required to work with taxpayers who are making good faith efforts to resolve their tax issues. However, time is critical – the longer you wait, the fewer options you may have available.

Step 2: Understand Your Full Tax Situation

Before you can develop a strategy to resolve your tax debt, you need to understand exactly what you owe. This includes:

• The original tax debt
• Penalties that have been assessed
• Interest charges
• Any payments you've already made

You can request a tax transcript from the IRS to get a complete picture of your account. This document will show all transactions on your account and help you understand how your current balance was calculated.

Step 3: Know Your Options

The IRS offers several programs to help taxpayers resolve their tax debt:

Payment Plans (Installment Agreements)

If you can't pay your full tax debt immediately, you may be able to set up a payment plan. The IRS offers both short-term (120 days or less) and long-term payment plans. Long-term plans can extend up to 72 months for individual taxpayers.

Offer in Compromise

This program allows you to settle your tax debt for less than the full amount owed if paying the full amount would create financial hardship or if there's doubt about your ability to pay.

Currently Not Collectible Status

If you're experiencing financial hardship, the IRS may temporarily stop collection efforts and place your account in Currently Not Collectible status.

Step 4: Consider Professional Help

While you can work with the IRS directly, tax resolution cases can be complex. A qualified tax professional can:

• Evaluate your financial situation objectively
• Determine which resolution options you qualify for
• Handle all communication with the IRS
• Negotiate on your behalf
• Ensure all paperwork is filed correctly and on time

Step 5: Take Action Immediately

The key to resolving tax debt successfully is taking action quickly. The IRS has powerful collection tools at its disposal, including wage garnishments, bank levies, and asset seizures. However, these actions typically don't happen immediately – you usually have time to work out a resolution.

Don't let fear or overwhelm prevent you from taking action. The sooner you address your tax debt, the more options you'll have available and the less you'll ultimately pay in penalties and interest.

Final Thoughts

Remember, the IRS wants to collect the money owed, but they also understand that not everyone can pay their full tax debt immediately. They have programs in place to help taxpayers resolve their issues, but you need to be proactive in seeking these solutions.

If you're facing tax debt, don't wait. Contact a qualified tax resolution professional today to discuss your options and start working toward a solution.