If you owe money to the IRS, the agency may take steps such as seizing a bank account or placing a lien on your Texas home. Fortunately, there are many actions that you can take to stay in the good graces of the federal government’s tax collector. Let’s take a look at what you can do to resolve an outstanding tax debt in a timely and favorable manner.
Ask for more time to pay
The IRS will add interest to any outstanding balance until it is paid in full. However, existing tax law says that setting up a payment plan generally prevents the government from seizing any of your assets. The amount of time that you’ll have to pay your back taxes depends on how much you owe. It’s worth noting that a federal tax lien may be placed on your property if you owe more than $10,000.
Request that your back tax debt be forgiven
In the event that you truly can’t pay what you owe without causing a financial hardship, the IRS may forgive your outstanding debt. Of course, you will be required to prove that you don’t have sufficient income or assets that could be liquidated to raise the money needed to cover an existing balance. It’s also possible that only a portion of your debt will be forgiven or that it will simply be deferred until your financial situation changes.
If you think that you have a past due tax balance, it’s important to take action as quickly as possible. Otherwise, you may have to pay interest, fees or other penalties on top of what you actually owe. In extreme cases, ignoring the IRS could result in civil or criminal penalties including incarceration or the forfeiture of your passport.
