What to Do If You Can't Pay Your IRS Back Taxes

How Tax Relief Companies Can Help You

Many people end up owing more IRS than they've expected, and this can happen for various reasons. Find out what you can do if you can't pay your taxes and how tax relief service providers can help you out.

Reasons Why You Might Have to Pay More Than Expected

The most common reason why taxpayers often struggle to pay back taxes is that they didn't put aside enough money for their taxes from their paychecks during the year. However, there are multiple other possible reasons such as:
• You miscalculated your taxes, and your actual due back taxes is higher than your initial calculation
• You also offer services as a freelancer or have additional income sources and you haven't included them in your tax calculation

Possible Tax Relief Solutions You Can Qualify For

The IRS provides different payment plans and solutions for taxpayers who realize their back taxes is overwhelming and can't afford to pay it. Here are the most popular ones.

Try Tax Negotiation

One of the most convenient and practical solutions to tackling your back taxes is to negotiate with the IRS. The purpose of the negotiation process is to get a payment plan that's suitable for your current financial situation.

What happens during these negotiations is that taxpayers try to get a new payment plan based on installments. These usually imply paying a small part of the back taxes each month until you become free. This involves prolonging your back taxes repayment for a longer period of time. However, it also represents an affordable solution that allows you to have enough cash for your living expenses.

It's also worth keeping in mind that these installments will include different fees and interest. This might not be good news, but it’s still better than having to pull out a significant amount of money to cover your at once.

If you want to apply for this type of program, you have two options. Go it alone or contact a tax relief firm that can handle the whole process on your behalf. We will detail the advantages of working with a tax relief expert later on. If you feel confident that you can do it alone, you can contact the IRS assistance line for more details on how to start the process or apply online. However, if what got you into tax issues in the first place is the fact that you miscalculated your due taxes, working with an expert might be the best option for you.

If you are wondering how much these professionals charge, the answer is 'it depends'. Some companies have an hourly rate of approximately $200. Others charge a flat fee. The average service fee for tax relief services is $4,000.

You can get quotes and go through an initial consultation for free before you choose a particular service provider. Moreover, the most reliable companies also offer a money-back guarantee, which means that in the unlikely case they don't manage to reach a favorable solution for your back taxes, you won't pay them.

Installment Agreement Types

There are a few types of individual installment agreements you can qualify for depending on the amount of you owe and your overall financial circumstances.

Short-Term Agreement: this is one of the best solutions for taxpayers who struggle to pay their IRS tax back taxes. If you manage to fully cover your back taxes within roughly 3 months (120 days), you only pay the due amount and its accrued penalties plus interest. No fees apply to this plan. You can set up automated payments from your checking account to make things easier or pay through check or money order. You can also use your debit or credit card, but make sure you check what extra fees apply in this case.

Long-term Agreement: if you can't pay your entire IRS back taxes within 120 days, you can qualify for a long-term installment agreement. This plan involves additional fees, but with a bit of research, you can choose the best application and payment methods that will trigger the lowest fees. For example, if you use a direct automatic debit method through your checking account, you pay lower fees. The application method you use to access the plan also entails specific fees. If you apply online, you only pay around $150. Phone and mail applications cost more. This plan also involves interest and penalties.

Apply for Offer in Compromise

Another solution many distressed taxpayers try to qualify for is offer in compromise. This means settling your back taxes for a lower amount than what you currently owe. This solution will not affect your credit score.

The IRS will scrutinize your finances before accepting to provide you with an offer in compromise. They will look at your income, assets, investments, and basically anything you own. They will only accept your application if they determine that there is no way you can pay the entire amount of your backi taxes. The IRS is very strict about these back taxes relief solutions and approves less than 20% of the applications.

Getting Help from A Tax Relief Firm

A tax relief service provider can take the entire IRS tax negotiation burden off your shoulders. Many people lack the necessary skills and knowledge to negotiate with the IRS. Moreover, for many, only the thought of contacting the IRS feels overwhelming.

These firms usually employ many different experts, and they will assign the most appropriate one for your case. This means you can start working towards tackling your back taxes immediately, instead of wasting time researching tax relief solutions on your own.

Another advantage is that the entire communication with your tax relief professional can be done remotely. Most companies offer services online, and email and phone support, so you won't have to commute to their office.

It's important to provide your tax relief expert with all the details they ask, be proactive, and contact them as soon as you start getting notices from the IRS. This way, you can reach a conclusion faster and gain peace of mind knowing your back taxes will be handled.