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Tax Debt

Don't Avoid Uncle Sam
Uh oh. You've found yourself in the unfortunate position of owing more taxes than you can pay to the Internal Revenue Service (IRS). What should you do? Well the worst thing you can do is not pay off tax debt, so it's important to know what other options are available to avoid getting in trouble with Uncle Sam.

Pay What You Can
Even if the bill is more than you can afford, try to pay off some of your tax debt to lower the amount of penalties and fees you'll be hit with. You can also apply for an automatic six-month extension of time to pay off your taxes. You'll pay less penalties and interest with an extension than if you negotiate an installment agreement.

Payment Plan
An installment agreement will allow you to pay off your tax debt over a specific period of time by breaking up payments. If you owe less than $25,000 you can set up an installment plan online. Tax debt over $25,000 may require a Collection Information Statement, which details your financial obligations.

Get the Help You Need
If you have a large amount of tax debt you may need to seek professional help. A tax attorney can help you make an Offer in Compromise, an agreement in which the IRS might accept less than the total amount of your tax debt. The IRS may settle with you if there is reason to believe the assessed amount is incorrect or there is doubt that you could ever pay off the full amount.