Understanding Your Tax Debt
Debt is a slippery slope, and the fear of the unknown can be crippling. Understanding your tax debt can give you an upper hand while seeking solutions to resolve the debt. Your tax debt is the total amount of money that you owe to the Internal Revenue Service (IRS) after filing your tax returns. The debt arises when the amount of tax due is more than the total liability paid to the IRS. Once the IRS discovers the debt, they will send a notice and demand for payment of the debt.
It’s crucial to note that your tax debt accumulates interest and penalties, which compounds the total amount that you owe annually. Although the interest rate changes every year, the IRS will assess the interest daily, with accrued interest compounded daily. Delve further into the subject and uncover fresh perspectives with this specially selected external content. united collection bureau.
Expert Strategies to Resolve Tax Debt
There are several expert strategies that you can use to resolve your tax debt, including:
This is an agreement between you and the IRS that allows you to make monthly payments of the total amount due plus interest and penalties over time. The IA can either be in the short-term, which has a maximum term of 120 days, or the long-term, which has a term of up to 72 months.
The Offer In Compromise is an agreement that settles your tax debt for less than the total amount owed. This option is only available if you can convince the IRS that you lack the ability to pay the total amount due, which is known as doubt as to collectibility. With reliable and credible professional assistance, you may get approved if the IRS determines that the OIC is a reasonable compromise.
This agreement allows you to make monthly payments of an amount that’s less than the total amount owed until the statutory period expires. The statutory period is the time limit within which the IRS can legally collect debt, which is ten years.
This option is available for those who can demonstrate that they can’t pay their debt regardless of how many steps are taken. It means that the IRS will stop the collection activities until the taxpayer’s financial situation improves to a level that allows them to pay the debt.
Although bankruptcy isn’t the most favorable option, it’s worth considering in extreme cases. If you file for bankruptcy and get approved, your qualifying tax debt gets wiped out entirely. However, not all tax debts qualify for discharge in bankruptcy.
Benefits of Expert Strategies
Using expert strategies to resolve your tax debt can have some benefits, including: Discover more about the topic in this carefully selected external resource for you. Read this complementary subject!
Conclusion
A tax debt can weigh you down, especially when the collection activities begin to take shape. However, with expert strategies, you can find a viable solution to the problem and focus on getting back on track. Remember to work with credible and experienced tax resolution specialists to ensure the best outcome of the process.
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