Pay Down Tax Debt

Where do you start?

When paying down your tax debt most people do not know where to start.  When there is multiple years of tax debt, it is even more confusing.  Most believe to pay down on the earliest tax debt is the best way to start.  I ask you to reconsider your choice.

Current Compliance

In order to resolve your prior year(s) tax debt, first you must get your tax account into current compliance.  Compliance is when you ensure that the most recent year tax balance is paid in full to include any penalties and interest.  For W-2 employees, this may mean correcting your filing status decreasing the number of exemptions claimed on your employer filed W-4 withholding form.  For self-employed business owners, this means paying your current quarter’s estimated taxes.  All future tax return years must be timely filed and paid.  So if your confused as to how to spend your available cash funds, catch up on your current taxes for the quarter and or year.

Yes, the first step is to stop the accumulation of tax debt allowing the correct amount of withholding from your paycheck and by paying in full all estimated taxes due.  It is the best start to pay off and resolve your back tax problems.

Collection Alternatives

Now that you are in current compliance, you have several collection alternatives you will need to choose from.  Whichever payment method used, you must insure it does not bring financial hurt or harm to the household.  There are typically three major categorical means to pay the back taxes.  And with installment agreements, there are several variations to select from.  There is one that is suitable for you that is affordable.

The currently not collectible status is when your household income is less than your allowable expenses.  If this is you, the IRS will defer the collections process.

You have seen or heard the commercials of paying “Pennies on the Dollar”?  Though it is true if your offer is accepted, yes not all offer in compromise are accepted, yet if you qualify, you can save hundreds, even thousands of tax dollars.  Again, the IRS will be very intrusive in gathering much of your financial information before rendering a decision.

You have choices, when you cannot pay the taxes.  Don’t despair.  I will be able to get you into an affordable agreement with the IRS.  Contact me today for a consultation.