Taxpayers who owe IRS back taxes need to pay the debt amount as soon as possible in order to avoid possible collection actions. It is always in a taxpayer's best interest not to ignore their tax debt or procrastinate in getting it resolved. Here are the first steps to resolving a back tax debt.
When a taxpayer owes IRS taxes, it is most important to verify the amount with the organization. If an IRS notice was received about the tax debt, the exact figure will be printed on the letter. It will also have the name of the IRS employee to contact regarding the tax debt.
If an IRS notice has not been sent regarding the tax debt, taxpayers can call the IRS or visit their local IRS office to get the exact amount owed.
Taxpayers should also get the details of the statute of limitations on their debt. The statute of limitations is the time period the IRS has to collect a tax debt. If the statute of limitations expires, the IRS loses its legal power to collect the debt, and the taxpayer is no longer obligated to pay. In most cases, the IRS has 10 years to collect. However, there are many instances where the statute of limitations clock is paused, which extends collection times.
The next crucial step a taxpayer should take is finding out whether or not they are in the collections process. A collection action is when the IRS uses certain methods to recover a tax debt. After the IRS has informed a taxpayer about a back tax debt, they are legally allowed to take any necessary steps within their power to collect the amount owed.
If the IRS has begun collection actions, such as placing a tax lien or tax levy, taxpayers will need to stop the collection action by contacting the IRS and reaching an official payment agreement.
Taxpayers can choose a debt payment program that suits their needs. While most taxpayers look for debt reduction or settlement programs, many taxpayers will not qualify due to the IRS' strict guidelines.
The most common IRS payment programs include an Installment Agreement, and a Partial Payment Installment Agreement.
Taxpayers are advised to act quickly if they owe IRS back taxes. In case of complicated tax debt issues, taxpayers can hire a tax resolution company.