What can you do if you can’t afford your tax bill?

| Jun 1, 2021 | Tax Law |

There may come a time, whether you’re filing as an individual or business owner, that you cannot afford your full tax bill. Unexpected expenses may add up, or you may find that you earned more than you expected this year. That’s okay. It happens, but you need to make sure you take the right steps to resolve the debt rather than to ignore it.

If the Internal Revenue Service does not get the money it’s owed, you can get into deep trouble with the law. Your business or personal taxes may be audited, and you could be accused of fraud. Fortunately, you can avoid this trouble by setting up a simple payment plan, asking for an extension to complete your taxes or by resolving your tax obligation with an offer in compromise.

There are plenty of things you can do if you can’t pay your taxes. Here are a few tips to keep in mind.

  1. Pay as much as you can as soon as possible

If you can’t pay everything you owe, that doesn’t mean you shouldn’t pay something. File your tax return and pay as much as you have before moving on to other options to resolve the debt.

  1. Set up a payment plan if you’re able

Another good option is to set up a payment plan with the IRS. There are limitations to these plans, but if you only owe a few thousand or meet other requirements, then a payment plan will take payments in installments each month, so you can resolve the debt over time.

  1. Negotiate with the IRS

You can also talk to your attorney about negotiating with the IRS. The IRS will sometimes take an offer in compromise if there is a good reason to do so, such as if you have significant financial hardships to deal with because of a death or serious injury.

The last thing you should do is avoid paying the IRS or avoid addressing the issue head-on. Your attorney will walk you through your options if you’re not sure what they are, so that you can resolve your IRS tax debt and feel more comfortable with your tax obligations.

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