What do you do when you’re faced with an unexpected tax debt? Well, the first thing to do is to fight the urge to panic. Remind yourself that even though the debt is tax related, it’s still just a debt – not the end of the world. The government is not the kind of creditor you want to have, but they are willing to work with you. Certain tax debt help is available.
The next thing to do is to assess your options. Your first choice should always be to try to pay back the debt in its entirety by using a credit card if you must or taking out a loan if you can. Even though you’d be switching one debt for another, paying the complete debt off will mean no extra penalties will accrue and you won’t have to worry about the IRS placing a levy against your bank accounts.
If those options aren’t open to you, then you need to negotiate for debt relief directly with the tax agency. All agencies have their own individual repayment plans that can be put in place but you’ll need to initiate the contact and work out the details with them. Sometimes that can be done over the phone and sometimes through the mail. It can also be done in face-to-face meetings at a local agency office. For instance, the IRS has lots of local offices in most cities and they see people on a first-come, first served basis.
There isn’t an awful lot of room to negotiate in most cases. That’s because tax agencies have all the power and don’t provide much wiggle room. But they can be somewhat flexible on payment amounts and lengths of repayment. They do, after all, want their money.
When negotiating directly isn’t your cup of tea, you can hire a tax attorney to do it for you. This will, of course, add an additional cost to your repayment but an attorney may find a way to lower the tax settlement amount to offset that cost. If you do want to go this route, make sure to find an attorney that has strong recommendations from someone you know and trust – do not just pick one out of the phone book.
Tax debt help in a lot of cases is self-help. It’s uncomfortable to deal with but it is also unavoidable. If you stick your head in the sand your situation will only get worse – and in some cases a lot worse. So summon up your strength and lean on friends and family if you can, but get the ball rolling. You’ll be very glad you did.
