What You Should Know About IRS Debt

Many people who have found themselves in debt for some reason or another do not understand the ramifications with incurring debt with the IRS. Unlike other creditors who must obtain a court order to obtain money which is owed to them, the IRS can garnish bank accounts, seize property and even incarcerate people who owe them money. For this reason, the first order of business for anyone who has incurred some sort of tax debt is to take care of that promptly, even before any other debts are resolved.

Prioritizing Debts

Many people make the mistake of thinking they can take care of their IRS debt later. This is extremely unwise and can lead to a lot of problems. Even if a person has signed up for some sort of debt relief, or debt management program which claims to assist with fixing tax issues in addition to sorting out other debt, they should still never rely on this. Because IRS agents are so much more powerful than standard bill collectors and can essentially ruin someone, the wisest choice is to make income tax or IRS debt a priority. In addition, unlike bill collectors and other debtors, the IRS does not care whether or nor you are currently involved in some sort of debt management program. This will not sway their decisions to take action on you and they generally do not “work with people” either. However, going to the IRS and making a feasible arrangement with them may help you deter other debtors. In most cases debtors will know that if the IRS has not been able to collect from you, they certainly stand very little chance of doing so. If there are tax liens on a person, no one is going to collect a dime from him/her until those liens have been satisfied.

Making a Payment Arrangement with the IRS

There are many ways to go about striking some sort of a deal with the IRS that they will approve. However, the longer the debt is allowed to go unpaid and the more of it that has accumulated, the less likely a person is to be approved for any sort of payment plan. The first step in taking care of IRS debt is usually to contact a tax attorney who specializes in taking care of matters involving tax debt. Often, an agreement can be reached with the IRS for a certain amount of money to be paid in installments provided the debt has not been left for a long period of time. In cases where prompt action is taken to correct tax related issues, the IRS may accept proposals for lowered or reduced amounts of money, or payment arrangements. Generally speaking, the IRS will not look at any “Offer of Compromise” that is not accompanied by a good faith payment. The amount of the initial offer payment should be determined based on the total amount of money owed.

Obviously, keeping up with your taxes and paying them in a timely manner is the best suggestion. Unfortunately things happen and this is not always possible. As long as you understand how important it is to resolve any issues you do incur with the IRS, you will be saving yourself a lot of headaches.