When you owe taxes, it causes stress. No one wants the IRS on their back, and sometimes tax bills can just seem to high to be manageable. If you need help with tax debt, you may be looking for resources to turn to. Read on to learn a bit more about tax debt, and where to go if you need additional assistance.
Does Bankruptcy Clear Tax Debt?
One of the most frequently asked questions by people looking for help with tax debt is about bankruptcy. Can bankruptcy clear your tax debt like it can your medical or other debts?
The answer isn’t so simple. Usually, you can’t discharge taxes in a bankruptcy. Once your Chapter 7 bankruptcy is cleared, you’ll typically still owe your taxes. And with a chapter 13 bankruptcy, your taxes will be unaffected.
That said, in some cases it may be possible to include your back taxes in a bankruptcy. If your debt is from income taxes, if what you owe is older than three years old and the tax debts were incurred legally, this is possible.
It’s also mandatory that you filed a tax return for the year that you owe. If you forget to file your taxes, the IRS will “file” them for you. This is usually don’t around five or six years after your missed filing. In those cases, if the IRS determined that you owe, you can’t discharge your tax debt with bankruptcy.
If you’re considering bankruptcy as an option for other debts, speak with your attorney about the possibility of including your taxes. In some cases this is possible, though it’s not usually the case.
Can You Lessen of Eliminate Tax Debt?
We’ve all heard horror stories. Whether from a friend of a friend or just in books and movies, it’s easy to assume that the IRS is out to get you. Uncle Sam is relentless – he won’t stop until he gets what he’s owed, right?
Believe it or not, that’s just not true. Whether you owe the state or the federal government, it usually just takes a phone call or two to come up with a solution.
The Internal Revenue Service wants its money, yet. However, there are thousands upon thousands of people each year who can’t (or won’t) pay their tax bills. Just like any other business, the IRS is more happy to see some of that debt repaid than none of the debt repaid.
For that reason, the IRS (or the state Department of Revenue) is usually tickled pink to work out a payment plan with you. In some cases, though rare, you may be able to defer your tax or even have your tax debt eliminated. Before you seek a professional to help with tax debt, call the IRS! It’s not as scary as it seems – and you may find a very viable payment option. Sometimes you’ll owe as little as $5 per month.
Help with Tax Debt
Tax debt relief companies are everywhere. You’ll see advertisements on television, hear them on the radio and will even see flyers for the services hanging on downtown bulletin boards.
These companies advertise that they’ll eliminate your tax debt, or settle it for less than you owe. They claim to stop garnishments and “harassing phone calls.” So are these companies legit? Can you actually get your tax debt settled or stop phone calls from the IRS?
Well, first of all, the IRS doesn’t make phone calls. Yes, they’ll absolutely garnish your wages. They may even garnish your bank account. But once that process is initiated, a call to the IRS can help to get you back on track.
That said, there may be some instances where you feel like some help is in order. Help with tax debt may be right for you if you can’t work out a reasonable arrangement with the IRS. It also may be helpful if you don’t know how to apply for applicable relief programs through the IRS.
There’s no debt settlement or repayment negotiation you can’t do yourself. If you feel that help is in order, just be mindful that there are scammers out there. Check with the FTC to ensure your tax help is what’s called an Enrolled Agent, and don’t give any money upfront until you understand the full terms of your arrangement.
Where to Get Additional Help with Tax Debt
As mentioned, it’s hard not to view the IRS as a scary entity. People don’t like paying taxes, and the organization has become a bit intimidating by reputation. But there’s nothing to be lost by placing a simple phone call to whichever agency you owe, whether it’s federal or local.
Your first step, should you need additional help with tax debt, is to call the government. Find out the total amount you owe, and see if you can negotiate a way to pay down debt. In some cases, you may qualify for government programs which will wipe out your debt completely. This is rare, but it’s possible.
If you need further assistance, it’s time to take to the web. Simply visit the National Association of Enrolled Agents to begin a search in your local area. The NAEA is a membership of enrolled agents, certified public accountants, and attorneys. These agents are licensed by the IRS to assist you with your tax debt.
There will be some cost associated with hiring an Enrolled Agent. Be sure you interview the agent thoroughly before you sign an agreement. Furthermore, many agents will offer a free consultation to you. These consultations are generally about fifteen minutes long, which is plenty of time to ask about IRS programs which may be available to you.
Once you get the information you need, it’s up to you whether you apply for the government programs yourself or hire an agent to assist you. Whatever you choose to do, be sure to follow with the arrangements to prevent further trouble with tax debt.
And if you need anymore tips, there is plenty of advice, guides and more here on DebtReviews. Just take a look at our sections above or give us a ring (details at the top of this page) and we can help you directly.